ethics watch opening brief crp v. ethics watch

8/9/2019 Ethics Watch Opening Brief CRP v. Ethics Watch

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COLORADO COURT OF APPEALSCourt Address: 2 East 14th AvenueDenver, CO 80203

District Court, City and County of Denver

Honorable Robert L. McGahey Jr., JudgeCase No. 2014CV031851 ______________________________________Plaintiff/Appellee: COLORADO REPUBLICANPARTY

v.

Intervenor Defendant/Appellant: COLORADOETHICS WATCH

and

Defendant/Appellee: WAYNE W. WILLIAMS, in hisofficial capacity as Colorado Secretary of State

_______________________________________Attorneys for Appellant:Luis Toro, #22093Margaret Perl, #431061630 Welton Street, Suite 415Denver, CO 80202

Telephone: 303-626-2100Email: [email protected] [email protected]

▲ COURT USE ONLY ▲ ________________________

Case No. 14CA1945

OPENING BRIEF

mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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TABLE OF CONTENTS

TABLE OF AUTHORITIES ......................................................................................................... iii

CERTIFICATE OF COMPLIANCE ...............................................................................................v

ISSUES PRESENTED FOR REVIEW ...........................................................................................1I. STATEMENT OF THE CASE ....................................................................................................1

A. Nature of the Case ................................................................................................................2

B. Statement of Facts ................................................................................................................3

1. Colorado enacts campaign finance rules governing contributions to political parties and

independent expenditure committees. ......................................................................................3

2. The Party establishes an independent expenditure committee subject to political party

limits, dissolves it, then establishes a new independent committee for the purpose of

accepting contributions not subject to those limits...................................................................6II. SUMMARY OF ARGUMENT ..................................................................................................6

III. ARGUMENT .............................................................................................................................8

A. Standard of Review ..............................................................................................................8

B. The Statute Does Not Override the Colorado Constitution’s Limits on Contributions to

Political Parties. ............................................................................................................................9

1. The Statute Must Be Read In Harmony with the Colorado Constitution’s Contribution

Limits and Source Prohibitions For Political Parties. ..............................................................9

2. Alternatively, Senate Bill 10-203 Is Unconstitutional To The Extent It Purports toAuthorize Political Parties to Avoid Constitutional Contribution Restrictions.. ....................14

C. The District Court Erroneously Concluded That the Party’s Independent Expenditure

Committee Is Independent of The Party.. ..................................................................................14

D. The First Amendment Does Not Compel Colorado To Allow Unlimited Contributions To

Political Parties... ........................................................................................................................19

IV. CONCLUSION........................................................................................................................23

CERTIFICATE OF SERVICE ......................................................................................................24


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TABLE OF AUTHORITIES

CASES

Buckley v. Valeo, 424 U.S. 1, 26-27 (1976) --------------------------------------------- 20

Citizens United v. Fed. Election Comm’n, 558 U.S. 310 (2010) ------------------ 5, 21City & County of Denver v. Indus. Claim Appeals Office, 107 P.3d 1019, 1020-

1021 (Colo. App. 2004) ----------------------------------------------------------------- 10Colorado Ethics Watch v. Clear The Bench Colorado, 2012 COA 42 ----------- 8, 10Colorado Ethics Watch v. Senate Majority Fund, LLC , 2012 CO 12 --------------- 11Colorado Republican Fed. Campaign Comm. v. Fed. Election Comm’n, 518 U.S.

604, 617-18 (1996) ----------------------------------------------------------- 4, 10, 13, 20 Fed. Election Comm’n v. Colorado Republican Fed. Campaign Comm., 533 U.S.

431 (2001) ---------------------------------------------------------------------- 4, 5, 10, 22

Huber v. Colo. Mining Ass'n, 264 P.3d 884, 889 (Colo. 2011)----------------------- 10 In re Interrogatories Propounded By Governor Bill Ritter , Jr., 227 P.3d 892 (Colo.2010). --------------------------------------------------------------------------------------- 5

McConnell v. Fed. Election Comm’n, 540 U.S. 93 (2003) ----------------------- 13, 20 McCutcheon v. Fed. Election Comm’n, 134 S. Ct. 1434 (2014) ---------------- 20, 22 P.F.P. Family Holdings, L.P. v. Stan Lee Media, Inc., 252 P.3d 1 (Colo. App.

2010) ---------------------------------------------------------------------------------------- 9 Republican Nat’l Comm. v. Federal Election Com’n (In re Anh Cao), 619 F.3d

410, (5th Cir. 2010) ---------------------------------------------------------------------- 21 Republican Nat’l Comm., et al. v. Federal Election Comm’n, 698 F. Supp. 2d 150

(D.D.C 2010) ------------------------------------------------------------------------ 21, 22 Republican Nat’l Comm.et al. v. Federal Election Com’n, 130 S.Ct. 3543 (2010) 22 Republican Party of N.M. v. King , 741 F.3d 1089, 1103 (10th Cir. 2013) --------- 18 Rufer v. Fed. Election Comm’n, No.14-cv-837, 2014 U.S. Dist. LEXIS 114762

(D.D.C. August 19, 2014) --------------------------------------------------------------- 19Town of Telluride v. San Miguel Valley Corp., 185 P.3d 161 (Colo. 2008) -------- 14Tulips Invs., LLC v. State ex rel. Suthers, 2015 CO 1 ---------------------------------- 8

STATUTES

C.R.S. § 1-4-502(1) ------------------------------------------------------------------------ 12C.R.S. § 1-45-103(11.5) ----------------------------------------------------------- 5, 11, 12C.R.S. § 1-45-103.7 ------------------------------------------------------------------------ 11C.R.S. § 1-45-104 --------------------------------------------------------------------------- 6


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C.R.S. § 1-45-107.5 --------------------------------------------------------------- 1, 2, 5, 10C.R.S. § 24-4-105(11) ---------------------------------------------------------------------- 7

R ULES

C.A.R. 43(c)(1) ------------------------------------------------------------------------------ 2R EGULATIONS

8 C.C.R. 1505-6 (3.3) ---------------------------------------------------------------------- 118 C.C.R. 1505-6 (1.4) ----------------------------------------------------------------- 15, 188 C.C.R. 1505-6 (10.14) -------------------------------------------------------------------- 3

CONSTITUTIONAL PROVISIONS

Colo. Const. art. XXVIII, § 2(9) ---------------------------------------------------------- 3Colo. Const. art. XXVIII, § 3 ---------------------------------------------------------- 1, 14Colo. Const. art. XXVIII, § 3(1) --------------------------------------------------------- 11Colo. Const. art. XXVIII, § 3(13) --------------------------------------------------------- 3Colo. Const. art. XXVIII, § 3(3) --------------------------------------------------- passimColo. Const. art. XXVIII, § 3(4) --------------------------------------------------- passimColo. Const. art. XXVIII, § 3(5) --------------------------------------------------------- 11 Colo. Const. art. XXVIII, § 5(1) ---------------------------------------------------------- 4Colo. Const. art. XXVIII, § 5(3) ------------------------------------------------- 3, 15, 17


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CERTIFICATE OF COMPLIANCE

I hereby certify that this brief complies with all requirements of C.A.R. 28 andC.A.R. 32, including all formatting requirements set forth in these rules.

Specifically, I certify that:

The brief complies with C.A.R. 28(g).It contains _______words.

X It does not exceed 30 pages.

The brief complies with C.A.R. 28(k).X For the party raising the issue:

It contains under a separate heading (1) a concise statement of theapplicable standard of appellate review with citation to authority; and (2) acitation to the precise location in the record (R. , p. ), not to an entiredocument, where the issue was raised and ruled on.

It contains, under a separate heading, a statement of whether such party agrees with the opponent’s statements concerning the standard ofreview and preservation for appeal, and if not, why not.

I acknowledge that my brief may be stricken if it fails to comply with any of therequirements of C.A.R. 28 and C.A.R. 32.

/s/ Luis Toro

Luis ToroAttorney for the AppellantColorado Ethics Watch


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Appellant Colorado Ethics Watch, by its undersigned attorneys, respectfully

submits its opening brief:

I. ISSUES PRESENTED FOR REVIEW

A. Whether the district court erred by ruling that the political party

contribution limits and source restrictions set forth in Colo. Const. art. XXVIII, § 3

do not apply to contributions received by an independent expenditure committee

established by a political party pursuant to C.R.S. § 1-45-107.5.

B. If the district court did not err by interpreting Colorado’s independent

expenditure committee statute to allow a political party to establish an independent

expenditure committee free from contribution limits and source restrictions,

whether the statute is unconstitutional as contrary to Colo. Const., art. XXVIII, § 3.

C. Whether the district court erred by ruling that the undisputed facts

established that the Colorado Republican Party’s independent expenditure

committee is independent of the Party.

II. STATEMENT OF THE CASE

A. NATURE OF THE CASE

This case presents the question whether a political party may evade the

contribution limitations and prohibitions placed on parties by Colorado voters in

Colo. Const. art. XXVIII, § 3 by establishing, operating and maintaining an

“independent expenditure committee” pursuant to C.R.S. § 1-45-107.5.


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This action was filed on May 8, 2014 by the Colorado Republican Party (the

“Party”) against the Colorado Secretary of State (the “Secretary”),1 seeking a

declaratory judgment that the Party could “sponsor, maintain, and operate” an

independent expenditure committee that would not be subject to the Colorado

Constitution’s limitations on the amount of contributions to political parties or its

prohibition of direct corporate or labor union contributions to parties. The Party’s

complaint did not allege the existence of an actual controversy between itself and

the Secretary; rather, it alleged that a declaratory judgment was needed because

without one Ethics Watch might sue the Party for violating campaign finance laws.

The Party and the Secretary consented to Ethics Watch’s intervention in the case as

an additional defendant.

The Party filed a summary judgment motion, which Ethics Watch, but not

the Secretary, opposed. The district court entered summary judgment in favor of

the Party, reasoning that because C.R.S. § 1-45-107.5 permits “any person” to

establish an independent expenditure committee, and because the evidence

purportedly showed that the Party does not control its independent expenditure

committee, the Party was entitled to raise money for that committee without regard

to the Colorado Constitution’s political party contribution restrictions. This appeal

1 On January 13, 2015, Wayne W. Williams was sworn in as Colorado Secretary ofState. Pursuant to C.A.R. 43(c)(1), Williams should be substituted on the captionfor his predecessor, Scott Gessler.


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followed.

B. STATEMENT OF FACTS

1. Colorado enacts campaign finance rules governing contributions to

political parties and independent expenditure committees.

In 2002, Colorado voters passed Amendment 27, which became Article

XXVIII of the Colorado Constitution. Article XXVIII creates a comprehensive

campaign and political finance system, including disclosure requirements,

contribution limits and source restrictions for candidates, political parties, and

other political actors. Pursuant to Section 3, a political party may only receive

contributions subject to certain dollar limitations. See Colo. Const. art. XXVIII, §

3(3).2 In addition, political parties are absolutely prohibited from accepting

contributions of any amount from corporations and labor unions. See Colo. Const.

art. XXVIII, § 3(4)(a).

Article XXVIII also includes provisions governing “independent

expenditures,” defined as spending for the purpose of expressly advocating for or

against candidates that is “not controlled by or coordinated with” a candidate or

political party. Colo. Const. art. XXVIII, §§ 2(9), 5(4). If a political actor, e.g ., a

political committee or political party, makes an independent expenditure, it is

required to file certain public reports with the spending information. See Colo.

2 These contribution limits have been increased from the 2002 levels established in§ 3(3) to keep pace with inflation. See Colo. Const. art. XXVIII, § 3(13);Campaign and Political Finance Rule 10.14, 8 C.C.R. 1505-6 (10.14).


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Const. art. XXVIII, § 5(1). As enacted by the voters of Colorado, corporations and

labor unions were banned from making independent expenditures outside of a

connected political committee or small donor committee subject to contribution

limits. Id . § 3(4).

In the years immediately preceding the adoption of Article XXVIII, the

Party, through its federal campaign committee, challenged federal law governing

political party independent expenditures, reaching the U.S. Supreme Court twice.

See Colorado Republican Fed. Campaign Comm. v. Fed. Election Comm’n, 518

U.S. 604, 617-18 (1996) ( “Colorado Republicans I ”); Fed. Election Comm’n v.

Colorado Republican Fed. Campaign Comm., 533 U.S. 431, 440 (2001)

( “Colorado Republicans II ”). In Colorado Republicans I , the Supreme Court held

that the First Amendment prohibited any caps on expenditures made by a political

party independently from candidate campaigns. Colorado Republicans I , 518 U.S.

at 616. When the case returned to the high court five years later, it rejected the

Party’s First Amendment challenge to limits on political party contributions to

candidates in the form of coordinated expenditures. Colorado Republicans II, 533

U.S. at 446-447. Neither of these decisions called into question the federal

contribution limit of $20,000 per donor to a political party (with no corporate or

union contributions allowed), even if that money was used for independent

expenditures. See Colorado Republicans I , 518 U.S. at 617; Colorado Republicans


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II , 533 U.S. at 458.

On January 21, 2010, the U.S. Supreme Court struck down the federal law

banning corporate and labor union spending, except through political committees,

as unconstitutional under the First Amendment. Citizens United v. Fed. Election

Comm’n, 558 U.S. 310 (2010). Shortly thereafter, the Colorado Supreme Court

ruled that in light of Citizens United , the Colorado Constitution’s prohibition on

corporate and labor union independent expenditures could no longer be enforced.

In re Interrogatories Propounded By Governor Bill Ritter , Jr., 227 P.3d 892 (Colo.

2010).

The General Assembly acted swiftly to require transparency of this new

spending by enacting Senate Bill 10-203, signed by the Governor on May 25,

2010. The new statute recognized that corporations and labor unions were no

longer prohibited from making independent expenditures and declared its purpose

to be to require “[a]ll such expenditures to be disclosed in accordance with the

requirements of this article and Article XXVIII of the state constitution.” C.R.S. §

1-45-107.5(2). It established a new type of committee, an “independent

expenditure committee,” defined as “one or more persons that make an

independent expenditure in an aggregate amount in excess of one thousand dollars

or that collect in excess of one thousand dollars from one or more persons for the

purpose of making an independent expenditure.” C.R.S. § 1-45-103(11.5). To


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ensure transparency of these newly legalized expenditures, the statute imposed

upon independent expenditure committees registration and reporting requirements

parallel to those that exist for other committees. See C.R.S. §§ 1-45-107.5(3) and

(4).

2. The Party establishes an independent expenditure committee subject

to political party limits, dissolves it, then establishes a new independent

committee for the purpose of accepting contributions not subject to those

limits.

It was well understood at the time the statute was enacted that if a political

party were to establish an independent expenditure committee, contributions to that

committee would still be subject to the contribution limits and prohibition of

corporate and labor union contributions established in Colo. Const. art. XXVIII, §§

3(3) and 3(4). Consistent with this understanding, Respondent Party established an

independent expenditure committee for the 2012 election, and treated contributions

to the committee as contributions to the Party subject to constitutional limitations

and prohibitions. [R:3, Verified Complaint ¶ 13.]

That changed in November 2013, when the Party petitioned the Secretary for

a declaratory order permitting it to establish a new independent expenditure

committee “for the purpose of making independent expenditures [and which] may

raise funds in any amount from any permissible source.” [R:15, Verified

Complaint at ¶ 15.] This was the first time the Party attempted to set up a

mechanism to fund independent expenditures with money not subject to


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contribution limitations or prohibitions.

In a Final Agency Decision dated February 6, 2014, the Secretary declined

to issue the declaratory order. [R:137-47.] Acting through his Deputy, the

Secretary told the Party that its options were to file a declaratory judgment action

in state or federal court or proceed and defend a campaign finance complaint if one

were to be filed. [R:141.] The Final Agency Order went on to include an advisory

opinion generally in favor of the Party’s position, presumably to bolster the Party’s

position in any future suit. [R:141-47.] On February 7, 2014, the Party terminated

its independent expenditure committee that complied with article XXVIIII

limitations. [R:3, Verified Complaint at ¶ 13.]

The statute that authorizes petitions for declaratory orders also treats the

agency’s ruling on such a petition as a final agency action subject to judicial

review. C.R.S. § 24-4-105(11). Rather than seeking review of the Secretary’s

decision, however, the Party accepted his invitation to file this declaratory

judgment action. [R:4, Verified Complaint at ¶ 17.]

On May 7, 2014 the Party filed paperwork to establish its new independent

expenditure committee and appointed Tyler Harber as its executive director. [R:59,

83.] An executive committee of two was appointed in July. [R:59.] On August 8,

2014, the same day the Party filed its motion for summary judgment, the Standing

Rules of the Party’s new independent expenditure committee went into effect.


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[R:79-82.]

III. SUMMARY OF ARGUMENT

The Party attempts to avoid decades-old contribution limitation and

prohibitions on political parties through a new hyper-technical reading of the state

statute establishing disclosure requirements for independent expenditure

committees. The district court erred by not interpreting this statute in harmony with

the Colorado Constitution. If the statute cannot be construed to comply with

Article XXVIII, then it is unconstitutional to the extent that it contradicts the

constitutional provisions governing political party contributions.

In addition, the language of the Standing Rules demonstrates that the

independent expenditure committee is subject to the control of the Party, and

therefore, not truly independent.

IV. ARGUMENT

A. Standard of Review

The questions of constitutional and statutory interpretation presented here

are reviewed de novo. Tulips Invs., LLC v. State ex rel. Suthers, 2015 CO 1, ¶ 11.

“Because the Fair Campaign Practices Act and the Campaign and Political Finance

Amendment both pertain to campaign finance regulations, they are in pari materia

and must be construed together.” Colorado Ethics Watch v. Clear The Bench

Colorado, 2012 COA 42, ¶ 32 (“Clear The Bench”).


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The interpretation of the Party’s independent expenditure committee’s

Standing Rules presents a question of interpretation of a written instrument that is

also subject to de novo review. P.F.P. Family Holdings, L.P. v. Stan Lee Media,

Inc., 252 P.3d 1, 3 (Colo. App. 2010).

B. The Statute Does Not Override the Colorado Constitution’s Limits on

Contributions to Political Parties.

Ethics Watch raised the issue of the proper interpretation of the independent

expenditure statute and the applicability of the Colorado Constitution’s

contribution limits and source prohibitions applicable to political parties in its

opposition to the Party’s summary judgment motion. (R:105-110, Opposition Brief

at pp. 7-12). The district court implicitly rejected this argument when it ruled that

the Party could operate its independent expenditure committee outside of

constitutional limits “so long as it is independent.” (R:152, Order at 5.)

1. The Statute Must Be Read In Harmony with the Colorado

Constitution’s Contribution Limits and Source Prohibitions For Political

Parties.

“When a reviewing court construes a statute, it must determine and give

effect to the intent of the legislature by affording the language of the statute its

plain and ordinary meaning. A statute must be construed in a manner that gives

effect to the legislative purpose underlying its enactment. If possible, the statute

should be interpreted so as to give consistent, harmonious, and sensible effect to all

its parts.” City & County of Denver v. Indus. Claim Appeals Office, 107 P.3d 1019,


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1020-1021 (Colo. App. 2004) (citation omitted). The importance of this rule is

heightened when, as here, the statute must be construed in harmony with the

Campaign Finance Amendment. See Clear The Bench, 2012 COA 42, ¶ 32; see

also Huber v. Colo. Mining Ass'n, 264 P.3d 884, 889 (Colo. 2011) (when statute is

capable of more than one interpretation, courts must choose the construction that

avoids a constitutional issue).

The district court placed great weight on the fact that the constitutional

definition of “person” includes political parties, and that C.R.S. § 1-45-107.5

permits “any person” to establish an independent expenditure committee. [R:150,

Order at 3.] It does not follow, however, that a political party committee that

chooses to create an independent expenditure committee somehow exempts itself

from the constitutional limitations on contributions to political parties.

Reading the statute harmoniously with the constitution, a political party may

establish an independent expenditure committee – but any contributions it receives

must comply with the contribution limits and prohibition of contributions from

corporations or labor unions set forth in Colo. Const. art. XXVIII, §§ 3(3) and (4).

This reading of the statute’s application to political parties is consistent with the

controlling Supreme Court precedent regarding independent expenditures by

parties developed in Colorado Republicans I and II . The Court must assume that

the legislature and those involved in the bill at the time were aware of this


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precedent which arose from actions of the Party itself. See Colorado Ethics Watch

v. Senate Majority Fund, LLC , 2012 CO 12, ¶ 20 (legislature must be presumed to

be aware of existing case law when it amends or clarifies campaign finance law).

Senate Bill 10-203 nowhere mentions political parties, as one might expect if the

statute really were intended, as the Party contends, to depart from the then-

governing approach and allow political parties to begin avoiding contribution

limits and source prohibitions by establishing an independent expenditure

committee.

Further proof that the General Assembly did not intend to allow political

parties to use independent expenditure committees to avoid constitutional

limitations on the size and source of contributions may be found in the statute’s

express provision that “[a]n independent expenditure committee shall not be

treated as a political committee, and therefore, shall not be subject to the

requirements of section 3(5) of article XXVIII of the state constitution”

establishing contribution limits to political committees. C.R.S. § 1-45-103.7(2.5).3

This statute does not state that independent expenditure committees are free from

all contribution limits in Article XXVIII, nor does it refer to the political party

3 The main difference between political committees and independent expenditurecommittees is that political committees may make direct contributions tocandidates or political parties, while independent expenditure committees may not.See Colo. Const. art. XXVIII, §§ 3(1), 3(3); C.R.S. § 1-45-103.7(2.5); Campaignand Political Finance Rule 3.3, 8 C.C.R. § 1505-6 (3.3).


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contribution provisions in § 3(3) and (4) as part of this exception. Given the

General Assembly’s care to declare political committee limits inapplicable to

independent expenditure committees, the Court should not presume from the

legislature’s silence that it also intended to declare political Party contribution

limits inapplicable to such committees.

The legislative history, like the statute itself, is devoid of any suggestion that

a political party could establish an independent expenditure committee and accept

contributions that would otherwise be limited or prohibited. The natural reading of

the statutory language is that the General Assembly intended to exempt

independent expenditure committees only from political committee contribution

limits, and not also from political party contribution limits. See C.R.S. § 1-45-

103(11.5). The district court erred by interpreting the statute as overriding the

contribution limits and source prohibitions in Article XXVIII and departing from

Supreme Court precedent authorizing regulation of how political parties raise

money for independent expenditures.

Strong policy considerations support the people’s decision to limit

contributions to political parties. In Colorado, as in other states and at the federal

level, political parties are differently situated and appropriately treated differently

than corporations, labor organizations, or other associations. See, e.g., C.R.S. § 1-

4-502(1) (providing that political parties may nominate candidates for the ballot,


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while candidates not affiliated with a party must gather signatures to get on the

ballot). This preferential access to the ballot, along with the political reality that the

two major party caucuses dominate legislative proceedings in Colorado and

elsewhere, justifies treating political parties differently from other organizations.

“Interest groups do not select slates of candidates for elections. Interest groups do

not determine who will serve on legislative committees, elect congressional

leadership, or organize legislative caucuses. Political parties have influence and

power in the Legislature that vastly exceeds that of any interest group.” McConnell

v. F ed. Election Comm’n, 540 U.S. 93, 188 (2003); see also Colorado Republicans

I , 518 U.S. at 617-618 (1996) (noting the potential for corruption linked to “the

ability of donors to give sums up to $20,000 to a party which may be used for

independent party expenditures for the benefit of a particular candidate”).

Colorado citizens have spoken and decided that the potential for corruption

warrants limitations on contributions to political parties and the prohibition on

direct receipt of corporate or union funds. See Colo. Const. art. XXVIII, § 3(3) and

§ 3(4). Their will should not be subverted by a strained construction of the

independent expenditure committee statute that would interpret legislative silence

as a license to ignore these constitutional limits on parties.

The district court erred by failing to read the statute governing independent

expenditure committees in harmony with the political party contribution limits in


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Colo. Const. art. XXVIII, § 3.

2. Alternatively, Senate Bill 10-203 Is Unconstitutional To The

Extent It Purports to Authorize Political Parties to Avoid Constitutional

Contribution Restrictions.

Should the court determine, however, that the statute can only be read as

allowing political parties to establish independent expenditure committees not

subject to contribution limits and source prohibitions, then it must hold Senate Bill

10-203 unconstitutional to the extent it purports to allow political parties to avoid

the contribution limits and source restrictions set forth in Colo. Const. art. XXVIII,

§ 3. It is well-established that Colorado statutes that contradict the state

Constitution must be set aside. E.g., Town of Telluride v. San Miguel Valley Corp.,

185 P.3d 161, 171 (Colo. 2008). The General Assembly is without authority to

authorize by statute that which the state constitution prohibits.

C. The District Court Erroneously Concluded That the Party’s

Independent Expenditure Committee Is Independent of The Party.

Ethics Watch argued that the undisputed evidence established that the Party

controls its independent expenditure committee in its opposition brief. (R:103-04,

Opposition Brief at 5-6.) The district court erred when it ruled that the undisputed

evidence established that the Party’s independent expenditure committee is not

controlled by the Party. (R:150-52, Order at 3-5.)

The Colorado Constitution treats an expenditure “coordinated with or

controlled by . . . a political party” as a contribution to that political party. Colo.


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Const. art. XXVIII, 5(3) (emphasis added). Moreover, under the Secretary’s Rule

1.4, coordination occurs when a committee makes an expenditure “at the request,

suggestion, or direction of, in consultation with, or under the control of

that … political party.” Campaign and Political Finance Rule 1.4., 8 C.C.R. 1505-6

(1.4) (emphasis added). The undisputed facts demonstrate that the Party’s

independent expenditure committee is controlled by the Party.

At the most fundamental level, the independent expenditure committee is

structured as a standing committee and “separate segregated fund” of the Party.

[R:79.] The Party’s chairman appoints the Executive Director and management

committee members, names replacements when a member’s term expires, and can

remove members for cause with concurrence of a majority of the committee’s

management committee. [ Id .] The avowed purpose of the committee is to express

“the facts, argument, and perspective of the Colorado Re publican Party.” [R:76.]

The district court placed great weight on the Standing Rules’ recitation that

the Executive Director or members of the management committee can be removed

only for “fraud or malfeasance.” [R:151, Order at 4.] This ruling ignored the

numerous, specific directions regarding political spending set forth in the Standing

Rules, the violation of which certainly could constitute “malfeasance.” It also

ignored the Standing Rules that cement the Party’s control of its independent

expenditure committee, including (1) requiring the independent expenditure


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committee to adhere to directions from the Party and (2) allowing the Party to

override provisions of the Standing Rules at any time by amending its bylaws.

For example, Rule 12 of the Standing Rules provides:

The IEC is permitted to accept contributions and expendfunds and make independent expenditures andelectioneering communications to support and influencethe election of Republican candidates for public office oran office in a political organization at the state and locallevel ONLY.

[R:81.] The requirement that the “independent” committee support only

Republican candidates – a requirement imposed by the Party itself – alone

demonstrates that the committee is not independent of the Party. A truly

independent committee would be free to spend money on behalf of any state

candidate regardless of partisan affiliation.

Rule 18 of the Standing Rules imposes an additional restriction on spending

by the purportedly “independent” committee:

The IEC will abide by the requirement of pre-primaryneutrality set forth in Article III, Section C of the [Party]Bylaws which provides that “No candidate for anydesignation or nomination for partisan public office shall

be endorsed, supported, or opposed by the [Party], actingas an entity, or by its state officers or committees, before

the Primary Election, unless such candidate is unopposedin the Primary Election.”

[R:82.] A truly independent committee would be free to spend on behalf of

candidates in a primary election.


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The Court should hold that the Standing Rules provisions that prohibit

support of candidates other than Party candidates or spending in connection with

primary campaigns are a form of control by the Party over the spending of its

purportedly independent committee that constitutes control under Colo. Const. art.

XXVIII, § 5(3) and coordination under Rule 1.4. While the district court criticized

Ethics Watch for failing to provide evidence that the committee would not follow

its own bylaws in the future – a curious criticism in an action for declaratory

judgment regarding rights under a written instrument – it failed to consider the

effect of the Party’s committee following its own Standing Rules that restrict its

spending and subject it to Party bylaws. [R:151, Order at 4.]

Even if the independent expenditure committee were to display true

independence and spend in violation of Party dictates, the Party chairman’s power

to remove the Executive Director or members of the management committee for

cause enforces adherence to Party rules and requirements to which no truly

independent committee would be subject. The undisputed evidence established that

the party bylaws allow the executive director to be removed for cause if, for

example, the committee spends money in a Party primary (other than a primary

where there is only one Party candidate) or if the committee spends money to

support a candidate who is not a Party candidate. The district court erred as a

matter of law in its interpretation of the Standing Rules when it held that “the


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Standing Rules eliminate the ability of the Party to have any control over the IEC’s

activities – including and especially its expenditures.” (R:128, Order at 4)

(emphasis by the Court).

The district court also gave no weight to Standing Rule 19, which subjects

the committee to the bylaws of the Party and of the Republican National

Committee and renders “inoperative and ineffective” any provision deemed to

conflict with those bylaws. [R:82.] Thus, at any time the Party may pass a bylaw

that would supersede the provisions of the Standing Rules that purportedly

establish the independent expenditure committee’s independence from the Party.

Campaign and Political Finance Rule 1.4 states that coordination with a

political party is established when expenditures are made “under the control of that

. . . political party.” 8 C.C.R. 1505-6 (1.4). Contrary to the district court’s apparent

understanding, it was not necessary for Ethics Watch to prove that the Party would

direct specific expenditures made by its independent expenditure committee. It is

sufficient that the Party controls the independent expenditure committee in general

through its bylaws, the Standing Rules, and its enforcement authority over the

executive director and committee members. See, e.g., Republican Party of N.M. v.

King , 741 F.3d 1089, 1103 (10th Cir. 2013) (noting if a group was indirectly

controlled by a political party and considered coordinated then contributions would

be subject to political party limits).


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The Court should reverse the district court’s determination that the

undisputed facts establish that the Party’s independent expenditure committee is

independent from the Party.

D. The First Amendment Does Not Compel Colorado To Allow Unlimited

Contributions To Political Parties.

Before the district court, the Party’s primary argument was that First

Amendment case law forbidding caps on spending should drive the court to rule

that the Party may accept corporate and labor union contributions and contributions

above the state constitution’s limits. [R:63-65, Motion for Summary Judgment at

pp. 7-9.] Ethics Watch argued that this case is about political party contribution

limits, not spending, and such limits have been repeatedly upheld against First

Amendment challenges. [R:110-17, Opposition Brief at pp. 12-19.] The district

court did not reach the issue in its Order, however, Ethics Watch will address the

issue in the event the Party urges it as an alternative rationale to uphold the

judgment below.

The Party had to admit that laws like Colorado’s contribution limits and

source prohibitions applicable to political parties have “not yet been successfully

challenged” in court. [R:72, Motion for Summary Judgment at 16]. See Rufer v.

Fed. Election Comm’n, No.14-cv-837, 2014 U.S. Dist. LEXIS 114762, *22

(D.D.C. August 19, 2014) (stating political parties’ case arguing contribution limits

should not apply to party independent expenditures is “in tension with forty years


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of Supreme Court jurisprudence upholding contribution limits to political parties”).

It is well-established that “reasonable contribution limits directly and

materially advance the Government's interest in preventing exchanges of large

financial contributions for political favors.” Colorado Republicans I , 518 U.S. at

615 (citing Buckley v. Valeo, 424 U.S. 1, 26-27 (1976)). “Contribution limits

‘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.” McCutcheon v. Fed. Election Comm’n, 134 S. Ct. 1434, 1444 (2014)

(quoting Buckley, 424 U.S. at 21, brackets in original).

Under the lower level of scrutiny mandated by the Supreme Court,

contribution limits are valid so long as they are “closely drawn” to match a

“sufficiently important” government interest. McConnell , 540 U.S. at 136. This

lower scrutiny gives deference to the legislature’s ability to weigh competing

interests and provides legislation “sufficient room to anticipate and respond to

concerns about circumvention of regulations designed to protect the integrity of the

political process.” Id . at 137.

In McConnell , the Supreme Court upheld a federal law banning “soft

money” contributions outside political party contribution limits as constitutional

means to address the government’s interest in preventing corruption and

appearance of corruption:


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Given this close connection and alignment of interests,large soft-money contributions to national parties arelikely to create actual or apparent indebtedness on the

part of federal officeholders, regardless of how thosefunds are ultimately used.

Id . at 155.

McConnell’s approval of political party contribution limits remains good law

after Citizens United . See, e.g., Republican Nat’l Comm. v. Federal Election

Com’n (In re Anh Cao), 619 F.3d 410, 422 (5th Cir. 2010) (rejecting constitutional

challenge to contribution limits on political parties because “we do not read

Citizens United as changing how this court should evaluate contribution limits on

political parties and PACs”). The most recent Supreme Court case on contribution

limitations, which struck down aggregate individual donor limits not at issue in this

case, reaffirmed contribution limits applied to political parties are constitutional

and still binding. See McCutcheon, 134 S. Ct. at 1451 n.6 (“Our holding about the

constitutionality of the aggregate limits clearly does not overrule McConnell ’s

holding about ‘soft money.’”).

Directly on point is the post-Citizens United case of Republican Nat’l

Comm., et al. v. Federal Election Comm’n, 698 F. Supp. 2d 150 (D.D.C 2010).

That case involved a First Amendment challenge brought by national and state

party committees challenging the contribution limits for political parties very

similar to the Party’s arguments in the district court. The political party sought to


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raise contributions not subject to statutory contribution limits for use in certain

activities not connected to federal candidate races and argued that the First

Amendment prohibited limiting contributions in those circumstances. Id . at 155-

56. The special three-judge panel (including one D.C. Circuit Judge) held

unanimously that “Citizens United did not disturb McConnell ’s holding with

respect to the constitutionality of [statutory] limits on contributions to political

parties.” Id . at 153. On direct appeal, the U.S. Supreme Court summarily affirmed

the three- judge panel’s ruling. Republican Nat’l Comm.et al. v. Federal Election

Com’n, 130 S.Ct. 3543 (2010).

Thus, governing Supreme Court precedent states that contribution limits and

prohibitions can constitutionally be applied to political parties regardless of

whether they intend to use the money for independent expenditures. See

McCutcheon, 134 S.Ct. at 1451 (“Those base limits remain the primary means of

regulating campaign contributions.”); Colorado Republicans II, 533 U.S at 481-82

(“Indeed, parties’ capacity to concentrate power to elect is the very capacity that

apparently opens them to exploitation as channels for circumventing contribution

and coordinated spending limits binding on other political players.”). The Court

should re ject any invitation by the Party to hold Colorado’s political party

contribution limits unconstitutional.


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V. CONCLUSION

For these reasons, this Court should reverse the judgment of the district court

and remand with instructions to enter judgment against Respondents Colorado

Republican Party and the Colorado Secretary of State, declaring that contributions

to the independent expenditure committee established by the Party are subject to

the Colorado Constitution’s contribution limits and source restrictions applicable to

political parties.

Respectfully submitted on March 6, 2015.

signed original on file

/s/ Luis Toro________________ Luis ToroMargaret PerlColorado Ethics Watch

1630 Welton Street, Suite 415Denver, CO 80202

Attorneys for Appellant

Colorado Ethics Watch


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CERTIFICATE OF SERVICE

The undersigned hereby certifies that on March 6, 2015, service of theforegoing OPENING BRIEF was made via ICCES, addressed as follows:

Matthew D. GroveSueanna JohnsonOffice of the Attorney General1525 Sherman Street, 7th FloorDenver, CO 80203

Richard A. WestfallAllan L. HalePeter J. KrumholzHale Westfall LLP1600 Stout Street, Suite 500Denver CO 80202

igned original on file

/ s/ Luis Toro

ethics watch opening brief crp v. ethics watch

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