rex sinquefield brief

8/13/2019 Rex Sinquefield brief

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IN THE COURT OF APPEALS OF THE STATE OF MISSOURIWESTERN DISTRICT

REX A. SINQUEFIELD, et al., )

)

Plaintiffs/Respondents, ))

vs. ) Case No. WD77056

)

JASON KANDER, et al., )

)

Defendants, )

)

TODD S. JONES, et al., )

)

Intervenors/Appellants. )

Appeal from the Circuit Court of Cole County, Missouri

Nineteenth Judicial Circuit

The Honorable Jon E. Beetem, Judge

BRIEF OF PLAINTIFFS/RESPONDENTS REX A. SINQUEFIELDAND TRAVIS H. BROWN

Marc H. Ellinger, #40828

Stephanie S. Bell, #61855

BLITZ, BARDGETT & DEUTSCH, L.C.

308 East High Street, Suite 301

Jefferson City, MO 65101

Telephone No.: (573) 634-2500

Facsimile No.: (573) 634-3358

Attorneys for Plaintiffs/Respondents Rex A.

Sinquefield and Travis H. Brown


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TABLE OF CONTENTS

Table of Authorities ............................................................................................................ 4

Jurisdictional Statement ...................................................................................................... 5

Statement of Facts .............................................................................................................. 6

A. Background .......................................................................................................... 6

B. The Initiative Petition Fiscal Note ....................................................................... 6

C. The Initiative Petition Fiscal Note Summary ...................................................... 9

D. Sinquefield v. Kander ......................................................................................... 9

E. Sinquefield v. Kander Appeal ........................................................................... 10

Argument ........................................................................................................................... 11

Introduction ............................................................................................................ 11

Point I ................................................................................................................................ 12

THE TRIAL COURT DID NOT ERR IN FINDING THAT THE FISCAL NOTE

MUST BE REMANDED, BECAUSE THE FISCAL NOTE IS INSUFFICENT AND

UNFAIR IN THAT THE FISCAL NOTE INCLUDED THE DEPARTMENT OF

REVENUES UNREASONABLE SUBMISSION

A. The standard of review is de novo for questions of law and deference to thetrial court on contested issues of fact ................................................................ 12

B. Facts determined by the trial court which should be given deference by thiscourt .................................................................................................................. 14

C. The inclusion of the Department of Revenues submission makes the FiscalNote insufficient and unfair .............................................................................. 14


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Point II ............................................................................................................................... 18

THE TRIAL COURT DID NOT ERR IN FINDING THAT THE FISCAL NOTE

SUMMARY MUST BE REMANDED, BECAUSE THE FISCAL NOTE

SUMMARY IS INSUFFICENT AND UNFAIR IN THAT THE FISCAL NOTE

SUMMARY FAILED TO REFLECT THE NUMBERS IN THE ELLINGER

SUBMISSION AND IMPROPERLY SUGGESTED THAT THE FISCAL IMPACT

COULD BE POSITIVE

A.The Standard of Review is de novo for questions of law and deference to thetrial court on contested issues of fact ................................................................ 18

B. Facts determined by the trial court which should be given deference by thiscourt .................................................................................................................. 20

C. The Auditor does not have the discretion to consider arguments made at trialbased on information not in the record before him when drafting the Fiscal

Note and Fiscal Note Summary ........................................................................ 21

D.The Ellinger Submission is not speculative ...................................................... 25E. The Trial Court correctly determined that the Fiscal Note Summary must

reflect the numbers in the Ellinger Submission ................................................ 26

F. The Trial Court correctly determined that the Fiscal Note Summary mustreflect the numbers in the Ellinger Submission ................................................ 27

Conclusion ........................................................................................................................ 29

Certificate of Compliance with Rule 84.06(b) and (c) ..................................................... 31

Certificate of Service ........................................................................................................ 32


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TABLE OF AUTHORITIES

Brown v. Carnahan, 370 S.W.3d 637 (Mo. banc 2012) ............................ 21, 22, 23, 24, 27

Buchanan v. Kirkpatrick, 615 S.W.2d 6 (Mo. banc 1981) ................................................ 16

Essex Contracting Inc. v. Jefferson Cnty., 277 S.W.3d 647 (Mo. banc 2009) ............ 13, 19

Missouri Municipal League v. Carnahan,303 S.W.3d 573 (Mo. App. W.D. 2010) ........ 28

Moore v. Bi-State Dev. Agency, 132 S.W.3d 241 (Mo. banc 2004) ............................ 13, 19

Murphy v. Carron, 536 S.W.2d 30 (Mo banc. 1976) ............................................ 12, 13, 19

Safeco Ins. Co. of America v. Stone & Sons, Inc. 822 S.W.2d 565 (Mo. App. E.D. 1992) ..

..................................................................................................................................... 13, 20

White v. Director of Revenue, 321 S.W.3d 298 (Mo. banc 2010) ............. 12, 13, 14, 18, 19

Section 116.175, RSMo ..................................................................................................... 21

Section 116.175.1, RSMo .................................................................................................. 21

Section 116.180, RSMo ....................................................................................................... 6

Section 116.190, RSMo ................................................................................................... 5, 9

Section 116.190.4, RSMo .................................................................................................... 5

Section 116.334, RSMo ....................................................................................................... 6

Section 477.070, RSMo ....................................................................................................... 5

Mo. Const. art. V, 3 .......................................................................................................... 5


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JURISDICTIONAL STATEMENT

This appeal was filed regarding a Final Judgment of the Circuit Court of Cole

County, Judge Beetem, holding that the Fiscal Note and Fiscal Note Summary of the

State Auditor for Initiative Petition No. 2014-032, filed by Todd S. Jones, was unfair and

insufficient and remanding such Fiscal Note and Fiscal Note Summary to the State

Auditor. The underlying action was filed under Section 116.190, RSMo, and the appeal

was taken under Section 116.190.4, RSMo.

This case does not raise any of the claims or issues that vest jurisdiction in the

Supreme Court and thus such appeal is in the jurisdiction of the Court of Appeals. Mo.

Const. art. V, 3.

Since this case arises out of the Circuit Court of Cole County, jurisdiction is

vested in the Western District of the Court of Appeals. 477.070, RSMo.


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STATEMENT OF FACTS

A. Background

On May 3, 2013, Todd S. Jones submitted a sample sheet to Defendant Kander for

an initiative petition regarding campaign contribution limitations (hereafter Initiative

Petition.).1 (Legal File 303-12) (hereinafter L.F. _____). On May 6, 2013,

Defendant Kander sent the initiative petition to the State Auditor for preparation of a

Fiscal Note and Fiscal Note Summary. (L.F. 314). On May 28, 2013, the State Auditor

sent his Fiscal Note Summary for the Initiative Petition to Missouri Attorney General

Christopher Koster for review and approval pursuant to Section 116.334, RSMo. (L.F.

317). On June 7, 2013, Attorney General Koster sent Opinion Letter No. 36-2013 to

Defendant Kander, approving the legal content and form of the Fiscal Note and Fiscal

Note Summary. (L.F. 386). On June 12, 2013, Defendant Kander certified the official

ballot title of the Initiative Petition (Official Ballot Title) pursuant to Section 116.180,

RSMo. (L.F. 389).

B. The Initiative Petition Fiscal Note

The Fiscal Note prepared by the State Auditor contained submissions from a

number of state entities, including the Department of Revenue. (L.F. 318-23). It also

! Appellants Statement of Facts contains extensive argument and matters beyond therecord in this case (including citations to editorial pages and allegations with no factual

support). Pursuant to Rule 84.04(f), Respondents submit this Statement of Facts in

compliance with Rule 84.04(c).


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included several submissions from local government entities and educational institutions.

(L.F. 321) Finally, the Fiscal Note contained a submission by an opponent of the

proposed measure, Marc H. Ellinger (the Ellinger Submission) (L.F. 323-383).

The Fiscal Note includes the following response attributed to the Department of

Revenue:

[T]he Department of Revenue indicated this initiative petition will have no impact

on their department. The officials indicated they had no way of measuring the

proposals [sic] economic impact.

(L.F. 320). This language in the Fiscal Note is the Auditors summary of the following

exchange:

State Auditors Office (SAO): [P]lease also comment on the revenue impact to

the state in the attached proposed statement of fiscal impact

Department of Revenue (DOR): While we have no expertise in the area of the

impacts of campaign spending.This will not impact the Department of

Revenue.

SAO: You do not think the proposal will impact revenue to the state?

DOR: We would have no way of measuring the economic impact it may generate.

SAO: The submission is projecting a decrease in state revenue not an increase.

DOR: Im sorry. I meant that any campaign spending would generate.

(L.F. 429-30).

The Fiscal Note also includes the Ellinger Submission which contained estimates

of fiscal impact to both state and local entities. (L.F. 323-83). The State Auditors


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official representative, Jon Halwes, testified that the data in the Ellinger Submission was

supported by verifiable source citations. (Transcript 47:16 - 48:19) (hereinafter Tr.

_____). The Auditor found, as did the trial court, that the Ellinger Submission was

complete and reasonable. (L.F. 612).

With respect to the costs associated with lost revenue to state entities, the only

substantive responses received by the Auditor were from Marc Ellinger and the

Department of Revenue. (L.F. 320, 323-83). The Ellinger Submission indicated a

negative impact to the state based on lost state income tax, corporate income tax, and

state sales tax of more than $7.3 million dollars. (L.F. 330-31). The Department of

Revenue, as described above, only indicated they would have no way of measuring the

economic impact. (L.F. 429-30). After being given the Ellinger Submission to review

prior to their response, the Department of Revenue indicated that it was unable to

independently measure the economic impact. (L.F. 429-30). No submission

contradicted or conflicted with the numbers in the Ellinger Submission. (Tr. 48:2 -

54:11). No submission suggested that there would be a positive impact on state

governmental entities. (L.F. 318-83; Tr. 55:19-22). The Auditor summarized such impact

as follows: Any potential impact to revenues for state governmental entities is

unknown. (L.F. 380).

With respect to the costs associated with lost revenue to local entities, the only

responses received by the Auditor were from Marc Ellinger, the City of Columbia, the

City of Jefferson, the City of Kansas City and the City of Raymore. (L.F. 321, 323-83).

The City of Jefferson, the City of Kansas City and the City of Raymore responses stated:


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no impact. (L.F. 32). The City of Columbia stated it is impossible for the city to

determine if this would increase or decrease contributions[.] (L.F. 321). The Ellinger

Submission indicated a more than $1.2 million dollar impact on local governments as a

result of lost earnings taxes and lost sales taxes. (L.F. 331-32). No submission suggested

that there would be a positive impact on local governmental entities. (Tr. 96:9-11). The

Auditor summarized these responses in his summary as follows: Any potential impact

to revenues forlocal governmental entities is unknown. (L.F. 380).

C. The Initiative Petition Fiscal Note Summary

The Fiscal Note Summary of the Official Ballot Title of the Initiative Petition

(Fiscal Note) reads:

It is estimated this proposal will increase state government costs by at least

$118,000 annually and have an unknown change in costs for local government

entities. Any potential impact to revenues for state and local governmental entities

is unknown.

(L.F. 380).

D. Sinquefield v. Kander

Respondents Sinquefield and Brown filed a lawsuit challenging the ballot title for

Initiative Petition 2014-032 on December 30, 2011. (L.F. 6-37). The lawsuit named

Secretary of State Jason Kander and State Auditor Thomas Schweich as the Defendants,

pursuant to Section 116.190, RSMo. (L.F. 6-37).


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On August 16, 2013, Appellants Todd S. Jones and Missouri Roundtable For Life

filed a Motion to Intervene as Party Defendants. (L.F. 101-05). The Motion was granted

and Respondents/Intervenors Answer was filed. (L.F. 106-21).

On October 15, 2013 Respondents Sinquefield & Brown filed a Motion for Partial

Summary Judgment and Suggestions in Support thereof (L.F. 3; 192-200) with respect to

the Secretarys Summary Statement. Defendant Kander filed a Response and

Memorandum in Opposition on October 22, 2013. (L.F. 3).

Defendant Kander, Respondents Sinquefield and Brown, and Intervenors filed

Pre-Trial Briefs on October 18, 2013. (L.F. 236-99). On October 21, 2013, a Joint

Stipulation of Facts and Exhibits was filed. (L.F. 300-577).

On October 23, 2013 the court heard evidence, including the testimony of Jon

Halwes as representative of the State Auditor, and arguments by the parties on all

pending claims and took the case under advisement. (L.F. 4). On November 26, 2013,

the trial court entered judgment ruling that (1) the Fiscal Note and Fiscal Note Summary

are insufficient and unfair; (2) the Secretarys summary statement is fair and sufficient

and (3) Plaintiffs constitutional claims in Count IV, V, and VI are not ripe. (Appendix to

Appellants Brief at A18-19).

E.Sinquefield v. KanderAppeal

On November 27, 2013, Appellants filed a Notice of Appeal. (L.F. 5). Appellants

filed their Brief on December 10, 2013.


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ARGUMENT

INTRODUCTION

Appellants raise two points on appeal, the first being that the trial court erred in

holding that the Fiscal Note was insufficient and unfair and the second being the trial

court erred in holding the Fiscal Note Summary was insufficient and unfair.

With respect to their first point, Appellants claim that the Department of

Revenues submission was reasonable and properly included in the Fiscal Note. Related

to their second point, Appellants claim: (1) the Auditor properly exercised discretion in

determining the Ellinger Submission was speculative and assigning it less weight, (2) the

Ellinger Submission was speculative based on the submission itself, (3) the court erred in

holding that the Fiscal Note Summary should include the Ellinger Submission numbers,

and (4) the court erred in holding the Fiscal Note Summary should include the word

negative.

Neither point raised by Appellants is supported by the facts or the applicable law.

The trial court was correct in its ruling that the Fiscal Note and Fiscal Note Summary

were both unfair and insufficient and should be remanded to the State Auditor for a new

Fiscal Note and Fiscal Note Summary.

This Court should affirm the Judgment.


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I.

THE TRIAL COURT DID NOT ERR IN FINDING THAT THE

FISCAL NOTE MUST BE REMANDED, BECAUSE THE FISCAL

NOTE IS INSUFFICENT AND UNFAIR IN THAT THE FISCAL

NOTE INCLUDED THE DEPARTMENT OF REVENUES

UNREASONABLE SUBMISSION.

(Responds to Appellants Brief Point I)

The trial court correctly found that the Auditor included in the Fiscal Note a

response from the Department of Revenue which was unreasonable. The trial courts

determination was based on facts adduced at trial. Appellants bear a heavy burden to

show that the trial court erred based on fact issues. They have not carried this burden and

thus the trial court should be affirmed.

A. The standard of review is de novo for questions of law and deference to the trial

court on contested issues of fact

The applicable standard of review for appeals of court-tried civil cases is found in

White v. Dir. of Revenue, 321 S.W.3d 298, 307-08 (Mo. banc 2010). The judgment of the

trial court will be affirmed !unless there is no substantial evidence to support it, it is

against the weight of the evidence, or it erroneously declares or applies the law."Id.at

307-08 (citingMurphy v. Carron, 536 S.W.2d 30, 32 (Mo banc. 1976)).

The determination of the court, as to whether the Auditor#s Fiscal Note and Fiscal

Note Summary was insufficient or unfair was, in part, a determination of law. This Court

applies de novo review to questions of law decided in court-tried cases. Id. at 308.


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Questions of law are reviewed !independently [and] without deference to [the trial

court#s] conclusions."Moore v. Bi-State Dev. Agency, 132 S.W.3d 241, 242 (Mo. banc

2004).


Note Summary was insufficient or unfair was, in part, a determination of contested fact.

Evidence is contested when one !dispute[s] a fact in any matter." White, 321 S.W.3d at

308. A factual issue is contested when a party presents contradictory or contrary

evidence, through cross-examination, through pointing out internal inconsistences in the

evidence.Id. The role of the appellate court is not to !re-evaluate testimony through its

own perspective"but rather, the court !confines"itself to the standard set forth inMurphy

v. Carron. Id at 309. !Appellate courts defer to the trial court on factual issues $because it

is in a better position not only to judge the credibility of witnesses and the persons

directly, but also their sincerity and character and other trial intangibles which may not be

completely revealed by the record." Id. at 308-09 (quoting Essex Contracting Inc. v.

Jefferson Cnty., 277 S.W.3d 647, 652 (Mo. banc 2009)). In addition, fact issues without

specific findings in the judgment are considered on appeal as being found in accordance

with the result reached (here that the fiscal note and fiscal note summary are insufficient)

and this court will affirm the trial court#s judgment if it is correct on any reasonable

theory supported by the evidence. Safeco Ins. Co. of America v. Stone & Sons, Inc. 822

S.W.2d 565 (Mo. App. E.D. 1992).


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B. Facts determined by the trial court which should be given deference by

this court

The trial court found, from the response of the Department of Revenue itself, (1)

that the Department had not reviewed the submission sent by the Auditor and (2) that the

Department did not understand the Auditors request. (L.F. 620). As a result of these

facts, the trial court stated the finding by Mr. Halwes that the response was reasonable

was not supported. (L.F. 620). Such facts were still !contested"as described in White,

and therefore this Court should defer to the trial court#s determination of such facts.

C. The inclusion of the Department of Revenues submission makes the Fiscal Note

insufficient and unfair

Appellants claim that the Departments statement was clear that they would

have no way of measuring the economic impact that any campaign spending would

generate. Appellants Brief, p. 19. The Departments statements show just what the trial

court concluded, that the Department had not reviewed the Ellinger Submission and they

did not understand the request. The Department stated (after supposedly having time to

review the Ellinger Submission): We would have no way of measuring the economic

impact it would generate. (L.F. 429-30). The Auditor was forced to respond, because

the submission the Auditor sent in no way indicated that the proposed measure would in

any way generate revenue. The Auditor clarified, The submission is projecting a

decrease in state revenue not an increase. Id. The Department replied, I meant that any

campaign spending would generate. Id. Not only is this confusing, it does not respond

to the original question of the Auditor: You do not think the proposal will impact


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revenue to the state? There exists no possibility that the Department of Revenue could

have reviewed the Ellinger Submission and believed it had suggested that the proposed

measure would generate revenue. In addition, the Department did not understand the

Auditors request regarding impact [to] revenue of the state when it answered regarding

campaign spending.

Appellants claim the fact the Department of Revenue did not review the Ellinger

Submission is legally irrelevant. Respondents agree that the Auditor is not required to

forward a submission to any government entity or compel submission from certain

entities. But the fact remains that the Auditor did forward a submission to the

Department of Revenue and follow up with them about such submission. While the

Department of Revenue generally has no duty to review another submission, the fact

remains that it responded in a manner which was intended to lead the Auditor to believe it

had reviewed such submission. The Auditor could assign more or less weight to the

Departments response of no impact or unknown impact based on whether or not the

Department had the opportunity to review another submission that suggested something

different.

The Auditor summarized the Departments response as The officials indicate they

had no way of measuring the proposals impact. This statement is an incorrect synopsis

of the communications from the Department of Revenue because the Department had not

reviewed what was sent and because the Department did not understand the Auditors

request.


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Appellants claim that the email exchange between the Department of Revenue and

the Auditor shows that the Department did, in fact, review the Ellinger Submission.

Their basis for the argument is (1) that the Department stated it reviewed such document

and (2) that some amount of time passed between the Auditors request and the

Departments response. Nothing about the passage of time suggests the Department

actually reviewed the submission. And while there might not be any evidence that the

Department was purposefully or maliciously lying to the Auditor, the substance of the

Departments response makes abundantly clear they had not reviewed the Ellinger

Submission.

Appellants claim that the Final Judgment contradicts the Courts holding, but the

trial courts description of the Department of Revenues response is of no consequence to

whether the Fiscal Note itself was insufficient or unfair.

Appellants additionally claim that it makes no difference if the Revenue officials

had misunderstood the Auditors request. This is untrue. Missouri courts have long

recognized that procedural safeguards, both those in the Constitution and those created by

the legislature, are important and necessary in the initiative petition process for two

reasons: "(1) to promote an informed understanding by the people of the probable effects

of the proposed amendment; or (2) to prevent a self-serving faction from imposing its

will upon the people without their full realization of the effects." Buchanan v.

Kirkpatrick, 615 S.W.2d 6, 11(Mo. banc 1981). The Auditors inclusion of the

Department of Revenues statement in the Fiscal Note is for the purpose of promot[ing]

an informed understanding by the people of the probable effects of the proposed


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amendment. If the language in the Fiscal Note is an incorrect summary of what the

Department actually communicated, or is based on a misunderstanding between the

Auditor and the Department of Revenue, then the language in the Fiscal Note no longer

promotes such informed understanding by the people. It actually serves to mislead the

people about the probable effects of the proposed amendment, and therefore, renders the

Fiscal Note insufficient and unfair.

Appellants Point I should be denied.


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II.

THE TRIAL COURT DID NOT ERR IN FINDING THAT THE

FISCAL NOTE SUMMARY MUST BE REMANDED, BECAUSE

THE FISCAL NOTE SUMMARY IS INSUFFICENT AND UNFAIR

IN THAT THE FISCAL NOTE SUMMARY FAILED TO REFLECT

THE NUMBERS IN THE ELLINGER SUBMISSION AND

IMPROPERLY SUGGESTED THAT THE FISCAL IMPACT

COULD BE POSITIVE.

(Responds to Appellants Brief Point II)

The trial court correctly found that the Fiscal Note Summary should not have left

open the possibility of a positive impact to state or local revenues, a conclusion that was

not supported by the record before the Auditor. In addition, the trial court correctly

found that there was nothing in the record before the Auditor to support a conclusion that

the numbers in the Ellinger Submission were speculative and allow the Auditor to give

such submission less weight. The trial courts determination was based on facts adduced

at trial. Appellants bear a heavy burden to show that the trial court erred based on fact

issues. They have not carried this burden and thus the trial court should be affirmed.

A. The Standard of Review is de novo for questions of law and deference to the trial

court on contested issues of fact

The applicable standard of review for appeals of court-tried civil cases is found in

White v. Dir. of Revenue, 321 S.W.3d 298, 307-08 (Mo. banc 2010). The judgment of the

trial court will be affirmed !unless there is no substantial evidence to support it, it is


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against the weight of the evidence, or it erroneously declares or applies the law."Id.at

307-08 (citingMurphy v. Carron, 536 S.W.2d 30, 32 (Mo banc. 1976)).


Note Summary was insufficient or unfair was, in part, a determination of law. This Court

applies de novo review to questions of law decided in court-tried cases. Id. at 308.

Questions of law are reviewed !independently [and] without deference to [the trial

court#s] conclusions."Moore v. Bi-State Dev. Agency, 132 S.W.3d 241, 242 (Mo. banc

2004).

The determination of the court as to whether the Auditor#s Fiscal Note and Fiscal

Note Summary was insufficient or unfair was, in part, a determination of contested fact.

Evidence is contested when one !dispute[s] a fact in any matter." White, 321 S.W.3d at

308. A factual issue is contested when a party presents contradictory or contrary

evidence, through cross-examination, through pointing out internal inconsistences in the

evidence.Id. The role of the appellate court is not to !re-evaluate testimony through its

own perspective"but rather, the court !confines"itself to the standard set forth inMurphy

v. Carron. Id at 309. !Appellate courts defer to the trial court on factual issues $because it

is in a better position not only to judge the credibility of witnesses and the persons

directly, but also their sincerity and character and other trial intangibles which may not be

completely revealed by the record." Id. at 308-09 (quoting Essex Contracting Inc. v.

Jefferson Cnty., 277 S.W.3d 647, 652 (Mo. banc 2009)). In addition, fact issues without

specific findings in the judgment are considered on appeal as being found in accordance

with the result reached (here that the fiscal note and fiscal note summary are insufficient)


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and this court will affirm the trial court#s judgment if it is correct on any reasonable

theory supported by the evidence. Safeco Ins. Co. of America v. Stone & Sons, Inc. 822

S.W.2d 565 (Mo. App. E.D. 1992).

B. Facts determined by the trial court which should be given deference by

this court

The trial court made a factual finding that the only substantive responses regarding

impact to local government entities were the Ellinger Submission and the submission

from the City of Columbia. (L.F. 620). Columbia stated that it was impossible to

determine whether the proposed measure would increase or decrease contributions. Id.

The data in the Ellinger Submission showed more than a $1.2 negative fiscal impact on

local government entities as a result of lost tax revenues. Id. The trial court found that

the data was supported by verifiable source citations based on the testimony of Mr.

Halwes. Id. The trial court also found no submission indicated a positive impact to local

governmental entities. Id.

The trial court found the only responses regarding state revenue impact were the

Ellinger Submission and the submission from the Department of Revenue. (L.F. 621).

The data in the Ellinger Submission showed more than a $7.3 million dollar loss to state

revenues as a result of lost state income tax, corporate income tax, and state sales tax. Id.

The Department of Revenue only indicated they would have no way of measuring

economic impact and the trial court found its response to be unreasonable. Id. The trial

court found that the Department of Revenues response did not cast doubt on any of the

underlying assumptions in the Ellinger Submission. Id.This Court should defer to the


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trial court#s determination of such facts.

C. The Auditor does not have the discretion to consider arguments made at

trial based on information not in the record before him when drafting the Fiscal

Note and Fiscal Note Summary

Appellants argue that that the word assess in Section 116.175.1, RSMo, gives

the Auditor the discretion to review an opponents submission, determine whether it is

speculative, and if so, give it less weight when preparing a fiscal note summary. To

the contrary, Section 116.175, RSMo, dictates that the Auditor must rely on the

information in the record before him when preparing the Fiscal Note Summary. The

Auditor has previously taken this position, and this position has been upheld by the

Missouri Supreme Court.2

In Brown v. Carnahan, 370 S.W.3d 637, 649 (Mo. banc 2012), the Missouri

Supreme Court determined the Auditor is conducting an investigation when preparing a

fiscal note and fiscal note summary. The Court explained that the process is an official

inquiry performed to statutory directive. Id. The court closely examined the Auditors

2SeeBrown v. Carnahan, 370 S.W.3d 637, 649 (Mo. banc 2012) (The Auditor argued

that he was not required to look beyond the record before him when preparing a fiscal

note and fiscal note summary and that even if the later adduced information about fiscal

impact was true, because it was not part of the record before him, it was appropriately

absent from the Fiscal Note and Fiscal Note Summary. The Missouri Supreme Court

agreed.).


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process and procedures. With respect to the process, the court stated:

The auditor does not analyze or evaluate the correctness of the returned fiscal

impact submissions. Rather, he or she examines the submissions, to determine

whether they appear complete, are relevant, have an identifiable source and are

relevantWith respect to reasonableness, the auditor examines the submission to

establish whether it address or diverges from the particular issue.

Id. (emphasis added). Appellants would like to have the Auditor conduct independent

research, or analysis, or double-check the theories and assumptions in the Ellinger

Submission. But, according to the Missouri Supreme Court, this is not the Auditors

role.3

The Missouri Supreme Court continued to explain the process: The auditor then

drafts the fiscal note and fiscal note summary based solely on the responses he or she

receives. Id. at 649. Appellants would like the Auditors fiscal note summary to reflect

the attacks on the Ellinger Submission present in their Pre-Trial Brief (L.F. 273-74). The

fundamental flaw with this argument is that such attacks were not part of any of the

responses the Auditor received when preparing the fiscal note and fiscal note summary.

Such attacks were only made many months later, just days before trial, and thus cannot

be a factor in the Fiscal Note or Fiscal Note Summary underBrown.

"The Appellants themselves could have made a submission to the State Auditorsuggesting the Ellinger Submission is speculative, but they chose not to do so.


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In Brown, the Auditor conceded that he conducts no independent research or

analysis regarding the fiscal impact of a proposed initiative. Id. Appellants suggest that

the Auditor was justified in discounting the Ellinger Submission based on the

assumptions contained in the submission itself. Again, the grounds for questioning such

assumptions were not brought to light until many months following the Auditors actual

preparation of the summary, and come directly from Appellants Pre-Trial Brief, which

was not before the Auditor when he was drafting the Fiscal Note Summary. The

Missouri Supreme Court made clear inBrown:

The auditor is not required to compel and second-guess reasonable submissions

from entities but is able to rely on the responses submitted. Nor should the auditor

wade into the policy debates surrounding initiative petitions, which an

independent investigation would entail.It is not the auditors role to choose a

winner among those opposing viewpoints by independently researching the issue

himself [and] double-checking economic theories and assumptions[.]

Id.at650. Now, Appellants assert that there were reasonable grounds for the Auditor to

double-check the assumptions in the Ellinger Submission, find them speculative, and give

the submission less weight. But according to the Missouri Supreme Court, double-

checking economic theories and assumptions is not the auditors role. Id. Proponents

could have submitted information related to the assumptions in the Ellinger Submission

but failed to do so. They cannot now use additional information which was not in the

record before the Auditor to attempt to save or justify, after-the-fact, an insufficient and

unfair Fiscal Note Summary.


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This case is nearly identical to one of the initiative cases (the Payday Loan

Initiative) at issue inBrown. In that case, an economist testified at trial about the effect

of the initiative on 510 lenders and how the Fiscal Note and Fiscal Note Summary did

not include the fiscal impact on these lenders. Id. at 666. The trial court in that case ruled

that the Fiscal Note was insufficient for not reflecting the impact on 510 lenders. Id.

The Missouri Supreme Court pointed out, The economist admittedthat his trial

testimony evidenced fiscal impact information on 510 lenders that was not provided to

the auditor during the time the auditor was preparing the fiscal note and fiscal note

summary. Id. The Missouri Supreme Court, in reversing the decision of the trial court

and finding the Fiscal Note and Fiscal Note Summary to be fair and sufficient, stated:

The auditor did nothing out of his ordinary practice when incorporating verbatim

the fiscal impact submissions that were returned to him, and the initiative

opponents are unpersuasive in suggesting that the auditor should have undertaken

additional examinations of the fiscal impacts that the initiative would have

specifically on 510 lenders[the Auditor need not] look beyond the information

he was provided in assessing the fiscal impact on those lenders.

Id. at 666-67. Here, Appellants suggest that the Auditor should complete additional

examinations related to the fiscal impact of the measure. Appellants want the Auditor to

look beyond the submissions that were returned to him in order to find the Ellinger

Submission speculative. This is not within the normal procedures of the Auditor, not part

of the process that has been approved by Missouri courts, and not within the Auditors

discretion.


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D. The Ellinger Submission is not speculative

The alleged speculative nature of the Ellinger Submission is not evident from

the submission itself as Appellants argue. The nine points in Appellants Brief (p. 28-

32), which Appellants claim are the basis for Halwes finding the submission

speculative, are taken directly from their Pre-Trial Brief and were essentially read into

the trial testimony by counsel for Appellants. Mr. Halwes admissions at trial that certain

assumptions were not justified is not the same as him reviewing the submission and at the

time of drafting the Fiscal Note Summary, it being immediately apparent that the

numbers in such submission were somehow inaccurate, unjustifiable, or incomplete.

Quite the opposite, Mr. Halwes did not find the Ellinger Submission

unreasonable, irrelevant, or inaccurate. (L.F. 396). Moreover, Mr. Halwes found

the data in the submission was attributable to verifiable source citations. (Tr. 47:16-

48:19). Mr. Halwes reviewed the references and articles cited. (Tr. 47:20-22). He

reviewed the projections in the Ellinger Submission and found no submissions that

contradicted the projections therein. (Tr. 47:24-48:4). Mr. Halwes testified he reviewed

the data related to the negative impact to revenues and that he had nothing from the other

submissions to contradict such data. (Tr. 54:15-24). On the record before the Auditor

and information available to him at the time he was preparing the Fiscal Note and Fiscal

Note Summary, there were no grounds for him to find the Ellinger Submission

speculative. The trial court expressly found that the Auditor had no basis for finding

the Ellinger Submission speculative. (L.F. 622).


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E. The Trial Court correctly determined that the Fiscal Note Summary must

reflect the numbers in the Ellinger Submission

First, it should be clarified that the trial court did not hold that the Summary must

include the specific numbers in the Ellinger Submission. The trial court stated that the

numbers from such submission should be reflected in the summary. (L.F. 623). This

can be accomplished in a number of ways besides simply stating the specific numbers

from the submission. In the past, the Auditor has (1) included a range of numbers or (2)

included a lower or upper end estimate to provide potential signors and voters

information about the possible effects of the initiative. The Fiscal Note, as it stands,

completely disregards the numbers in the Ellinger Submission. This is insufficient and

unfair, in light of the Auditors finding that the submission was not unreasonable,

irrelevant, or inaccurate.

Appellants take issue with reasons for the trial courts holding that Mr. Halwes

had no basis for finding the Ellinger Submission speculative. The trial court was

attempting to find a basis, any basis, for Mr. Halwes conclusion that the Ellinger

Submission was speculative. The three possible bases for such a conclusion are: (1)

from another submission contradicting or questioning the Ellinger Submission; (2) some

other source of information or research available to the Auditor; or (3) Mr. Halwes own

knowledge about economics and the matters at issue.

Appellants argue that the Auditor does not need a separate submission to find the

Ellinger Submission speculative and that the Auditor has the discretion to give a

submission less weight when the Auditor finds the submission unreasonable.


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Appellants Brief at 34. But those facts were not before the trial court. Mr. Halwes did

not find the Ellinger Submission unreasonable, irrelevant, or inaccurate. (L.F.

396).4 As a result, he was not entitled to accord the Ellinger Submission less weight.

Appellants misconstrue the trial courts justification for its findings. They argue

that Halwes was not required to conduct any additional research, and therefore this

cannot be grounds for the courts decision. The trial court is simply stating that the

Auditor conceded he did not conduct any independent research on the economic impact

and therefore such independent research could not be a basis for finding the Fiscal Note

speculative.

Similarly, the Missouri courts have recognized from time to time that the Auditor

can rely on his own knowledge (for example, about state government) in making

determinations regarding the Fiscal Note Summary. Brown v. Carnahan, 370 S.W.3d

637, 649 (Mo. banc 2012). Mr. Halwes conceded at trial that he has no knowledge with

respect to the information contained in the Ellinger Submission regarding campaign

finance and therefore the trial court ruled out the Halwes knowledge as a basis for

finding the submission speculative. (L.F. 622).

F. The Trial Court correctly determined that the Fiscal Note Summary must

reflect the numbers in the Ellinger Submission

The trial court did not err in finding that the Fiscal Note Summary should have

included the word negative. Appellants allege that this finding constitutes just the sort

of micro-parsing that this Court has repeatedly rejected. Quite the opposite, without the

#In fact, Mr. Halwes expressly found the submission to be reasonable. (L.F. 396).


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word negative in the Fiscal Note Summary the summary misleads potential signors and

voters to the conclusion that the impact of the proposed measure could be positive, when

it most certainly will not. Adding the word negative to the Summary is not about

finding the best language, but rather about finding language that will not mislead the

public.

Appellants rely onMissouri Municipal League v. Carnahan,303 S.W.3d 573 (Mo.

App. W.D. 2010). That case is not on point. Plaintiffs argued the trial court erred in

affirming the fiscal note summary because the summary suggested a potential savings

when no entity reported a savings would result. The Court found that several entities

indicated the costs or savings was unknown or provided conditional responses. Id. at

583. The Auditor testified he interpreted the responses to mean there could be indirect

costs or savings at some point in time. Id. Therefore, the Auditors summary that costs or

savings is unknown was a fair indication to the voters of the responses received. Id.

Here, there were not several submissions indicating unknown costs or savings or

providing conditional responses. As described herein, the Auditor had no basis for

suggesting to potential signors or voters that the proposed measure could result in

savings.

Finally, Mr. Halwes testimony with respect to the speculative nature of the

Ellinger Submission was not based on anything in the record before him when preparing

the Fiscal Note Summary. Mr. Halwes had no basis for finding that such submission was

speculative and therefore no basis for finding the submission failed to establish that

the impact on state and local revenues would necessarily be negative. The only thing


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Mr. Halwes even questioned at the time of preparing the Fiscal Note and Fiscal Note

Summary, was whether contributions would be 27 percent of what they would have been

without the law change. Tr. 58:16-21. None of the other testimony elicited from Mr.

Halwes at trial, through cross examination by Appellants, was identified as an issue with

the Ellinger Submission at any time prior to the trial itself. For example, Appellants now

claim that smaller contributors might become more prolific and total money in politics

would not be affected by the proposed measure, but proponents did not make such a

claim, much less provide any evidence of such a claim to the Auditor during the Fiscal

Note and Fiscal Note Summary preparation. Tr. 91: 11-14.

Mr. Halwes had no support or authority in his own experience or knowledge base,

from any research, or from any other submissions for questioning the 27 percent

calculation. Halwes testified that he reviewed the numbers in the Ellinger Submission

and could find and received no conflicting information. Therefore, the Auditors

conclusion must be based on the reasonable information which was submitted to him

which was that the proposal would have negative impact on both state and local

government entities.

Appellants Point II should be denied.

CONCLUSION

The trial court correctly found that the Fiscal Note and Fiscal Note Summary are

insufficient and unfair. The trial court did not err in finding that the Fiscal Note must be

remanded because the Fiscal Note included the Department of Revenues unreasonable

submission. The trial court did not err in finding that the Fiscal Note Summary must be


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remanded because the Fiscal Note Summary failed to reflect the numbers in the Ellinger

Submission and improperly suggested that the fiscal impact could be positive.

Respondents Rex A. Sinquefield and Travis H. Brown respectfully request that this Court

affirm the Judgment of the Circuit Court.

Respectfully submitted,

BLITZ, BARDGETT & DEUTSCH, L.C.

By: \s\ Marc H. Ellinger_____________Marc H. Ellinger, #40828Stephanie S. Bell, #61855

308 East High Street, Suite 301Jefferson City, MO 65101Telephone: 573/634-2500Facsimile: 573/634-2500E-mail: [email protected]: [email protected]


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CERTIFICATE OF SERVICE

The undersigned certifies that a true and accurate copy of the foregoing Brief ofIntervenors/Respondents was filed electronically on December 24, 2013, to be served byoperation of the Courts electronic filing system upon the following registered users:

Stephen Robert ClarkD. John SauerClark & Sauer, LLC7733 Forsyth Boulevard, Suite 625St. Louis, MO 63105E-mail: [email protected]:[email protected] for Intervening DefendantsMissouri Roundtable for Life and Todd S. Jones

Jeremiah J. MorganDeputy Solicitor GeneralJonathan M. HensleyAssistant Attorney GeneralP.O. Box 899Jefferson City, MO 65102-0899E-mail:[email protected] for Secretary of State Kander

Darrell L. MooreChief Litigation CounselMissouri State Auditors Office301 West High Street, Suite 880Jefferson City, MO 65101E-mail: [email protected] for Auditor Schweich

\s\ Marc H. Ellinger___________Marc H. Ellinger

rex sinquefield brief

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