Americans for Prosperity Foundation v. Rodriquez

EXACTING SCRUTINY VERSUS STRICT SCRUTINY

Petitioners AFP and Thomas More Law Center (the “Center”) argue that the Supreme Court should apply strict scrutiny when reviewing California’s compulsory disclosure rule because charitable donors maintain a legitimate expectation of privacy. Brief for Petitioner, Thomas More Law Center at 23. They contend that a line of cases dealing with compulsory disclosure of private associational membership lists—beginning with NAACP v. Alabama—serves as clear precedent for why compelled disclosure rules that potentially impinge on free association should be subjected to the most stringent form of judicial review. Id. at 24, 26; see also Brief for Petitioner, Americans for Prosperity Foundation at 22. Along those lines, the Center maintains that California’s asserted interest—government efficiency—is not a “compelling” state interest and that no matter how tailored California’s regulation happens to be, it cannot be constitutional. Brief for Center at 30, 36. As to the second prong of strict scrutiny review, both Petitioners posit that California did not narrowly tailor Schedule B to the purpose of identifying and prosecuting cases of charitable fraud. Brief for Center at 37; Brief for AFP at 34. AFP notes that better and more effective tools are available to California’s executive agencies to combat fraud, and thus the regulation’s tailoring is a bad “fit.” Brief for AFP at 35–36. Finally, Petitioners argue that the Ninth Circuit incorrectly fashioned a “sliding scale” approach to scrutiny, which allowed the Ninth Circuit panel to ignore the narrow tailoring requirement altogether. Brief for Center at 51; Brief for AFP at 27.

The Center argues that the limited exception to strict scrutiny for free association disclosure cases—the campaign disclosure exception outlined in Buckley—is inapposite on the facts to this case, making strict scrutiny the only appropriate test to apply. Brief for Center at 31. Petitioners allege that even were the Court to use the less demanding intermediate scrutiny standard, the disclosure requirement would fail that test as well because Schedule B is not substantially related to any bona fide interest California might have in policing charities. Brief for AFP at 31. Furthermore, the Center maintains that the nexus between the regulation and California’s policing purpose is so fragile as to render the overly broad mandate unconstitutional. Brief for Center at 43. Petitioners maintain that a broad, prophylactic measure affecting all charities in the state cannot be constitutional when California has less restrictive means to ferret out charitable fraud. Id. Petitioners also distinguish between the federal tax disclosure regulations mandated by the IRS and those at issue in this case; they argue the compulsory disclosure have a more direct relationship to speech and association than the tax regulations enforced by the IRS. Brief for Center at 54–56; Brief for AFP at 27–28.

Respondent Rodriquez argues that exacting scrutiny, rather than strict scrutiny, applies in this case. Brief for Respondent, Matthew Rodriquez at 19. Rodriquez contends that under Supreme Court precedent, if an organization has to report information about its donors to government regulatory authorities, exacting scrutiny applies. Id. Rodriquez points to NAACP v. Alabama ex rel. Patterson and Buckley in particular in support of that contention. Id. at 19–21. Rodriquez argues that NAACP’s rule does not fall into the clear delineations of rational basis review, intermediate scrutiny, and strict scrutiny that apply in other cases and that the government’s interest therefore only needs to meet the standard of “sufficient to justify,” not be “compelling” as in strict scrutiny. Id. at 21. Additionally, Rodriquez contends that the tailoring requirement of exacting scrutiny is the correct standard, relying on other cases where the Supreme Court declined to enact a stricter tailoring requirement. Id. at 24.

Furthermore, Rodriquez states that it is illogical for the Supreme Court to apply strict scrutiny to these reporting requirements. Id. at 22. Rodriquez argues that California’s reporting requirements do not compare to other situations where the Supreme Court applied strict scrutiny—such as cases involving restrictions on free speech based on content, or other cases that “directly impinged” on free speech rights—because “[n]onpublic reporting requirements are fundamentally different from the restrictions . . . subjected to strict scrutiny.” Id. Rodriquez points out that California’s reporting requirement does not “compel or prohibit any speech.” Id. at 23. Additionally, Rodriquez contends that the exacting scrutiny standard sufficiently protects the interests involved—thereby limiting California to enacting only requirements “that directly serve their regulatory objectives.” Id. at 22. Rodriquez argues that this standard also allows organizations to sue for an exemption in cases that could lead to certain kinds of harm. Id.

IS THIS LAW UNCONSTITUTIONAL ON ITS FACE OR AS APPLIED?

Petitioners object to the notion that the disclosure regulation is needed to prevent and combat charitable fraud; despite all states having that same interest, California is one of only two states that compel charities to make these sorts of disclosures. Brief for Center at 35; Brief for AFP at 35. Broad, prophylactic rules, petitioners argue, do not qualify as narrowly tailored means to prevent fraud. Brief for Center at 36; Brief for AFP at 31, 38. Furthermore, as evidence that the stated interest is not supported by the regulation, petitioners point out that California rarely used the disclosed information required by Schedule B to initiate or supplement enforcement actions over the past decade. Id.; see also Brief for AFP at 32–33.

Petitioners argue that the application of this regulation to their charitable activities impermissibly burdens their First Amendment right to association, as many of their anonymous charitable backers are political minorities. Brief for Center at 20; Brief for AFP at 40. AFP maintains that confidentiality is especially important in the digital age and that the threat of hacking makes the mass collection of charitable donor data even more dangerous than ever before. Id. at 40, 42. As many of those associating with Petitioners’ charities might face retaliation, Petitioners maintain that a core privacy right intermeshes with the association right. Brief for Center at 23; Brief for AFP at 47. Therefore, Petitioners argue that even if the regulation is held to be facially valid, an as-applied exemption is warranted because there is a reasonable probability of threats and reprisals. Brief for Center at 24; Brief for AFP at 40. If the disclosure regulation is enforced against them, Petitioners contend, their donors will be subject to the same kinds of harassment as their clients: death threats, boycotts, defamation, and assassination attempts, which meets the “reasonable probability” standard outlined in Buckley. Brief for Center at 46–48; Brief for AFP at 49–53.

Rodriquez argues that California’s disclosure requirement does not meet the standard for an as-applied exemption. Brief for Respondent at 47. Rodriguez argues that neither AFP nor the Center can establish that the donors face a reasonable probability of reprisal due to the disclosure by a few of the major donors. Id. at 47–49. Similarly, Rodriquez also points to the lack of evidence at trial that disclosure will actually result in charitable organizations receiving fewer donations. Id. at 49–51.

Additionally, Rodriquez contends that AFP and The Center failed to show that the requirement to submit a Schedule B places a burden on charities. Id. at 36. Rodriquez argues that charities already submit the information contained on Schedule Bs to the federal government, as well as on California tax returns, so an additional reporting requirement will not prevent people from donating. Id. at 37. Rodriquez also says that since California keeps Schedule Bs confidential and that many charities do not engage in controversial activities, there is no reason to worry that submitting Schedule Bs will have a chilling effect on donors or negatively affect the charities in other ways. Id. at 36–37. Rodriquez further posits that despite the data breaches, the errors were promptly fixed. Id. at 47. As such, Rodriquez concludes that there is no significant risk that AFP’s donor information will be released publicly in the future. Id. at 48. Thus, Rodriquez posits that AFP and The Center failed to make the requisite showing for an as-applied exemption to invalidate the disclosure requirements because AFP and the Center failed to “demonstrate a reasonable probability that California’s Schedule B reporting requirement would subject their donors to threats, harassment, or reprisals” and accordingly does not meet the threshold for an as-applied exemption. Id. at 53.