Sindicato Puertorriqueno v. Fortuno-Burset ( 2012 )

United States Court of Appeals
For the First Circuit
No. 12-2171
SINDICATO PUERTORRIQUEÑO DE TRABAJADORES, SEIU LOCAL 1996, UNIÓN
GENERAL DE TRABAJADORES DE PUERTO RICO, SEIU LOCAL 1199; SERVICE
EMPLOYEES INTERNATIONAL UNION; ALIANZA SEIU PUERTO RICO, INC.,
Plaintiffs, Appellants,
v.
LUIS FORTUÑO, in his official capacity as Governor of the
Commonwealth of Puerto Rico; PUBLIC SERVICE COMMISSION OF PUERTO
RICO; LAUDELINO F. MULERO CLAS, in his official capacity as
President of the Public Service Commission; OFFICE OF THE
ELECTORAL COMPTROLLER; MANUEL A. TORRES NIEVES, in his official
capacity as Electoral Comptroller,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Juan M. Pérez-Giménez, U.S. District Judge]
Before
Torruella, Lipez, and Howard,
Circuit Judges.
Jeremiah A. Collins, with whom Mark Schneider, Alvin
Velazquez, John M. West, Kimberly M. Sánchez Ocasio, Nora Vargas
Acosta and Manuel A. Rodríguez Banchs were on brief, for
appellants.
Claudio Aliff-Ortiz, with whom Eliezer Aldarondo-Ortiz,
Michael C. McCall, and Eliezer A. Aldarondo-López were on brief,
for appellees Public Service Commission of Puerto Rico, Luis G.
Fortuño-Burset and Laudelino F. Mulero-Clas, and with whom Carlos
Enrique Cardona-Fernández was on brief, for appellees Office of the
Electoral Comptroller and Manuel Torres-Nieves.
October 19, 2012
Per Curiam. In this appeal from the denial of a
preliminary injunction, plaintiff labor unions claim that Sections
6.007-.010 of Law 222, Puerto Rico's campaign finance law, place an
unconstitutional burden on the unions' First Amendment right to
engage in political speech. Despite the gravity of plaintiffs'
claims and months of procedural wrangling, including two writs of
mandamus from this court to the district court directing it to rule
on plaintiffs' motion for preliminary injunctive relief and the
merits of their constitutional claims, both the district court and
the government declined to address the merits of their claims.
Indeed, we asked the Puerto Rico government three times at oral
argument to defend the merits of the campaign finance provisions at
issue, and each time the government declined to do so. In the
absence of any such defense, and in light of the other factors
relevant to the preliminary injunction analysis, we issued an
appellate injunction on October 11, 2012, enjoining enforcement of
the challenged provisions of Law 222 pending the final disposition
of this appeal. We now resolve that appeal. In so doing, we
explain more fully the reasons why we ordered the entry of the
appellate injunction. We also set forth at the end of the opinion
the preliminary injunction that we now direct the district court to
enter.
-3-
I. Background
Prior to 2011, the rights of labor unions in Puerto Rico
to make political expenditures or engage in electioneering were
strictly limited by Section 4.7(c)(4) of the Puerto Rico Public
Service Labor Relations Act, P.R. Laws Ann. tit. 3, § 1451i(c)(4),
also known as Law 45. Seeking to bring Puerto Rico's campaign
finance law into compliance with the Supreme Court's landmark
opinion in Citizens United v. Federal Election Comm'n, 130 S. Ct.
876 (2010), Puerto Rico enacted the "Puerto Rico Political Campaign
Financing Oversight Act," P.R. Laws Ann. tit. 16, also known as Law
222, on November 18, 2011.
Plaintiffs challenge the constitutionality of Sections
6.007-.010 of Law 222. These sections outline the procedures that
juridical persons such as corporations and unions must follow if
they wish to make either campaign contributions or independent
expenditures.1 Failure to comply with these procedures can result
in significant financial penalties, including criminal penalties,
1
Under Law 222, juridical persons can make financial
contributions in support of a candidate for political office either
through direct contributions or independent expenditures. Direct
contributions are those made directly to a political candidate or
to a party or committee that coordinates with that candidate's
campaign. Independent expenditures are financial investments in
electioneering activity outside of a candidate's official campaign.
Puerto Rico's campaign finance regulations define "independent
expenditure or uncoordinated expenditure" as "an expenditure that
is not or was not made in concert with or at the request or
suggestion of a political party, aspirant, candidate, or campaign
committee, authorized agent, representative, or committee of any of
the above." Regulation No. 16, § 3.1.
-4-
for the juridical person and its officers. Because we deem this to
be a facial challenge to an intricate statutory framework, we have
included the full text of each of the challenged sections in an
Appendix attached to this opinion.2
The plaintiffs in this case are three labor unions and
one non-profit organization associated with the unions. Plaintiff
unions Sindicato Puertorriqueño de Trabajadores ("SPT") and Unión
General de Trabajadores ("UGT") together have more than 26,000
members in Puerto Rico. Both SPT and UGT are affiliates of the
Service Employees International Union ("SEIU"), an international
labor organization with over 2.1 million members. Allianza SEIU is
a non-profit organization that provides educational and political
support to organizations in Puerto Rico affiliated with SEIU.
Officers from both UGT and SPT testified at the
preliminary injunction hearing that immediately after Law 222 was
passed the two unions swiftly initiated plans to engage in
political speech. On November 19, 2011 –- the day after Law 222
was signed into law -- the unions jointly adopted a platform
2
We note that the text of Law 222 has been amended in part by
Law 135, which came into effect on July 3, 2012, two days after the
plaintiffs filed their complaint in this case. An official
translation of Law 135 is not yet available. Though an unofficial
translation is necessarily somewhat imprecise, we have reviewed
plaintiffs' certified translation of Law 135, and conclude that Law
135 makes no substantive changes to the provisions of Law 222 at
issue here. Thus, while we rely on the official translation of Law
222 in our opinion, our holding should be construed to apply with
equal force to Law 222 as amended by Law 135.
-5-
titled "Proposals for a Better Country" ("the Proposals"), which
the unions' membership determined "should be implemented as a
solution to the crisis that Puerto Rico is experiencing." The
district court described the Proposals as "proposals to improve
the lives of their members and their families as well as the
welfare of Puerto Rico through the topics of education, health and
welfare, labor rights, sustainable development, democracy and
citizen participation, and human rights."3
After adopting the Proposals, the unions submitted them
to different members of the legislature and candidates for
political office to see if they would be willing to support the
Proposals. On March 30, 2012, UGT's Council of Delegates
determined that if permitted by law, UGT would make expenditures
on behalf of candidates in the November 6, 2012 general election
who supported the Proposals. On June 15, 2012, the SPT
Consultative Board adopted a similar resolution stating that if
permitted by law, it would make expenditures on behalf of
supportive candidates in the general election.
Officers from both unions testified that they had been
cautioned by their attorneys that they would face serious risks of
liability under Law 222 if they made any political expenditures
related to the upcoming general election. Consequently, at the
3
We have not been provided with an English translation of the
Proposals.
-6-
time the complaint in this case was filed, the unions had not yet
engaged in any activities covered by Law 222, such as making
political contributions or establishing a political action
committee ("PAC"). However, according to testimony of SPT's
president Roberto Pagán Rodríguez, SPT had already spent between
$15,000 and $20,000 by late September 2012 promoting the Proposals
themselves. Most of this money was spent holding meetings across
Puerto Rico for union members to discuss the Proposals and
printing information about the Proposals for the unions to use
internally and at these meetings.
On July 3, 2012, the plaintiffs filed a complaint in the
federal district court in Puerto Rico alleging that Sections
6.007, 6.009 and 6.010 of Law 222 restricted core political speech
in violation of the First Amendment. On July 17, the plaintiffs
moved for a preliminary injunction, seeking to enjoin enforcement
of Section 4(c)(7) of Law 45 and of Sections 6.007 through 6.010
of Law 222 "insofar as those provisions violate the constitutional
rights of the Unions to make contributions and expenditures in
connection with elections to public office and referenda."4
4
The plaintiffs have not always been precise in identifying
the scope of the relief they seek. As discussed in more detail
infra, the substance of the plaintiffs' argument on the merits
concerns primarily Section 6.010 of Law 222, and its relationship
to other provisions of Law 222 challenged here. Indeed, plaintiffs
did not raise any challenges to the prior campaign finance law, Law
45, before us.
-7-
Even though the November 6, 2012 general election was
rapidly approaching, the district court moved slowly on
plaintiffs' motion, and plaintiffs consequently petitioned this
court twice for extraordinary relief. In the first instance,
without conducting a hearing, the district court issued a sua
sponte order on September 7, 2012 certifying the question of Law
222's constitutionality to the Puerto Rico Supreme Court.
Plaintiffs petitioned this court for relief. On September 17, we
concluded that because the district court had certified only
questions of federal constitutional law, certification to the
Puerto Rico Supreme Court was inappropriate. Exercising our
supervisory mandamus authority, we vacated the district court's
certification order, directed the district court to rescind the
certified questions, and ordered the district court to "promptly
rule on [plaintiffs'] motion for preliminary injunctive relief."
One week later, plaintiffs again petitioned this court
for a writ of mandamus. This time, plaintiffs sought to vacate an
order of the district court that, in effect, required plaintiffs
to produce voluminous documents with only eighteen hours' notice.
The district court had granted the defendants' discovery motion
and stated that if plaintiffs failed to comply their claim would
be dismissed with prejudice. On September 24, 2012, we granted
plaintiffs' request for mandamus relief, concluding that "our
prior order leaves no room for avoidance through procedural
-8-
maneuvering designed to defeat a decision on the merits." We
vacated the district court's discovery order in part, and again
ordered the district court to rule on the merits of plaintiffs'
motion.
The day after our order issued, the district court
conducted an evidentiary hearing. On September 27, 2012, the
court issued an order denying plaintiffs' request for a
preliminary injunction. Plaintiffs quickly appealed and filed a
motion for an appellate injunction pending appeal. We set an
expedited briefing schedule and heard oral arguments during a
special session of this court on October 11, 2012. Within hours
of hearing oral argument, we issued a brief order granting
plaintiffs' motion for an appellate injunction enjoining
enforcement of Sections 6.007-10 of Law 222 pending the
disposition of this appeal.
II. The District Court's Opinion
In its Opinion & Order denying the plaintiffs' motion
for a preliminary injunction, the district court framed its
analysis using the familiar four-part test for evaluating the
propriety of issuing a preliminary injunction. Relying heavily on
our opinion in Respect Maine PAC v. McKee, 622 F.3d 13 (1st Cir.
2010), the district court concluded that the plaintiffs had not
made a showing of irreparable harm, that the balance of equities
favored the government, and that the public interest weighed in
-9-
favor of denying the motion for a preliminary injunction.
However, the court declined to determine whether plaintiffs had
shown a likelihood of success on the merits, despite the fact that
we have repeatedly held that this factor is "the most important
part of the preliminary injunction assessment." Jean v. Mass.
State Police, 492 F.3d 24, 27 (1st Cir. 2008).
Though it concluded that the balance of the equities
favored the government, the district court offered little
explanation of what harm the public would suffer if plaintiffs'
motion were granted. Without pointing to any specific provisions
of Law 222, the district court concluded that "[g]ranting the
plaintiffs the emergency relief they now seek in effect leaves the
government without the tools to implement its informational
interest and thereby maintain an informed electorate." The court
then referred to unspecified "disruptions" that would result if it
were to grant plaintiffs' motion.
The district court also concluded that plaintiffs had
not demonstrated irreparable harm because they "waited until the
eleventh hour to seek injunctive relief" and because "the
Plaintiffs have not presented this Court with evidence of specific
plans to make expenditures to support candidates or political
parties or ideologies in furtherance of [the Proposals]." For
reasons described in greater detail below, we conclude that the
plaintiffs have not engaged in undue delay and have made a
-10-
sufficient showing that they will suffer an irreparable injury to
their First Amendment rights if the enforcement of the relevant
sections of Law 222 is not enjoined.
III. Threshold Issues
Defendants argue that the complaint should be dismissed
because of lack of standing, justiciability, and ripeness. At
times these threshold arguments merge into a challenge to the
irreparable injury component of the preliminary injunction
analysis. Generally, defendants maintain that plaintiffs "have
not taken critical steps needed for them to be able to exercise
the First Amendment rights that they claim." Defendants claim
that plaintiffs have "fail[ed] to create political action
committees, identify and agree on candidates for political parties
who would support their [Proposals], make political contributions
or expenditures in support thereof, or even make a work plan for
such contributions or expenditures."
These arguments reduce to the proposition that there is
not a live controversy before the court sufficient to create
jurisdiction under Article III. Even though the district court
did not address this threshold issue, "we bear an independent
obligation to assure ourselves that jurisdiction is proper before
proceeding to the merits." Plains Commerce Bank v. Long Family
Land & Cattle Co., 554 U.S. 316, 324 (2008). Although defendants
attach a number of labels to their challenge, we believe that
-11-
their argument is properly construed as an attack on the ripeness
of plaintiffs' claims, and therefore analyze it as such.
"The doctrine of ripeness has roots in both the Article
III case or controversy requirement and in prudential
considerations." Mangual v. Rotger-Sabat, 317 F.3d 45, 59 (1st
Cir. 2003). The determination of ripeness depends on two factors:
"the fitness of the issues for judicial decision and the hardship
to the parties of withholding court consideration." Abbott Labs.
v. Gardner, 387 U.S. 136, 149 (1967), abrogated on other grounds
by Califano v. Sanders, 430 U.S. 99 (1977); see also D.H.L.
Assocs., Inc. v. O'Gorman, 199 F.3d 50, 53-54 (1st Cir. 1999).
The inquiry as to the fitness of the issues for judicial
resolution itself involves both constitutional and prudential
components. "The constitutional inquiry, grounded in the
prohibition against advisory opinions, is one of timing."
Mangual, 317 F.3d at 59. "[I]ts basic rationale is to prevent the
courts, through avoidance of premature adjudication, from
entangling themselves in abstract disagreements . . . ." Abbott
Labs., 387 U.S. at 148. The prudential inquiry is "whether
resolution of the dispute should be postponed in the name of
'judicial restraint from unnecessary decision of constitutional
issues'; if elements of the case are uncertain, delay may see the
dissipation of the legal dispute without need for decision."
-12-
Mangual, 317 F.3d at 59 (quoting Reg'l Rail Reorganization Act
Cases, 419 U.S. 102, 138 (1974)).
The inquiry into the hardship to the parties of
withholding court consideration is "wholly prudential." Mangual,
317 F.3d at 59. The hardship element requires a court to consider
"whether the challenged action 'creates a direct and immediate
dilemma for the parties.'" Verizon New Eng., Inc. v. Int'l Bhd.
of Elec. Workers, Local No. 2322, 651 F.3d 176, 188 (1st Cir.
2011) (quoting Ernst & Young v. Depositors Econ. Prot. Corp., 45
F.3d 530, 535 (1st Cir. 1995)). Generally, a "mere possibility of
future injury, unless it is the cause of some present detriment,
does not constitute hardship." Simmonds v. INS, 326 F.3d 351, 360
(2d Cir. 2003). However, the Supreme Court has made clear that
when a plaintiff alleges "an intention to engage in a course of
conduct arguably affected with a constitutional interest, but
proscribed by a statute, and there exists a credible threat of
prosecution thereunder, he 'should not be required to await and
undergo a criminal prosecution as the sole means of seeking
relief.'" Babbitt v. United Farm Workers Nat'l Union, 442 U.S.
289, 298 (1979) (quoting Doe v. Bolton, 410 U.S. 179, 188 (1973)).
As a supplement to these universally applicable aspects
of ripeness jurisprudence, we have previously said that "when free
speech is at issue, concerns over chilling effect call for a
relaxation of ripeness requirements." Sullivan v. City of
-13-
Augusta, 511 F.3d 16, 31 (1st Cir. 2007); see also El Día, Inc. v.
Hernández Colón, 963 F.2d 488, 495-96 (1st Cir. 1992) ("A facial
challenge of this sort, implicating First Amendment values,
customarily works a relaxation of the ripeness criteria."). Such
a relaxation has been justified by the potential for
"irretrievable loss" often involved in cases where First Amendment
rights are at stake. Sullivan, 511 F.3d at 31 (quoting El Día,
963 F.3d at 496); see also Peachlum v. City of York, 333 F.3d 429,
434-35 (3d Cir. 2003) ("The courts have repeatedly shown
solicitude for First Amendment claims because of concern that,
even in the absence of a fully concrete dispute, unconstitutional
statutes . . . tend to chill protected expression among those who
forbear speaking because of the law's very existence."). "Thus,
when First Amendment claims are presented, '[r]easonable
predictability of enforcement or threats of enforcement, without
more, have sometimes been enough to ripen a claim.'" Sullivan,
511 F.3d at 31 (quoting New Mexicans for Bill Richardson v.
Gonzales, 64 F.3d 1495, 1499 (10th Cir. 1995)).
Despite defendants' attempts to graft additional
requirements that we have never imposed onto the established
standards for determining ripeness in First Amendment cases,
plaintiffs have done enough to show a "reasonable predictability
of enforcement" sufficient to satisfy the relaxed ripeness
-14-
standard applicable to the present case.5 A party need not
marshal all its resources and march to the line of illegality to
challenge a statute on First Amendment grounds. Plaintiffs have
averred that they intend to act in a way that would violate Law
222, and they have taken steps in preparation to carry out those
acts. Furthermore, they have produced evidence that they
submitted the Proposals to members of the legislature, and SPT's
president testified that UGT has already spent significant funds
promoting the Proposals to its members. In the present case, that
is all that is needed to make plaintiffs' claim ripe for
resolution.6
5
We note that this result would be the same if we were to
consider defendants' jurisdictional arguments under the standing
doctrine. See Warth v. Seldin, 422 U.S. 490, 499 n.10 (1975) ("The
standing question thus bears close affinity to questions of
ripeness - whether the harm asserted has matured sufficiently to
warrant judicial intervention . . . ."); McInnis-Misenor v. Me.
Med. Ctr., 319 F.3d 63, 69 (1st Cir. 2003) ("In general, standing
and ripeness inquiries overlap. . . . The overlap is most apparent
in cases that deny standing because an anticipated injury is too
remote . . . ."); Daggett v. Comm'n on Governmental Ethics and
Election Practices, 205 F.3d 445, 463 (1st Cir. 2000).
6
Defendants also maintain that plaintiffs have not taken
advantage of the procedure set out in Section 3.003(e) of Law 222,
which provides that a party may request an opinion from the
Election Comptroller as to the scope and application of the
statute. However, nowhere in Section 3.003 is the Election
Comptroller given the authority to nullify unconstitutional
provisions of Law 222. Because it is clear that Law 222 applies to
the labor unions (a point that defendants conceded at oral
argument), and because the provisions of Law 222 plaintiffs
challenge are so constitutionally suspect, see infra, any
administrative relief that the Election Comptroller could have
provided would have been inadequate. Plaintiffs were therefore
under no obligation to exhaust such remedies. See Coit
-15-
IV. The Preliminary Injunction Analysis
"On appeal, we review the grant or denial of a
preliminary injunction for abuse of discretion." United States v.
Weikert, 504 F.3d 1, 6 (1st Cir. 2007). "Under that rubric,
findings of fact are reviewed for clear error and issues of law
are reviewed de novo." Wine & Spirits Retailers, Inc. v. Rhode
Island, 418 F.3d 36, 46 (1st Cir. 2005).
In considering a plaintiff's motion for a preliminary
injunction, the district court weighs four factors: "(1) the
plaintiff's likelihood of success on the merits; (2) the potential
for irreparable harm in the absence of an injunction; (3) whether
issuing the injunction will burden the defendants less than
denying an injunction would burden the plaintiffs and (4) the
effect, if any, on the public interest." Jean, 492 F.3d at 26-27.
Though each factor is important, we keep in mind that "[t]he sine
qua non of this four-part inquiry is likelihood of success on the
merits: if the moving party cannot demonstrate that he is likely
to succeed in his quest, the remaining factors become matters of
idle curiosity." New Comm Wireless Servs., Inc. v. SprintCom,
Inc., 287 F.3d 1, 9 (1st Cir. 2002). To demonstrate likelihood of
Independence Joint Venture v. Fed. Sav. & Loan Ins. Corp, 489 U.S.
561, 587 (1989) ("Administrative remedies that are inadequate need
not be exhausted."); Sousa v. INS, 226 F.3d 28, 32 (1st Cir. 2000)
(no exhaustion requirement "where a resort to the agency would be
futile because the challenge is one that the agency has no power to
resolve in the applicant's favor").
-16-
success on the merits, plaintiffs must show "more than mere
possibility" of success - rather, they must establish a "strong
likelihood" that they will ultimately prevail. Respect Maine
PAC, 622 F.3d at 15 (citing Winter v. Natural Res. Def. Council,
Inc., 555 U.S. 7, 21 (2008)).
A. The Obligation To Address the Plaintiffs' Likelihood of Success
on the Merits
The district court declined to address the plaintiffs'
likelihood of success on the merits of their First Amendment
claims, stating that the remaining three factors of the standard
weighed against the grant of equitable relief. Defendants urge us
to adopt a similar course of action.
This we cannot do. In the First Amendment context, the
likelihood of success on the merits is the linchpin of the
preliminary injunction analysis. As the Supreme Court has
explained, "[t]he loss of First Amendment freedoms, for even
minimal periods of time, unquestionably constitutes irreparable
injury." Elrod v. Burns, 427 U.S. 347, 373 (1976); see also
Asociación de Educación Privada de Puerto Rico, Inc. v.
García-Padilla, 490 F.3d 1, 21 (1st Cir. 2007) (applying Elrod to
irreparable harm component of permanent injunction analysis);
Maceira v. Pagan, 649 F.2d 8, 18 (1st Cir. 1981) ("It is well
established that the loss of first amendment freedoms constitutes
irreparable injury."). Accordingly, irreparable injury is
-17-
presumed upon a determination that the movants are likely to
prevail on their First Amendment claim.
It was therefore incumbent upon the district court to
engage with the merits before moving on to the remaining prongs of
its analysis. The court's stated reason for not doing so was that
addressing the merits was inappropriate on an "incomplete record,"
and that "engag[ing] in the in-depth analysis required" further
factual development. To the contrary, a facial challenge to a
statute presents a question of law that the district court could
and should have resolved on the present record. See New Eng.
Reg'l Council of Carpenters v. Kinton, 284 F.3d 9, 19 (1st Cir.
2002) (stating that facial challenge to regulation presents "pure
question of law"); see also Ctr. for Individual Freedom v.
Carmouche, 449 F.3d 655, 662 (5th Cir. 2006) (stating that "facial
challenge to the constitutionality of a statute presents a pure
question of law").
B. Likelihood of Success
1. Standard of Review
Despite its refusal to consider the merits, the district
court stated that the plaintiffs' challenge to Law 222 should be
analyzed, in whole or in part, under the "exacting" scrutiny
standard applicable to disclaimer and disclosure requirements.
See Citizens United, 130 S. Ct. at 914; see also Daggett, 205 F.3d
at 454 (applying exacting scrutiny to limits on direct
-18-
contributions).7 Plaintiffs disagree, contending that strict
scrutiny governs their claims.
Laws that burden political speech ordinarily are subject
to strict scrutiny, requiring the government to prove that any
restriction "'furthers a compelling interest and is narrowly
tailored to achieve that interest.'" Citizens United, 130 S. Ct.
at 898 (quoting Fed. Elect. Comm'n v. Wisc. Right To Life, Inc.,
551 U.S. 449, 464 (2007)). The Supreme Court applied that
standard to the regulation at issue in Citizens United, which
restricted the ability of corporations and unions to make
independent expenditures in connection with political campaigns.
After rejecting any distinction between natural persons and
corporate persons under the First Amendment, id. at 904, the Court
noted that "[t]he purpose and effect of th[e challenged] law is to
prevent corporations, including small and nonprofit corporations,
from presenting both facts and opinions to the public." Id. at
907. The Court observed:
When Government seeks to use its full power,
including the criminal law, to command where
a person may get his or her information or
what distrusted source he or she may not hear,
7
Although the basis for the district court's conclusion is
not clear, it appeared to believe that the unions' challenge
encompassed an attack on Law 222's disclaimer and disclosure
requirements. In fact, plaintiffs asserted no challenge to Law
222's disclosure-related requirements before the district court,
and reiterate this position on appeal. Those requirements are
therefore irrelevant, and the district court erred in relying on
them in its discussion of the appropriate standard of review.
-19-
it uses censorship to control thought. This
is unlawful. The First Amendment confirms the
freedom to think for ourselves.
Id. at 908. The law therefore struck at the heart of core First
Amendment protections and could not withstand strict scrutiny.
The Court explained, however, that not all laws
purporting to regulate election-related spending are treated
similarly. In certain circumstances, regulations designed "to
ensure against the reality or appearance of corruption," such as
those capping direct contributions to political candidates or
those imposing disclosure requirements on donors, are subject to
the more lenient "exacting scrutiny" review. Id. at 908; see also
Buckley v. Valeo, 424 U.S. 1, 26-29 (1976).8 While disclosure
requirements, for example, similarly "burden the ability to
speak," Citizens United, 130 S. Ct. at 914, they "impose no
ceiling on campaign related activities and do not prevent anyone
from speaking." Id. (citations omitted) (internal quotation marks
omitted). Caps on direct contributions, for their part, are
justified by their "limited effect upon First Amendment freedoms,"
as compared to the "weighty interest" in avoiding corruption or
the appearance of corruption. Buckley, 424 U.S. at 29.
8
Under exacting scrutiny, the government would bear the
burden of demonstrating that "(1) the statute as a whole . . .
serve[s] a compelling governmental interest, and (2) a substantial
nexus . . . exist[s] between the served interest and the
information to be revealed." Daggett, 205 F.3d at 464 (citation
omitted) (internal quotation marks omitted).
-20-
Law 222's challenged provisions plainly are more like
the regulation given strict scrutiny by the Supreme Court in
Citizens United than the contribution limits and disclosure
requirements afforded less stringent review. Law 222 imposes
substantial burdens on the very process through which a juridical
person determines whether and how to exercise its free speech
rights. On its face, Law 222 forbids juridical persons from
spending any money on political campaigns, be they direct
contributions, independent expenditures, or otherwise, without the
process the statute prescribes. These provisions are backed by
criminal sanctions, administrative penalties of up to $30,000 per
day, and other mechanisms designed to ensure strict compliance.
Indeed, a violation of section 6.010 can subject a juridical
person's "highest ranking official" to personal financial
liability for any violations, even if that individual lacked
knowledge of the violation in question.
To avoid these unusually harsh sanctions, juridical
persons "have to comply with these regulations just to speak."
Citizens United, 130 S. Ct. at 897. To adopt the Court's
language, by forbidding juridical persons from exercising their
speech rights without first complying with onerous governance
procedures, the provisions "'necessarily reduce[] the quantity of
expression by restricting the number of issues discussed, the
-21-
depth of their exploration, and the size of the audience
reached.'" Id. at 898 (quoting Buckley, 424 U.S. at 19).
Law 222 reaches deep into the mechanics of an
organization's own self-governance and imposes numerous
requirements on the organization's internal processes. In doing
so, it seeks to dictate the terms and circumstances under which
they are permitted to express political opinions. Stated
differently, Law 222's challenged provisions are designed to
regulate the if and how of a juridical person's political speech.
It is difficult to conceive of a statute that strikes more deeply
at a juridical person's core First Amendment rights. Accordingly,
strict scrutiny applies.
2. Application of Strict Scrutiny to Law 222
"Under strict scrutiny, [defendants] must prove that
[the statute] . . . furthers a compelling interest and is narrowly
tailored to achieve that interest." Wisc. Right To Life, 551 U.S.
at 464. "Especially where, as here, a prohibition is directed at
speech itself, and the speech is intimately related to the process
of governing, . . . the burden is on the government, [rather than
the plaintiffs], to show the existence of [a compelling]
interest." Bellotti, 435 U.S. at 786 (internal citation omitted)
(quotation marks omitted).
Due to defendants' failure to present any defense to the
unions' claims, the only conceivable interest we can identify is
-22-
described in the following paragraph of Law 222's Statement of
Motives:9
[C]ertain criteria and requirements shall be
established to ensure that the members of
those entities are duly informed of any
political statements that could be issued by
such entities on their behalf and at their
expense. By setting forth clear and effective
guidelines on this matter, the members of
juridical entities are provided with the
necessary information for them to give their
informed consent. The State, by means of this
Act, seeks to implement openness and clarity
as the public policy that shall govern
election processes.
Thus, Law 222 purports to foster democratic decisionmaking
processes within juridical persons and to ensure that any
political speech that they make is given with their members' full
and informed consent.
As admirable as this policy goal may be, Citizens United
addressed a similar interest and concluded that it was not
sufficiently compelling. There, the government asserted that
independent expenditures could be limited because dissenting
9
The district court discussed a part of the Statement of
Motives that addressed the need to "better identify and prevent
corrupt and unlawful actions" and emphasized the value of
"transparency on [sic] the voting system of Puerto Rico," so that
the "People know who provides funding for campaign activities and
advertisements intended to sway their opinion." This part of the
Statement appears to address the statute's disclosure requirements,
which are not at issue here. Defendants do not assert that Law
222's authorization requirements are justified by an interest in
transparency to the public at large, nor is a connection between
the challenged provisions and such an interest evident.
Consequently, we do not rely on this part of the Statement in
identifying the government interest at stake.
-23-
shareholders needed protection "from being compelled to fund
corporate political speech." 130 S. Ct. at 911. The Court was
unconvinced, noting that there was "little evidence of abuse that
cannot be corrected by shareholders 'through the procedures of
corporate democracy.'" Id. (quoting Bellotti, 435 U.S. at 794).
Similarly, there has been no invocation here of legislative
findings that juridical persons are engaging in abuse of their
internal procedures in order to suppress the speech of their
dissenting members, or that their internal governance mechanisms
are insufficient to address such concerns. We therefore cannot
accept this rationale as a justification for the statute.
Even if Law 222's provisions were justified by a
compelling interest in fostering juridical persons' internal
democratic procedures, the statute is far from narrowly tailored
to meet that end. The most problematic aspect of the statute is
section 6.010, which describes the detailed scheme that a
juridical person must comply with in making any election-related
expenditures. Among other requirements, the juridical person must
hold a membership meeting, where the members must vote to approve
any "use of the money or property of the entity for
election-related purposes."10 The members "shall be informed of
10
Section 2.004(42) of Law 222 defines "Membership" or
"Members" as "persons entitled to vote in a juridical person such
as shareholders, partners, members subject to membership fees and
who are entitled to vote in the entity in question." Although the
statute repeatedly refers to "members," it is clear that its
-24-
the purposes of the electioneering communication or communications
that shall be paid for, including the specific purpose of the
messages to be transmitted and the amount of money that shall be
earmarked to such campaign," and the members must "be clearly
informed of whether they, as an organization, intend to support,
oppose, or advocate for the election or defeat of a political
party, ideology, aspirant, or candidate." What is more, "a
majority plus one" of the juridical person's members not only must
attend this membership meeting, but also must approve the
election-related expenditure before funds can be disbursed.
If these restrictions were not burdensome enough, Puerto
Rico's election comptroller has issued regulations further
defining the statute's terms. See Government of Puerto Rico,
Office of the Electoral Comptroller, Regulations No. 16,
Regulations to Incur Independent Expenditures and to Establish a
Segregated Funds Committee (2012) [hereinafter "Regulations"].
These regulations require the "membership meeting" to be "an
assembly to be held simultaneously in various jurisdictions or
geographic areas provided they are held on the same day up to
12:00 midnight," Regulations, § 7.4 (emphasis added), meaning that
restrictions apply to individuals who hold some form of ownership
interest or voting stake in entities such as corporations and
partnerships. See also id. § 2.004(56) (defining "juridical
person" as "includ[ing] corporations, limited liability companies,
partnerships, cooperatives, trusts, groups of persons organized as
an association, and labor organizations").
-25-
"a majority plus one" of the entity's members must meet on the
same day (although not necessarily in the same location). The
only issue that can be discussed at this congregation is the
expenditure for election-related purposes. Additionally, the
regulations require that the "maximum amount" to be expended must
be stated in the notice calling for the meeting, as well as
disclosed to the members at the meeting. Regulations, § 7.3.
Moreover, noncompliance subjects a juridical person to an array of
sanctions, including daily fines, penalties against the person's
highest ranking official, and makes "payment in violation of the
provisions of [the statute]" a felony punishable by criminal
fines.
Law 222 therefore piles burden upon burden in its effort
to restrict the political speech of juridical persons, without any
indication that these measures are remotely necessary to meet the
articulated government interest. Leaving aside the draconian
nature of the civil and criminal penalties at issue, the rationale
for many of its requirements is difficult to fathom. Why is it
necessary to require a single collective membership meeting to
discuss campaign expenditures, or to demand that a majority of the
membership be present to approve election-related expenditures?
Why must all members meet on a single day? Why must the
membership discuss only the election-related expenditure at this
meeting and decline to address any other subjects? Even if some
-26-
measure of restriction on juridical persons' internal procedures
were justified, why these specific procedures, and toward what
end? Given their refusal to defend the merits of such provisions,
defendants leave all of these crucial questions unanswered. In
the absence of a discernible rationale for the challenged
provisions, we cannot presently conclude that the challenged
provisions are narrowly tailored to serve a compelling state
interest.
In sum, Law 222's challenged provisions are not likely
to withstand strict scrutiny. For the reasons stated, the unions
have demonstrated a strong likelihood that they will succeed on
their First Amendment challenge to Law 222.11
3. Potential for Irreparable Injury
There is no need for an extensive analysis of this
element of the preliminary injunction inquiry. Because we
conclude that plaintiffs have made a strong showing of likelihood
of success on the merits of their First Amendment claim, it
follows that the irreparable injury component of the preliminary
injunction analysis is satisfied as well. See Elrod, 427 U.S. at
373; Maceira, 649 F.2d at 18 ("It is well established that the
loss of first amendment freedoms constitutes irreparable
injury."); see also Phelps-Roper v. Nixon, 545 F.3d 685, 690 (8th
11
Because we conclude that the unions' First Amendment claims
are likely to succeed on their merits, we do not address their
contention that the statute as drafted is void for vagueness.
-27-
Cir. 2008) ("If [plaintiff] can establish a sufficient likelihood
of success on the merits of her First Amendment claim, she will
also have established irreparable harm as a result of the
deprivation."). The district court therefore erred in its finding
that plaintiffs failed to make a sufficient showing of irreparable
injury. See Child Evangelism Fellowship of Minn. v. Minneapolis
Special Sch. Dist. No. 1, 690 F.3d 996, 1004 (8th Cir. 2012)
(holding that district court's error in finding that plaintiff did
not establish high likelihood of success on the merits of its
First Amendment claim meant that it necessarily erred in its
finding that plaintiff did not establish irreparable harm).
4. Balance of Harms and Public Interest
The district court blended the third and fourth
components of the preliminary injunction analysis and determined
that the balance of the equities and the public interest justified
denial of the injunction. The court determined that the
government would be stripped of its tools to implement its
informational interest and the public would be left uninformed.
As noted, this finding is based on a misapprehension by the
district court of the scope of plaintiffs' challenge to Law 222,
since plaintiffs have explicitly disavowed any challenge to the
law's accounting, disclosure, and reporting requirements.
Furthermore, the Supreme Court noted in Citizens United
that the suppression of political speech harms not only the
-28-
speaker, but also the public to whom the speech would be directed:
"The right of citizens to inquire, to hear, to speak, and to use
information to reach consensus is a precondition to enlightened
self-government and a necessary means to protect it." 130 S. Ct.
at 898. To deprive plaintiffs of the right to speak will
therefore have the concomitant effect of depriving "the public of
the right and privilege to determine for itself what speech and
speakers are worthy of consideration." Id. at 899. This
deprivation would be especially significant in the election
context. Id. ("[I]t is inherent in the nature of the political
process that voters must be free to obtain information from
diverse sources in order to determine how to cast their votes.").
The district court failed to consider the interest of the public
in having a robust debate on the issues of concern to plaintiffs.
In further explanation of its denial of the preliminary
injunction, the district court relied heavily on our decision in
Respect Maine PAC in support of its two central findings: (1) that
granting plaintiffs' requested relief would cause substantial
disruption, and (2) that plaintiffs' alleged delay in bringing the
action justified the denial of relief. This reliance was
misplaced. Respect Maine PAC concerned a public matching-funds
scheme for candidates for state office. Under that scheme,
candidates had to declare early in their campaigns whether to
accept public matching funds. If a candidate opted in to the
-29-
public funds scheme, she had to agree to abide by certain rules,
including a $750 cap on individual contributions. See Cushing v.
McKee, 738 F. Supp. 2d 146, 148-49 (D. Me. 2010) (describing
provisions of Maine public matching-funds scheme). By the time
the plaintiffs in Respect Maine PAC filed their complaint,
candidates for state office had been on the campaign trail for
more than eight months, and roughly 280 candidates had opted in to
the scheme. See Maine PAC, 622 F.3d at 16.
The instant case is easily distinguished from Respect
Maine PAC on the issues of timing and delay. The law at issue
there had been in place for more than a decade and had endured
several election cycles. Id. At the time the complaint in the
instant case was filed, Law 222 was only seven-and-a-half months
old, and it was a response to Citizens United, which dramatically
changed prior law on the First Amendment rights of corporations
and unions. As already noted, there is evidence in the record
that since Law 222 was passed, the unions have been consistently
developing their platform and campaign plans.
Moreover, the consequences of disrupting the public
financing scheme at issue in Respect Maine PAC in the crucial
weeks before the campaign would have been significant and chaotic,
largely because granting the injunction would have altered rules
that candidates and the public had rightfully relied upon for
years. See Respect Maine PAC, 622 F.3d at 16. In the instant
-30-
case, there is simply no evidence that any such disruption would
occur. The only consequence of this injunction will be that
juridical persons who were unlawfully prevented from engaging in
political speech will now be able to engage in such speech.
V. Conclusion
On October 11, 2012, we granted plaintiffs' motion for
an appellate injunction pending the disposition of this appeal.
That order enjoined enforcement of Sections 6.007-.010 of Law 222.
Now that we have resolved the plaintiffs' interlocutory appeal, we
hereby dissolve the appellate injunction and remand to the
district court with instructions to enter the following order
forthwith:
The defendants are hereby enjoined from enforcing the
following provisions of Law 222: 1) Section 6.010 in
full; 2) the provision of Section 6.007 that states,
"[i]n order for a juridical person to be able to
establish a segregated committee or fund for these
purposes, it must comply with the limitations and
requirements set forth in Section 6.010 of this Chapter";
and 3) the provision of Section 6.009 that states "[t]o
make contributions or incur in this type of expenditures,
a juridical person must obtain authorization of the
majority vote of its members, as provided in Section
6.010 of this Act.
We do not enjoin the enforcement of Section 6.008, which
sets limits for contributions from segregated committees and
political action committees. Those limits have not been
challenged here. Similarly, nothing in our order should be
construed to undermine any disclosure requirements in other
-31-
sections of Law 222. These requirements are also unchallenged
here.
Mandate shall issue forthwith.
So ordered.
-32-
Statutory Appendix
Law No. 222, P.R. Stat. Ann. tit. 16, §§ 625g–625j.
Section 6.007.-Juridical Persons.-
No juridical person shall make contributions out [sic] its own
resources in or outside Puerto Rico to any political party,
aspirant, candidate, campaign committee, or to any authorized
agent, representative, or committee thereof, or to political
action committees that make contributions or coordinate
expenditures among them. However, it may establish, organize, and
administer a committee, to be known as a segregated committee or
fund that, for the purposes of contributions and expenditures,
shall be treated as a public action committee that must be
registered in the Office of the Election Comptroller, render
reports, and comply with all requirements imposed under this Act.
Thus, its members, employees, and their immediate family or
related persons may make contributions that shall be deposited in
the account established and registered in the Office of the
Election Comptroller. In order for a juridical person to be able
to establish a segregated committee or fund for these purposes, it
must comply with the limitations and requirements set forth in
Section 6.010 of this Chapter. The committee, organization, or
citizen group may make donations from said account to political
parties, aspirants, candidates, and campaign committees and
authorized committees, as well as to political action committees
making contributions to any of them.
P.R. Stat. Ann. tit. 16, § 625g.
Section 6.008.-Limits for Segregated Committees and Public Action
Committees.-
Segregated committees or funds may make contributions to any
political party, aspirant, candidate, campaign committee, and
authorized committees, and to any authorized agent and
representative thereof, provided that the contributions do not
exceed the limits established in this Act for natural persons or
aggregates. These limits shall also apply to contributions made by
members to a juridical person that shall use them to make a
contribution to a political party, aspirant, candidate, campaign
committee, and authorized committee, or to any authorized agent
and representative thereof. Two (2) or more political action
committees shall be deemed to be one (1) single committee if they
have been established by the same person or group of persons, are
controlled by the same person or group of persons, or share
officials, directors, or employees.
-33-
P.R. Stat. Ann. tit. 16, § 625h.
Section 6.009.-Independent Expenditures.-
Nothing in this Act shall limit contributions of money or anything
of value made for election-related purposes to natural persons,
juridical persons, or political action committees that do not
contribute or incur coordinated expenditures with political
parties, aspirants, candidates, campaign committees, or authorized
committees, or with any authorized agent and representative
thereof. However, in these cases, the provisions of Section 6.001
of this Act shall apply. To make contributions or incur in this
type of expenditures, a juridical person must obtain the
authorization of the majority vote of its members, as provided in
Section 6.010 of this Act.
P.R. Stat. Ann. tit. 16, § 625i.
Section 6.010.-Authorization to Establish a Segregated Committee
or Fund or to Incur Expenditures of Election-related Purposes.-
1. The juridical person must hold a membership meeting. The call
for such meeting shall be issued fifteen (15) days before the
holding thereof and shall only include this authorization purpose.
2. At the meeting, the majority plus one of the total members of
the entity, whether a corporation, cooperative, partnership,
association, or labor organization, shall approve by direct and
secret vote the use of the money or property of the entity for
election-related purposes. Under no circumstances shall a vote
that has not been cast be counted as a vote in favor of the use of
money or the property for election-related purposes.
3. For such authorization, the members shall be informed of the
purposes of the electioneering communication or communications
that shall be paid for, including the specific purpose of the
messages to be transmitted and the amount of money that shall be
earmarked to such campaign. Before voting at the meeting, the
members shall be clearly informed of whether they, as an
organization, intend to support, oppose, or advocate for the
election or defeat or a political party, ideology, aspirant, or
candidate. No organizational structures shall be created to evade
the requirement of obtaining the informed consent of the members
of any juridical person.
4. The board of directors and the highest ranking official of the
juridical person in question shall certify, under oath and under
penalty of contempt, that all the requirements of this Section
were met. The certification shall include the notice sent to all
-34-
members and the date thereof, the date and the place of the
meeting, the total number of members of the juridical person, the
number of members that attended the meeting, the exact results of
the voting, and an accurate and detailed description of the
information regarding the amount of money or property that was
approved. This sworn certification shall state the veracity and
accuracy of the information furnished. In addition, the Election
Comptroller shall immediately publish said certification over the
Internet.
5. Said certification shall be remitted, on the business day
following the voting, to the Office of the Election Comptroller.
After obtaining the corresponding authorization and remitting the
aforementioned certification, the entity shall register in the
Office of the Election Comptroller as an entity that intends to
incur expenditures for election-related purposes or make
contributions, and render the appropriate reports. The
registration of such entity shall be carried out according to the
demands and requirements of a Political Action Committee.
6. Any executive, director, manager, managing partner, and the
highest ranking official thereof at the time the contribution or
expenditure was made for election-related purposes in violation of
this Section shall be responsible for compensating the juridical
person ten thousand dollars ($10,000) or the amount of the
contribution or expenditure, plus any lawfully applicable
interest, whichever is higher. This responsibility shall be
separate and independent from any other fine or offense set forth
in this or any other Act. Any member of the juridical person may
request the refund established in this Section to the Court. Any
member of the juridical person may file a complaint, under oath,
with the Office of the Election Comptroller to report any
violations of this Section, or resort to the Court in the event
that his/her complaint is not addressed.
7. This process may be regulated by the Office of the Election
Comptroller subject to the requirements of this Act.
P.R. Stat. Ann. tit. 16, § 625j.
-35-