Joshua Stanwitz v. reagan/outlaw Dirty Money

IN THE
SUPREME COURT OF THE STATE OF ARIZONA
JOSHUA STANWITZ, AN INDIVIDUAL; ANDREW CLARK, AN INDIVIDUAL; SCOT
MUSSI, AN INDIVIDUAL; AND ROY MILLER, AN INDIVIDUAL,
Petitioners/Appellees/Cross-Appellants,
v.
MICHELE REAGAN, IN HER CAPACITY AS THE SECRETARY OF STATE,
Respondent/Appellee,
and
OUTLAW DIRTY MONEY, A POLITICAL COMMITTEE,
Real Party in Interest/Appellant/Cross-Appellee.
TERRY GODDARD, A CITIZEN AND QUALIFIED ELECTOR OF THE STATE OF
ARIZONA; PAUL JOHNSON, A CITIZEN AND QUALIFIED ELECTOR OF THE STATE
OF ARIZONA; AND GRANT WOODS, A CITIZEN AND QUALIFIED ELECTOR OF
THE STATE OF ARIZONA; AND OUTLAW DIRTY MONEY, A POLITICAL
COMMITTEE,
Petitioners/Appellants,
v.
MICHELE REAGAN, IN HER OFFICIAL CAPACITY AS THE SECRETARY OF STATE,
Respondent/Appellee,
and
J.D. MESNARD, IN HIS OFFICIAL CAPACITY AS SPEAKER OF THE ARIZONA
HOUSE OF REPRESENTATIVES; AND STEVE YARBROUGH, IN HIS OFFICIAL
CAPACITY AS PRESIDENT OF THE ARIZONA SENATE,
Intervenors/Appellees.
No. CV-18-0222-AP/EL
Filed November 21, 2018
Amended November 27, 2018
STANWITZ V. REAGAN
Opinion of the Court
Appeal from the Superior Court in Maricopa County
The Honorable Teresa A. Sanders, Judge
Nos. CV2018-009789, CV2018-010420 (Consolidated)
AFFIRMED
COUNSEL:
Kory Langhofer, Thomas Basile, Stewart Salwin, Statecraft PLLC, Phoenix,
Attorneys for Joshua Stanwitz, Andrew Clark, Scot Mussi, Roy Miller, J.
D. Mesnard, and Steve Yarbrough
Kimberly A. Demarchi, Joshua D. Bendor, Emma Cone-Roddy, Osborn
Maledon, P.A., Phoenix, Attorneys for Terry Goddard, Paul Johnson,
Grant Woods, and Outlaw Dirty Money
Mark Brnovich, Arizona Attorney General, Kara M. Karlson, Joseph E. La
Rue, Assistant Attorneys General, Phoenix, Attorneys for Michele Reagan
Mark Brnovich, Arizona Attorney General, Dominic E. Draye, Solicitor
General, Phoenix, Attorneys for Amicus Curiae State of Arizona
Israel G. Torres, James E. Barton, II, Saman J. Golestan, Torres Law Group,
PLLC, Tempe, Attorneys for Amicus Curiae Clean Energy for a Healthy
Arizona
JUSTICE LOPEZ authored the opinion of the Court, in which CHIEF
JUSTICE BALES, VICE CHIEF JUSTICE BRUTINEL, and JUSTICES
PELANDER, TIMMER, BOLICK, and GOULD joined.
JUSTICE LOPEZ, opinion of the Court:
¶1 We explain today the reasons for our prior decision order
disqualifying the “Stop Political Dirty Money Amendment” from the
November 2018 general election ballot. We honor the constitutional origins
of our citizens’ right to amend the Arizona Constitution and to enact
legislation through the initiative process, and we are reluctant to impede
such civic efforts. However, we must also enforce valid statutory
2
STANWITZ V. REAGAN
Opinion of the Court
requirements that permissibly regulate the initiative process. We hold that
A.R.S. § 19-118(C) is constitutional, both facially and as applied here,
because its requirement that registered petition circulators subpoenaed in
an election challenge appear for trial “does not unreasonably hinder or
restrict” the initiative process and it “reasonably supplements the
constitutional purpose” by fostering the integrity of the process. Direct
Sellers Ass’n v. McBrayer, 109 Ariz. 3, 5 (1972).
I.
¶2 The right to initiate constitutional amendments and propose
statutes was retained by the people when delegating legislative authority
to the Arizona legislature. Ariz. Const. art. 4, pt. 1, § 1(1)–(2). To exercise
this right, a sufficient number of qualified electors must sign verified
petitions in support of the proposed measure and submit them as
prescribed by law. See A.R.S. tit. 19 ch. 1 (setting forth the specific process
by which such petitions are to be submitted and processed). Constitutional
initiatives require signatures from 15% of all qualified electors. Ariz. Const.
art. 4, pt. 1, § 1(2). For a statewide initiative, the Arizona Secretary of State
(the “Secretary”) is required to review the submitted petitions, remove
petition sheets and individual signatures on petition sheets that fail to
comply with statutory requirements, and count the remaining signatures
on the petition sheets. A.R.S. § 19-121.01(A). If, after satisfying other Title
19 requirements not contested here, the Secretary determines that the
initiative is supported by the requisite number of valid signatures, the
measure is placed on the ballot. A.R.S. §§ 19-121.04(B), -125.
¶3 On July 5, 2018, the Outlaw Dirty Money political committee
(the “Committee”) filed signature petitions with the Secretary to qualify
initiative C-03-2018, otherwise known as the “Stop Political Dirty Money
Amendment” (the “Initiative”), for the November 2018 ballot. The
Initiative’s purpose is to amend the Arizona Constitution to ensure public
knowledge of the original source of campaign contributions. The
Committee was required to gather 225,963 valid signatures to qualify the
Initiative for the ballot. The Committee’s signature count exceeded the
minimum required.
¶4 On July 19, the tenth business day after the Committee filed
its petitions, the Stanwitz Petitioners (“Petitioners”) filed a complaint
pursuant to § 19-118(D) challenging the validity of certain petitions based
3
STANWITZ V. REAGAN
Opinion of the Court
on various objections to petition circulators, including that their
registrations were defective, they were ineligible to circulate petitions, and
they were improperly paid based upon the number of signatures gathered.
¶5 On August 2, the Secretary completed her preliminary review
of the petitions pursuant to § 19-121.01, and determined that 263,000
signatures remained to be verified pursuant to additional statutory
procedures. On August 7, the Committee filed a complaint pursuant to
A.R.S. § 19-122(A) claiming the Secretary erroneously removed certain
petition sheets and signatures during her review. The trial court
consolidated the actions.
¶6 On August 9, prior to trial, Petitioners notified the
Committee’s counsel and the trial court that they intended to subpoena
approximately twenty of the Committee’s petition circulators to testify
concerning their statutory qualifications to gather signatures. Counsel for
the Committee requested additional time to prepare for the evidentiary
hearing in light of the subpoenaed witnesses, which the court granted. The
next day, Petitioners issued subpoenas to fifteen circulators, approximately
0.6% of the Committee’s circulators, requiring their appearance at the
August 20 evidentiary hearing.
¶7 On August 10 and 13, Petitioners served the Committee’s
circulators. Petitioners provided counsel for the Committee with copies of
the subpoenas on August 10 and informed counsel that they had served, or
were in the process of serving, the circulators. Fourteen of the circulators
listed as their statutory address, for purposes of service of process pursuant
to § 19-118(B)(2), the same location—a ninth-floor suite in a multi-tenant
Phoenix commercial office building rented by the petition circulation
company hired by the Committee.1 Because there was a guard stationed at
the first-floor entrance to the building, Petitioners served the subpoenas on
the guard, who signed the service of process form and wrote that he was
“authorized to receive and accept service of process.”
¶8 None of the fifteen subpoenaed circulators appeared at the
August 20 evidentiary hearing or otherwise responded to Petitioners’
1 One circulator provided a different address with no suite or room number
and the Committee does not challenge the validity of service at that address
under § 19-118(B)(2).
4
STANWITZ V. REAGAN
Opinion of the Court
subpoenas. Petitioners moved the trial court to disqualify the non-
appearing circulators’ petitions containing 8824 signatures. In response,
the Committee challenged the constitutionality of three statutes: A.R.S.
§ 19-102.01(A), which requires strict construction of, and compliance with,
constitutional and statutory requirements for statewide initiative measures;
§ 19-122(A), which governs the Secretary’s duties to accept and file a
petition for an initiative or referendum; and § 19-118(C), which invalidates
any petition signatures obtained by a registered circulator properly served
with a subpoena who fails to appear for trial.
¶9 On August 22, the day before the trial court filed its ruling,
the Secretary issued the results of her final review, which included county
recorders’ verifications of random signature samples pursuant to A.R.S.
§ 19-121.02(A)-(B). The Secretary determined, pursuant to A.R.S.
§ 19-121.04(A), that “the estimated total number of valid signatures is
223,892, which is less than the 225,963 minimum signatures required to
qualify for the ballot under the Arizona Constitution.” The Secretary
concluded that, pending the outcome of legal challenges in the trial court,
“[the Initiative] has not submitted a sufficient number of signatures for
placement on the November 6, 2018 ballot.”
¶10 On August 23, the trial court filed its ruling, in relevant part,
upholding the constitutionality of § 19-102.01(A) (the strict compliance
provision), finding that the statute “reasonably supplements” and does
“not unreasonably hinder or restrict” the Constitution; upholding the
constitutionality of § 19-118(C) (the circulator subpoena provision), “both
on its face and as applied to the facts of this case,” because it “reasonably
supplements and does not unreasonably hinder[] the Committee’s
constitutional right of initiative”; and voiding the petition sheets containing
8824 signatures produced by the fifteen circulators who failed to appear
pursuant to Petitioners’ subpoenas. The trial court’s ruling rendered the
Initiative ineligible for the November 2018 ballot.
¶11 The Committee and Petitioners filed expedited appeals in this
Court pursuant to A.R.S. § 19-122(A). The Committee challenges the
constitutionality of §§ 19-102.01(A) and 19-118(C), and the trial court’s
decision to disqualify the non-appearing subpoenaed circulators’ petition
signatures. Because the parties agree that the validity of the signatures
gathered by the non-appearing circulators is dispositive as to whether the
5
STANWITZ V. REAGAN
Opinion of the Court
Initiative qualified for inclusion on the November 2018 ballot, we do not
consider Petitioners’ appeal.
II.
¶12 As our decision does not turn on whether the Committee
strictly complied with § 19-118(C), we need not determine the
constitutionality of the strict compliance requirement of § 19-102.01(A). See,
e.g., Hayes v. Cont’l Ins. Co., 178 Ariz. 264, 273 (1994) (noting that, if possible,
“we construe statutes to avoid unnecessary resolution of constitutional
issues”). Consequently, the only issues we must decide are the
constitutionality of § 19-118(C) and the propriety of the trial court’s
exclusion of the non-appearing subpoenaed circulators’ petition signatures.
We have jurisdiction over this matter pursuant to article 6, § 5(3) of the
Arizona Constitution and § 19-122(C).
III.
¶13 We will not disturb a trial court’s findings of fact unless they
are “clearly erroneous as not either supported by reasonable evidence or
based on a reasonable conflict of evidence.” Moreno v. Jones, 213 Ariz. 94,
98 ¶ 20 (2006) (internal quotation marks omitted). We review de novo as a
question of law whether an initiative violates a constitutional or statutory
requirement. League of Ariz. Cities & Towns v. Brewer, 213 Ariz. 557, 559 ¶ 7
(2006). We review the constitutionality of a statute de novo, “construing it,
if possible, to uphold its constitutionality.” State v. Hulsey, 243 Ariz. 367,
385 ¶ 67 (2018); see Pedersen v. Bennett, 230 Ariz. 556, 558 ¶ 6 (2012).
¶14 As noted above, the Arizona Constitution authorizes the
state’s qualified electors to propose and enact laws by initiative. Ariz.
Const. art. 4, pt. 1, § 1(1)–(2). This authority, however, is subject to
reasonable regulation. Id. § 1(14) (the initiative power “shall not be
construed to deprive the legislature of the right to enact any measure except
that the legislature shall not have the power to adopt any measure that
supersedes” an enacted initiative). “Further, article 7, section 12 directs the
legislature to enact ‘registration and other laws to secure the purity of
elections and guard against abuses of the elective franchise.’” Molera v.
Invest In Ed. Comm., ___ Ariz. ___, 428 P.3d 490, 493 ¶ 10 (2018) (quoting
Ariz. Const. art. 7, § 12). A statute regulating a provision of our constitution
is permissible if it “does not unreasonably hinder or restrict the
6
STANWITZ V. REAGAN
Opinion of the Court
constitutional provision and if the [statute] reasonably supplements the
constitutional purpose” of the provision. Direct Sellers, 109 Ariz. at 5.
¶15 Section 19-118(A) provides that “[a]ll circulators who are not
residents of this state and, for statewide ballot measures only, all paid
circulators must register as circulators with the secretary of state before
circulating petitions pursuant to this title.” Section 19-118(B)(1) requires
that the circulator consent to the jurisdiction of Arizona courts “in resolving
any disputes concerning the circulation of petitions by that circulator,” and
§ 19-118(B)(2) mandates that the circulator designate an Arizona address
“at which the circulator will accept service of process related to disputes
concerning circulation of that circulator’s petitions.” “Service of process is
effected under this section by delivering a copy of the subpoena to that
person individually or by leaving a copy of the subpoena at the address
designated by the circulator with a person of suitable age.” § 19-118(B)(2).
Thus, § 19-118, which requires certain circulators to register before
gathering signatures for ballot measures and creates a cause of action to
challenge the eligibility of petition circulators, is an exercise of legislative
authority to regulate the ballot measure process. Cf. W. Devcor, Inc. v. City
of Scottsdale, 168 Ariz. 426, 429–31 (1991) (holding referendum petitions
invalid because they did not comply with constitutional and statutory
requirements for circulators’ statements); Direct Sellers, 109 Ariz. at 5
(holding that “the requirement that circulators of referendum petitions be
qualified electors is a valid exercise of legislative power”).
IV.
¶16 Section 19-118(C), the statutory provision the Committee
challenges here, sets forth registered petition circulators’ obligations to
respond to a subpoena and the penalty for non-compliance:
If a registered circulator is properly served with a subpoena to
provide evidence in an action regarding circulation of petitions and
fails to appear or produce documents as provided for in the
subpoena, all signatures collected by that circulator are deemed
invalid.
7
STANWITZ V. REAGAN
Opinion of the Court
A.
¶17 The Committee argues that § 19-118(C) is facially
unconstitutional as it fails to pass muster under Direct Sellers because it
unduly hinders and restricts the legislative authority of the people through
the initiative process and fails to reasonably supplement the purpose of the
initiative process. Specifically, the Committee contends that the statute
impedes the initiative process because it improperly disqualifies otherwise
valid signatures merely because a circulator fails to appear when
subpoenaed to testify as to a petition challenge. We disagree.
¶18 To provide context for the Committee’s constitutional
challenge, we note that the Arizona Constitution specifically envisions a
signature verification requirement, Ariz. Const. art. 4, pt. 1, § 1(9), and this
Court has observed that “[t]he circulator is the only person in the process
who is required to make a sworn statement and is, therefore, the person
under the greatest compulsion to lend credibility to the process.” W.
Devcor, 168 Ariz. at 432. Consequently, because the integrity of the
signature collection process is singularly dependent on the probity of
circulators, “statutory circulation procedures” are critical “to reduce the
number of erroneous signatures, guard against misrepresentations, and
confirm that signatures were obtained according to law.” Brousseau v.
Fitzgerald, 138 Ariz. 453, 456 (1984) (discussing candidate nominating
petitions); cf. Arrett v. Bower, 237 Ariz. 74, 79 ¶ 17 (App. 2015) (concluding
that a petition serial number requirement was “critical” to ensuring the
integrity of the referendum process).
¶19 “To succeed on a facial challenge, . . . ‘the challenger must
establish that no set of circumstances exists under which the [statute] would
be valid. The fact that the [statute] might operate unconstitutionally under
some conceivable set of circumstances is insufficient to render it wholly
invalid.’” State v. Wein, 244 Ariz. 22, 31 ¶ 34 (2018) (quoting United States v.
Salerno, 481 U.S. 739, 745 (1987)), petition for cert. docketed, No. 18-391 (U.S.
Sept. 27, 2018). “[T]he State need not narrowly tailor the means it chooses
to promote ballot integrity,” including deterrence of fraud. Timmons v.
Twin Cities Area New Party, 520 U.S. 351, 365 (1997). As noted, supra ¶ 14, a
statute regulating a provision of the Arizona Constitution is permissible if
it “does not unreasonably hinder or restrict the constitutional provision and
if the [statute] reasonably supplements the constitutional purpose” of the
provision. Direct Sellers, 109 Ariz. at 5.
8
STANWITZ V. REAGAN
Opinion of the Court
¶20 The Committee’s facial challenge fails for two reasons. First,
the Committee does not contend that § 19-118(C)’s disqualification remedy
is invalid in all circumstances. On the contrary, the Committee observes
that “requiring the circulators to register and provide information to
facilitate calling them as witnesses in any proceeding involving their
petitions could arguably protect the integrity of the initiative process” when
there is a “valid objection” or a “need for the circulator’s testimony.” The
Committee’s implicit concession refutes its facial constitutional challenge
because it expressly contemplates a constitutional application of the statute.
Second, contrary to the Committee’s argument, the challenged provision
reasonably supplements the initiative process by deterring fraud.
¶21 We agree with the trial court that the statute “represents a
reasonable means of fostering transparency, facilitating the judicial fact-
finding process, inducing compliance with valid compulsory process, and
mitigating the threat of fraud or other wrongdoing infecting the petition
process.” Thus, § 19-118(C) is constitutionally valid on its face because it
furthers the constitutional purpose of the initiative process by ensuring the
integrity of signature gathering by reasonable means, and the Committee
fails to demonstrate that there is “no set of circumstances” under which the
statute’s application would be valid.
B.
¶22 The Committee’s principal argument, then, is that § 19-118(C)
is unconstitutional as applied in this case because the circulators’ testimony
was not factually or legally necessary to determine the validity of their
petition signatures and Petitioners’ issuance of subpoenas was unduly
burdensome. More pointedly, the Committee contends that Petitioners
“had no intention of actually relying on testimony by [the subpoenaed
circulators]” because their testimony was unnecessary or irrelevant to
Petitioners’ challenges to the circulators’ statutory qualifications. We are
unpersuaded.
¶23 Petitioners raised serious allegations concerning the
circulators’ statutory qualifications to collect signatures. Despite the
Committee’s assertion that the circulators’ testimony was unnecessary for
9
STANWITZ V. REAGAN
Opinion of the Court
the trial court to evaluate Petitioners’ challenges, the court, in its discretion,
reached the opposite conclusion. In fact, the trial court found that
the [s]ubpoenaed circulators’ failure to appear, or to
otherwise respond to the subpoenas, materially prejudiced
the fact-finding process, particularly with respect to questions
relating to (1) the manner in which circulators were
compensated, to include whether or to what extent signature
quotas or other productivity factors affected circulators’
compensation or employment status; (2) the existence and
nature of felony convictions; and (3) alleged defects in the
circulators’ registration forms and petition affidavits.
On this record, we find no basis to disturb the trial court’s findings
concerning the merits of Petitioners’ asserted need for testimony to support
their challenges to the subpoenaed circulators’ qualifications. See Moreno,
213 Ariz. at 98 ¶ 20.
¶24 Further, the Committee’s suggestion that it was unduly
burdened by Petitioners’ subpoenas to circulators is unpersuasive.
Petitioners subpoenaed only fifteen circulators to testify—fewer than one
percent (0.6%) of the Committee’s petition circulators—and the Committee
received notice of the subpoenas eleven days before the evidentiary
hearing. Section 19-118(C)’s application here demonstrates, rather than
refutes, the constitutional application of the statute’s disqualification
remedy.2
2
The Committee, citing San Carlos Apache Tribe v. Superior Court, 193 Ariz.
195, 195–96 ¶¶ 37-40 (1999), asserts in a footnote that “[t]o the extent that
A.R.S. § 19-118(C) also precludes the court from making factual findings
regarding the eligibility or lawful registration of circulators based on
evidence before it, it raises separation of powers concerns.” We decline to
consider the Committee’s passing reference to “separation of powers
concerns.” See, e.g., AMERCO v. Shoen, 184 Ariz. 150, 154 n.4 (App. 1995)
(declining to consider a “cursory parenthetical assertion” as sufficient to
frame an issue for review).
10
STANWITZ V. REAGAN
Opinion of the Court
C.
¶25 The Committee next argues that, even if § 19-118(C) is
constitutional, the trial court erred in refusing to quash the subpoenas
because Petitioners failed to comply with the statute’s valid service
requirement and Arizona Rule of Civil Procedure 45’s service and
timeliness provisions. We disagree.
¶26 “Service of process is effected under [§ 19-118] by delivering
a copy of the subpoena to that person individually or by leaving a copy of
the subpoena at the address designated by the circulator with a person of
suitable age.” § 19-118(B)(2); see also Ariz. R. Civ. P. 4.1(d)(1)-(3) (service is
proper if an individual is served personally, if a copy of the served
document is left at their dwelling or usual place of abode with a person of
suitable age, or if service is performed on an authorized agent). For
purposes of service of process, an authorized agent is a person who has
actual authority to accept service or who has apparent authority to do so
based on the principal’s actions. Kline v. Kline, 221 Ariz. 564, 570 ¶ 20 (App.
2009).
¶27 The Committee contends that Petitioners’ service was
defective under § 19-118(B)(2) because they served fourteen subpoenas on
a guard stationed on the first floor of the multi-story office building rather
than at the circulators’ listed ninth-floor suite at the same address. This
contention is unconvincing. The Committee, through its contracted
petition-circulation company, chose this location as the circulators’
statutory service address. Petitioners effected service at this facility as they
were permitted—with the guard on the first floor of the circulators’
building who signed the service of process form and avowed in writing that
he was “authorized to receive and accept service of process” for the
building’s tenants. Petitioners reasonably served the building’s guard as
the circulators’ authorized agent for service purposes. We see no reason to
disturb the trial court’s finding of proper service. See Moreno, 213 Ariz. at
98 ¶ 20. Further, accepting the Committee’s argument that Petitioners
failed to satisfy the statute’s service requirement on these facts would
incentivize evasion of service because it would encourage a circulator to
register a statutory service address beyond the reach of a process server,
thus undermining the enforceability and fraud deterrence purpose of
§ 19-118(C).
11
STANWITZ V. REAGAN
Opinion of the Court
¶28 The Committee’s argument that Petitioners failed to comply
with the Rule 45 requirements to provide proof of service of the subpoenas,
Ariz. R. Civ. P. 45(d)(3), and to do so within a “reasonable time to comply,”
Ariz. R. Civ. P. 45(e)(2)(A)(i), is also unavailing. On August 10, 2018,
Petitioners provided written notice to the Committee of the fifteen
subpoenas, including the circulators’ names and service-of-process
addresses, and that the circulators were being served. At the August 20
evidentiary hearing, after Petitioners moved to disqualify the non-
appearing circulators, the Committee suggested for the first time that
Petitioners’ service was defective. But the Committee knew of the
subpoenas at the initial hearing in the case, the subpoenas were issued and
served ten days before the evidentiary hearing, and the Committee was
promptly served with copies of the affidavits of service. Because the record
belies the Committee’s claim of inadequate notice and unfair delay, we
affirm the trial court’s ruling that the Committee failed to articulate any
prejudice arising from the alleged Rule 45 violations.
V.
¶29 The Committee recounts its extraordinary efforts in
circulating petitions and gathering signatures over seven months to
propose a constitutional amendment to enhance transparency concerning
the source of campaign contributions. We do not discount the civic activism
or the resources devoted to this campaign. But the right of the people to
exercise the legislative prerogative is, and must be, subject to reasonable
regulation of the initiative process. Because § 19-118 fosters the integrity of
the initiative process and does so by reasonable means, we hold that
§ 19-118(C)’s disqualification provision is constitutional on its face and as
applied here.
¶30 For the reasons stated, we affirm the trial court’s judgment
disqualifying the Initiative from the November 2018 ballot.
12