Legacy Foundation Action v. Citizens Clean Election

IN THE
SUPREME COURT OF THE STATE OF ARIZONA
LEGACY FOUNDATION ACTION FUND,
Plaintiff/Appellant,
v.
CITIZENS CLEAN ELECTIONS COMMISSION,
Defendant/Appellee.
No. CV-22-0041-PR
Filed March 2, 2023
Appeal from the Superior Court in Maricopa County
The Honorable Christopher T. Whitten, Judge
Nos. CV2018-004532, CV2018-006031
(Consolidated)
REVERSED AND REMANDED WITH INSTRUCTIONS
Opinion of the Court of Appeals, Division One
252 Ariz. 499 (App. 2022)
VACATED
COUNSEL:
Brian M. Bergin, Bergin, Frakes, Smalley & Oberholtzer, PLLC, Phoenix;
Brennan Bowen, Holtzman Vogel Baran Torchinsky & Josefiak PLLC,
Phoenix; Jason B. Torchinsky, Shawn Sheehy (argued), Holtzman Vogel
Baran Torchinsky & Josefiak PLLC, Haymarket, VA, Attorneys for Legacy
Foundation Action Fund
Mary R. O’Grady, Joseph N. Roth (argued), John S. Bullock, Osborn
Maledon, P.A., Phoenix, Attorneys for Citizens Clean Elections
Commission
LEGACY V. CITIZENS CLEAN ELECTIONS
Opinion of the Court
Timothy Sandefur, John Thorpe, Scharf-Norton Center for Constitutional
Litigation at the Goldwater Institute, Phoenix, Attorneys for Amicus Curiae
Goldwater Institute
Kristin K. Mayes, Arizona Attorney General, Alexander W. Samuels,
Principal Deputy Solicitor General, Kara M. Karlson, Joshua Whitaker,
Assistant Attorneys General, Phoenix, Attorneys for Amicus Curiae
Arizona Attorney General
Aditya Dynar, Pacific Legal Foundation, Arlington, VA, Attorneys for
Amicus Curiae Pacific Legal Foundation
VICE CHIEF JUSTICE TIMMER authored the Opinion of the Court, in
which CHIEF JUSTICE BRUTINEL, JUSTICES BOLICK, BEENE,
MONTGOMERY, and PELANDER (Ret.) joined. *
VICE CHIEF JUSTICE TIMMER, Opinion of the Court:
¶1 For the second time, we address issues stemming from a 2014
election-related dispute between the Clean Elections Commission (the
“Commission”) and Legacy Foundation Action Fund (“Legacy”). See
Legacy Found. Action Fund. v. Citizens Clean Elections Comm’n (Legacy I),
243 Ariz. 404 (2018). Because Legacy failed to timely appeal the
Commission’s final administrative decision assessing a penalty for Legacy’s
violation of the Citizens Clean Elections Act (the “Act”), we previously held
the superior court lacked appellate jurisdiction to decide whether the
Commission acted within its subject matter jurisdiction. Id. at 408 ¶ 19.
We now consider whether the superior court can adjudicate that issue in a
collateral proceeding.
*
Justice Lopez and Justice King have recused themselves from this case.
Pursuant to article 6, section 3 of the Arizona Constitution, Justice John
Pelander (Ret.) of the Arizona Supreme Court was designated to sit in this
matter.
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LEGACY V. CITIZENS CLEAN ELECTIONS
Opinion of the Court
¶2 We hold the superior court can adjudicate Legacy’s challenge
to the Commission’s subject matter jurisdiction in a collateral proceeding
because a judgment entered by a tribunal lacking subject matter jurisdiction
is void. Also, we hold that issue preclusion does not apply under the
circumstances here because the Commission did not serve as a neutral
decisionmaker in deciding its own jurisdiction, thereby depriving Legacy
of a full and fair adjudication of the issue.
BACKGROUND
¶3 This matter has ping-ponged between the Commission and
the courts. It commenced when an attorney for former Mesa Mayor Scott
Smith’s gubernatorial campaign filed a complaint with the Commission on
July 1, 2014, alleging Legacy violated the Act by funding advertisements
expressly advocating against Mayor Smith without properly registering
and filing statutorily required campaign finance reports. See A.R.S. §§ 16-
914.02 (repealed 2016), -941(D), -958(A)–(B). 1 The complaint also alleged
that gubernatorial candidate Doug Ducey, his campaign committees, and
others coordinated with Legacy for these advertisements, triggering
unfulfilled in-kind contribution reporting requirements. The Commission
is the state agency charged with enforcing the Act. A.R.S. § 16-956(A)(7).
¶4 On July 16, Legacy responded to the complaint arguing the
Commission lacked subject matter jurisdiction and, regardless, the
complained-of advertisements did not constitute “express advocacy.”
Two days later, Legacy filed a lawsuit in superior court challenging the
Commission’s jurisdiction. (The court dismissed the action on
September 23 for reasons not appearing in our record.) The Ducey
campaign also asserted the Commission lacked jurisdiction to investigate
questions involving contributions to candidates not participating in clean
election funding.
1 Throughout this opinion, we cite statutes in effect in 2014. The
legislature has since amended some of those provisions. We also take
judicial notice of the Commission’s record of proceedings in MUR 14-007,
which contains transcripts and documents referred to, but not attached, as
exhibits in the appellate record here. See, e.g., Jarvis v. State Land Dep’t City
of Tucson, 104 Ariz. 527, 530 (1969) (taking judicial notice of an
administrative agency’s records).
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LEGACY V. CITIZENS CLEAN ELECTIONS
Opinion of the Court
¶5 On July 28, spurred to act by Legacy’s lawsuit and two other
pending lawsuits concerning what constitutes “express advocacy” and
whether the Commission has jurisdiction when non-participating
candidates engage in express advocacy, Thomas Collins, the Commission’s
executive director, recommended that the Commission immediately decide
it possessed jurisdiction and that Legacy’s advertisements constituted
express advocacy. See Ariz. Admin. Code R2-20-206(A) (authorizing the
executive director to make recommendations). Legacy filed a
supplemental response opposing the recommendation and then appeared
at a public Commission meeting held July 31, where Collins presented his
recommendation and Legacy’s and the Ducey campaign’s attorneys argued
against it. After the Commission members questioned Collins and the
attorneys, the commissioners met in executive session with their own
attorney and then voted in public session that the Commission possessed
jurisdiction to consider the complaint. 2 The commissioners did not decide
whether Legacy had engaged in express advocacy.
¶6 On September 9, Collins filed a statement explaining why
reason existed to believe Legacy had violated the Act and recommending
action. 3 Collins and Legacy argued the matter at a September 11 public
meeting, and the commissioners voted to find that reason existed to believe
Legacy had violated the Act and to authorize an investigation. In a
September 26 compliance order, the Commission formally notified Legacy
of that decision and required that Legacy comply with the Act within
fourteen days, provide an explanation for not doing so, or enter into a
public administrative settlement with the Commission. See A.R.S. § 16-
957(A) (authorizing these procedures if the Commission finds “reason to
believe” that a person violated the Act). The Commission also ordered
Legacy to answer written questions under oath concerning its spending in
Arizona. See § 16-956(B) (authorizing such questions).
¶7 Legacy filed a response on October 14, again arguing that the
Commission lacked subject matter jurisdiction and that the advertisements
fell outside the Act. At a November 20 public meeting, Collins informed
2 The transcript reflects that the Commission would receive legal advice
during any executive session and that the “public” left the room during
executive session. It is unclear whether Collins was also present during
the executive session or removed himself as a member of “the public.”
3 On Collins’ recommendation, the Commission dismissed the complaint
against the Ducey campaign on August 21 for lack of evidence.
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Opinion of the Court
the commissioners that Mayor Smith’s attorney had withdrawn the
complaint and asked that the Commission refrain from further action.
After meeting in executive session with their attorney, the commissioners
refused the request. They variously commented the Commission had
already asserted jurisdiction by investigating the complaint; the
commissioners had a duty to “remedy any violation that [they] perceive”;
the commissioners were there “to uphold the public interest in enforcing
the [Act]” and not Mayor Smith’s “private interest”; and once an
investigation occurs, “[un]like [in] a court action,” the complainant has no
authority to withdraw a complaint as the matter is then one “brought by
the Commission.”
¶8 Thereafter, Collins recommended the Commission find
probable cause that Legacy had violated the Act and assess a monetary
penalty. Legacy’s attorney then argued Legacy’s advertisements were not
“express advocacy,” again argued the Commission lacked subject matter
jurisdiction, and that, in any case, the statutory penalty provision was
inapplicable to Legacy because it was not acting on behalf of a candidate.
See A.R.S. § 16-942(B). The commissioners again found the Commission
had jurisdiction, concluded probable cause existed Legacy had violated the
Act by failing to comply with reporting statutes, and assessed a penalty of
about $95,000. The Commission entered an order to this effect on
November 28, additionally finding that Legacy had violated the statutory
reporting requirements. See § 16-957(B) (authorizing the Commission to
assess a penalty if it “finds that the alleged violator remains out of
compliance” with the Act after the fourteen-day period).
¶9 Legacy appealed and requested an administrative hearing,
challenging, among other things, the Commission’s subject matter
jurisdiction. Through their attorneys, Legacy and the Commission
participated in a hearing on January 28, 2015. Thereafter, an
administrative law judge (“ALJ”) from the office of administrative hearings
rejected Legacy’s assertion that the Commission had exceeded its authority
to enforce the Act. But he ultimately ruled the Commission had failed in
its burden to show Legacy had engaged in express advocacy and was
therefore subject to the Act’s reporting requirements. He additionally
concluded that even if Legacy had violated the Act, the Commission’s order
was defective for failing to make any candidate on whose behalf the
expenditure was made jointly and severally responsible. The ALJ
therefore sustained Legacy’s appeal and rescinded the civil penalty.
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Opinion of the Court
¶10 The Commission’s attorney, who had previously advised the
commissioners during the proceedings and represented the Commission
before the ALJ, moved the Commission to reject the ALJ’s disposition and
instead affirm the November 28, 2014 Commission order.4 After Legacy
opposed the motion, the Commission issued a final administrative order in
the form proposed by the Commission’s attorney, which made additional
findings of fact, accepted the ALJ’s findings of fact and some of his
conclusions of law, but rejected his conclusions that Legacy had not
engaged in express advocacy and that the Commission’s order was
otherwise defective. Consequently, the Commission affirmed the
November 28, 2014 order finding a violation and assessing a penalty. See
A.R.S. § 41-1092.08(B) (authorizing an agency to accept, reject, or modify an
ALJ’s decision).
¶11 Legacy appealed the Commission’s order to the superior
court, arguing, among other things, the Commission lacked subject matter
jurisdiction because the advertisements did not constitute express
advocacy. See Legacy I, 243 Ariz. at 405 ¶ 4. The Secretary of State sought
to intervene, claiming the Commission had usurped her authority to
enforce independent expenditure statutes.
¶12 The superior court dismissed the appeal as untimely. Id.
Both the court of appeals and this Court subsequently agreed the appeal
was untimely, thereby depriving the superior court of jurisdiction to
consider Legacy’s challenge. Id. at 408 ¶ 19. We did not address whether
Legacy could collaterally attack the Commission’s decision. Id. (“We
express no view on whether Legacy may pursue alternative procedural
means to challenge the Commission’s penalty order as void.”).
¶13 Legacy next filed a special action complaint in the superior
court challenging the Commission’s subject matter jurisdiction, and the
Commission simultaneously sued to enforce payment of its penalty.
Legacy Found. Action Fund v. Citizens Clean Elections Comm’n, 252 Ariz. 499,
502 ¶ 5 (App. 2022). After consolidating the cases, the superior court
ultimately granted the Commission’s motion to dismiss the special action
complaint and entered summary judgment in favor of the Commission on
its complaint. Id. ¶ 6. The court permitted the collateral challenge but
4 The motion stated that “[a]n attorney who did not previously represent
or advise the Commission on this matter [would] provide the Commission
independent advice” regarding the motion.
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LEGACY V. CITIZENS CLEAN ELECTIONS
Opinion of the Court
applied issue preclusion to reject two bases for Legacy’s claim that the
Commission lacked subject matter jurisdiction. It rejected a third basis on
the merits.
¶14 In a split decision, the court of appeals affirmed but for a
different reason. Id. at 501 ¶ 2. The majority adopted the Restatement
(Second) of Judgments § 12 (Am. L. Inst. 1982) and held Legacy was
precluded from collaterally attacking the Commission’s final
administrative order on jurisdictional grounds. Legacy Found. Action Fund,
252 Ariz. at 504 ¶ 15. The dissenting judge disagreed, reasoning
Restatement § 12 is inconsistent with Arizona law, which provides that a
tribunal’s subject matter jurisdiction is always subject to challenge. Id.
at 507 ¶ 35, 508 ¶ 41 (Bailey, J., dissenting). She further concluded that
neither issue preclusion nor claim preclusion applies to shield an agency
order from a collateral challenge if the agency lacked subject matter
jurisdiction. Id. at 508 ¶¶ 37–38.
¶15 Whether to follow Restatement § 12 in deciding if an agency’s
subject matter jurisdiction can be challenged in a collateral proceeding and
identifying the circumstances in which issue preclusion applies to agency
determinations present recurring legal issues of statewide importance.
We therefore granted review. We have jurisdiction under article 6,
section 5(3) of the Arizona Constitution.
DISCUSSION
¶16 We review a summary judgment and a judgment resulting
from a motion to dismiss de novo. Dabush v. Seacret Direct LLC, 250 Ariz.
264, 267 ¶ 10 (2021) (summary judgment); Mills v. Ariz. Bd. of Tech.
Registration, 253 Ariz. 415, 420 ¶ 10 (2022) (motion to dismiss). Similarly,
we review de novo as issues of law whether to adopt the Restatement § 12
and whether issue preclusion applies. See Dobson Bay Club II DD, LLC v.
La Sonrisa de Siena, LLC, 242 Ariz. 108, 111 ¶ 15, 112 ¶ 18 (2017) (Restatement
application); Banner Univ. Med. Ctr. Tucson Campus, LLC v. Gordon, 252 Ariz.
264, 266 ¶ 8 (2022) (issue preclusion).
A. Restatement § 12
¶17 Restatement § 12 curtails the circumstances in which a party
may collaterally attack an adjudicative tribunal’s subject matter
jurisdiction:
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LEGACY V. CITIZENS CLEAN ELECTIONS
Opinion of the Court
When a court has rendered a judgment in a contested action,
the judgment precludes the parties from litigating the
question of the court’s subject matter jurisdiction in
subsequent litigation except if:
(1) The subject matter of the action was so plainly beyond the
court’s jurisdiction that its entertaining the action was a
manifest abuse of authority; or
(2) Allowing the judgment to stand would substantially
infringe the authority of another tribunal or agency of
government; or
(3) The judgment was rendered by a court lacking capability
to make an adequately informed determination of a
question concerning its own jurisdiction and as a matter
of procedural fairness the party seeking to avoid the
judgment should have opportunity belatedly to attack the
court’s subject matter jurisdiction.
Thus, under Restatement § 12, once a final judgment is entered, parties are
ordinarily precluded from challenging the tribunal’s subject matter
jurisdiction in collateral litigation, regardless of whether the parties
litigated subject matter jurisdiction in the original proceeding. See
Restatement § 12 cmt. d.
¶18 We generally follow Restatement principles when they reflect
sound legal policy and no contrary controlling authority exists. In re Sky
Harbor Hotel Props., LLC, 246 Ariz. 531, 533 ¶ 6 (2019). Here, we agree with
the court of appeals’ dissent that Restatement § 12 is inconsistent with
controlling Arizona authority, and the majority therefore erred by adopting
the provision. See Legacy Found. Action Fund, 252 Ariz. at 507 ¶ 32.
¶19 For more than a century Arizona courts have recognized that
a judgment is “void upon its face” and has no legal effect if the issuing court
lacked subject matter jurisdiction, making the judgment “subject to attack
at any time,” including in a collateral proceeding. Shinn v. Ariz. Bd. of Exec.
Clemency, 521 P.3d 997, 1004 ¶ 27 (Ariz. 2022) (quoting Hughes v. Indus.
Comm’n, 69 Ariz. 193, 197 (1949)); see also Chaparro v. Shinn, 248 Ariz. 138,
142–43 ¶ 22 (2020); Walker v. Davies, 113 Ariz. 233, 235 (1976); Henderson v.
Towle, 23 Ariz. 377, 383 (1922); Tube City Min. & Mill. Co. v. Otterson, 16 Ariz.
8LEGACY V. CITIZENS CLEAN ELECTIONS
Opinion of the Court
305, 310 (1914). Final administrative orders are similarly void if the
agency lacked subject matter jurisdiction, rendering them vulnerable to
collateral attack. See Tucson Warehouse & Transfer Co., Inc. v. Al’s Transfer,
Inc., 77 Ariz. 323, 325 (1954) (“[A] decision of [an agency] which goes
beyond its power as prescribed by the Constitution and statutes is
vulnerable for lack of jurisdiction and may be questioned in a collateral
proceeding.”); Ariz. Pub. Serv. Co. v. S. Union Gas Co., 76 Ariz. 373, 377 (1954)
(stating that the corporation commission decision could not be collaterally
attacked unless the commission lacked jurisdiction or power to make the
decision); see also A.R.S. § 12-902(B) (barring judicial review of an
administrative decision outside a direct appeal “except for the purpose of
questioning the jurisdiction of the administrative agency over the person or
subject matter”). Thus, unlike Restatement § 12, Arizona law generally
permits collateral challenges to a final administrative decision to contest the
tribunal’s subject matter jurisdiction.
¶20 Contrary to the court of appeals’ opinion, this authority
applies even if a party had already raised a jurisdictional challenge before
entry of the contested judgment. See Legacy Found. Action Fund, 252 Ariz.
at 504 ¶ 15. This Court’s decision in Moeur v. Ashfork Livestock Co., 48 Ariz.
298 (1936), although addressing the propriety of a mandamus action, is
instructive. There, the state land commissioner awarded a land lease to a
livestock company (Ashfork) and rejected a competing application from
another (Fritsche). Id. at 299–300. Fritsche appealed to the state land
department but failed to serve Ashfork with notice as statutorily required.
Id. at 300. Ashfork appeared at the appeal hearing and moved to dismiss
the matter. Id. It argued that because Fritsche’s appeal was procedurally
defective, the commissioner’s decision had become final, and the state land
department therefore lacked subject matter jurisdiction to overturn it. Id.The department denied the motion and ultimately awarded the lease to
Fritsche. Id. Although Ashfork was statutorily entitled to appeal to the
superior court, it instead filed a new mandamus lawsuit that resulted in the
court directing the department to issue the lease to Ashfork. Id. at 300–01.
¶21 On appeal, this Court rejected Fritsche’s argument that
mandamus was improper because Ashfork had a plain, speedy, and
adequate remedy by way of appealing the state land department’s decision.
Id. at 302, 304–05. The Court reasoned that an appeal was neither
adequate nor proper because any appeal from the department’s decision
might have ignored Ashfork’s rights as established in the commissioner’s
decision, which had become final due to the absence of a proper appeal.
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Opinion of the Court
Id. at 304. Significantly, the Court recognized that “[a] judgment rendered
without jurisdiction is a nullity and the party against whom it is entered
may ignore it and proceed as though no attempt had ever been made to
render it.” Id. This reasoning is equally applicable when considering
whether to foreclose a collateral challenge to a void judgment based on a
tribunal’s lack of subject matter jurisdiction.
¶22 In sum, we do not adopt Restatement § 12. Judgments
entered by tribunals lacking subject matter jurisdiction are subject to
challenge in collateral proceedings. See Shinn, 521 P.3d at 1004 ¶ 27.
B. Issue preclusion
¶23 Our rejection of Restatement § 12 does not resolve this matter.
Because Legacy unsuccessfully challenged the Commission’s subject matter
jurisdiction during the administrative proceedings, we must decide
whether issue preclusion (collateral estoppel) applies to uphold the
superior court’s judgment. The superior court ruled that because the
Commission had determined it possessed jurisdiction, and Legacy failed to
timely appeal, the Commission’s decision was final and “created issue
preclusion.” Consequently, the court ruled it was bound by the
Commission’s jurisdictional findings.
¶24 Issue preclusion is a judicial doctrine that prevents a party
from relitigating issues of fact or law. Arizona v. California, 530 U.S. 392,
414 (2000); Chaney Bldg. Co. v. City of Tucson, 148 Ariz. 571, 573 (1986). The
doctrine protects litigants from needlessly relitigating settled issues and
promotes judicial economy. Crosby-Garbotz v. Fell ex rel. Cnty. of Pima,
246 Ariz. 54, 57 ¶ 10 (2019). For a party to successfully assert issue
preclusion as an affirmative defense, see Lakin Cattle Co. v. Engelthaler, 101
Ariz. 282, 284 (1966), it must show that (1) the issue at stake is the same in
both proceedings; (2) the issue was actually litigated and determined in a
valid and final judgment issued by a tribunal with competent jurisdiction;
(3) the opposing party had a full and fair opportunity to litigate the issue
and actually did so; and (4) the issue was essential to the judgment. See
Chaney Bldg. Co., 148 Ariz. at 573; King v. Superior Court, 138 Ariz. 147, 150
(1983); Corbett v. ManorCare of Am., Inc., 213 Ariz. 618, 624 ¶ 16 (App. 2006);
Restatement § 27.
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Opinion of the Court
¶25 Legacy argues that because issue preclusion applies only to
“valid” final judgments issued by courts or tribunals possessing
“competent jurisdiction,” the superior court must independently decide
whether the Commission possessed subject matter jurisdiction without
giving preclusive effect to the Commission’s determination of that issue.
See Legacy Found. Action Fund, 252 Ariz. at 508 ¶ 38 (Bailey, J., dissenting)
(“The requirements of a ‘valid’ decision and a ‘court of competent
jurisdiction’ mean that a court must have subject-matter jurisdiction over a
dispute before its ruling may acquire preclusive effect.”). We disagree.
¶26 An agency is authorized to determine its own jurisdiction.
See Ross v. Ariz. State Pers. Bd., 185 Ariz. 430, 432 (App. 1995). When it
“make[s] specific adjudications as to jurisdiction over the person or over the
subject matter,” these determinations are generally “subject only to direct
and not collateral attack by parties to the action.” Martin v. Indus. Comm’n,
4 Ariz. App. 547, 549–50 (1967); see also Lofts v. Superior Court, 140 Ariz. 407,
410 (1984) (“When the rendering court in a contested hearing determines it
has jurisdiction, its determination is res judicata on the jurisdictional issue
and cannot be relitigated in another state.”). Thus, because the
Commission determined it had subject matter jurisdiction, if the
circumstances justifying issue preclusion apply, the superior court correctly
applied the doctrine in finding subject matter jurisdiction.
¶27 Legacy next argues issue preclusion does not apply here
because subject matter jurisdiction was not actually litigated and decided
in the Commission proceedings. Legacy’s argument rests on its premise
that an issue is actually litigated only if an appellate court addresses it.
Because the superior court in the administrative proceedings dismissed
Legacy’s appeal as untimely, Legacy asserts jurisdiction was not actually
litigated. Again, we disagree. An administrative decision becomes final
for purposes of issue preclusion when those proceedings conclude, even
absent an appeal. Guertin v. Pinal Cnty., 178 Ariz. 610, 612 (1994) (“A
party’s failure to appeal a final administrative decision makes that decision
final and res judicata.”); see also Ariz. Downs v. Superior Court, 128 Ariz. 73,
76 (1981) (“In order for res judicata or collateral estoppel to be applicable
there must be a final judgment.”).
¶28 Legacy finally argues that the superior court violated
Legacy’s due process rights by invoking issue preclusion because the
Commission was not neutral in determining its own jurisdiction, thereby
depriving Legacy of a full and fair adjudication of the issue. See Ferris v.
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Opinion of the Court
Hawkins, 135 Ariz. 329, 331 (App. 1983) (stating that issue preclusion does
not apply when “there is some overriding consideration of fairness to a
litigant, which the circumstances of the particular case would dictate”
(quoting Di Orio v. City of Scottsdale, 2 Ariz. App. 329, 332 (1965))). Amicus
Goldwater Institute originally raised this issue, prompting this Court to
address it at oral argument and then invite relevant briefing from the
parties and interested amici. We do not ordinarily address arguments
raised solely by amicus. See Protect Our Ariz. v. Fontes, 522 P.3d 678, 683–
84 ¶ 13 n.4 (Ariz. 2023). We exercise our discretion to do so here because
the issue is one of constitutional dimension and statewide importance, and
“the public interest is better served by having the issue considered rather
than deferred.” Dombey v. Phx. Newspapers, Inc., 150 Ariz. 476, 482 (1986).
¶29 In Horne v. Polk, 242 Ariz. 226 (2017), we addressed the
consequences of permitting a non-neutral decisionmaker to issue a final
decision. There, the Secretary of State determined reasonable cause
existed to believe the Attorney General and others (collectively, “Attorney
General”) had violated campaign finance laws. Id. at 228 ¶ 2. Sheila
Polk, the Yavapai County Attorney, served as a special attorney general to
investigate the alleged violations. Id. Polk found that the Attorney
General had violated the law and directed him to amend his campaign
finance reports and refund $397,000 in contributions. Id ¶ 3. The
Attorney General requested and received an administrative hearing. Id.at 229 ¶ 4. At its conclusion, the ALJ found that Polk had failed to prove
any violations and recommended she vacate the compliance order. Id.Polk disagreed and issued a final decision accepting the ALJ’s findings of
fact and some conclusions of law but affirming her prior order. Id. ¶ 5.
In a subsequent appeal, the superior court affirmed Polk’s decision because
substantial evidence supported it, and a challenge to the campaign finance
laws was not well-taken. Id. ¶ 6. The court of appeals affirmed. Id. ¶ 8.
¶30 This Court vacated the prior courts’ decisions, concluding
that “due process does not permit the same individual to issue the initial
decision finding violations and ordering remedies, participate personally in
the prosecution of the case before an [ALJ], and then make the final agency
decision that [would] receive only deferential judicial review.” Id. at 228
¶ 1. After noting that a single agency may generally investigate,
prosecute, and adjudicate cases, we concluded “the combination of
functions in a single official violates an individual’s Fourteenth
Amendment due process right to a neutral adjudication in appearance and
reality.” Id. at 230 ¶ 14.
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Opinion of the Court
¶31 Here, unlike in Horne, one person did not serve as prosecutor
and final adjudicator. But for two reasons, that distinction does not cast
the Commission as a neutral decisionmaker in deciding the breadth of its
own subject matter jurisdiction under the circumstances here.
¶32 First, at the time the Commission initially ruled that it had
subject matter jurisdiction, it was motivated to do so, at least partly, by two
pending lawsuits concerning the meaning of “express advocacy” and
whether the Commission possessed jurisdiction to investigate questions
concerning campaign contributions to non-participating candidates. See
Doug Ducey Candidate Campaign Comm. & Legacy Found. Action Fund,
MUR 14-007, at 16 (Ariz. Citizens Clean Elections Comm’n July 28, 2014)
(Recommendation on Jurisdiction & Express Advocacy Communication)
(“Given that one of those cases is pending an opinion from the court of
appeals and the other will be fully briefed in the Superior Court by next
week, I recommend the Commission acknowledge that the advertisement
is express advocacy and that the Commission has jurisdiction over the
Complaint.”). The Commission was a party in one case, Horne v. Ariz.
Citizens Clean Elections Comm’n, No. CV 2014-009404, at 1 (Maricopa Cnty.
Super. Ct. Oct. 31, 2014), and had filed an amicus brief in the other, Comm.
for Just. & Fairness v. Ariz. Sec’y of State’s Off., 235 Ariz. 347, 347 (App. 2014).
Thus, when deciding the Commission had subject matter jurisdiction to
consider the complaint against Legacy, the commissioners had an interest
in taking a position consistent with those taken by the Commission in
pending lawsuits.
¶33 Second, although advised by Collins and their attorney, the
commissioners themselves made all enforcement decisions and then
adjudicated the case. Specifically, they found reason existed to believe
Legacy had violated the Act; authorized an investigation; ordered Legacy
to comply with the Act and answer written questions under oath verifying
its spending in Arizona; found probable cause that Legacy had violated the
Act; found that Legacy had violated the Act; assessed a penalty; and issued
the final administrative order rejecting the ALJ’s recommendation and
affirming their prior order, which had found a violation of the Act and
assessed a penalty.
¶34 The commissioners’ advocacy role is further evidenced by
their decision to continue with the matter after Mayor Smith’s attorney
withdrew the complaint and asked them to stop proceedings, and their
statements they had a duty to “remedy any violation that [they] perceive”;
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Opinion of the Court
that the commissioners’ job was “to uphold the public interest in enforcing
the [Act]” and not Mayor Smith’s “private interest”; and that once an
investigation occurs, the matter is one “brought by the Commission.”
Effectively, the commissioners acted as a party to the dispute, casting
considerable doubt on their ability to fairly and objectively decide whether
the Commission possessed jurisdiction. See Horne, 242 Ariz. at 231 ¶ 17
(observing “it is unreasonable that any man should determine his own
quarrel” (citing Am. Gen. Ins. Co. v. Fed. Trade Comm’n, 589 F.2d 462, 463 (9th
Cir. 1979))).
¶35 Like Polk in Horne, the commissioners here served as both
prosecutor and final decisionmaker, thereby depriving Legacy of its due
process right to have subject matter jurisdiction adjudicated by a neutral
decisionmaker. See id. at 230–31 ¶ 16 (reasoning “once an official
determines that a legal violation has occurred, that official can be expected
to develop a will to win at subsequent levels of adjudication” and cannot
be considered a neutral decisionmaker in accordance with due process).
Although the ALJ was a neutral decisionmaker who reviewed the
commissioners’ initial decision, his ruling was not binding, and the
commissioners lawfully rejected it in their final decision. See
§ 41-1092.08(B). Thus, the ALJ’s participation did not provide Legacy with
the neutrality demanded by due process. See Horne, 242 Ariz. at 232 ¶ 22
(giving no weight to ALJ proceedings in similar circumstances).
¶36 Likewise, the availability of an appeal to the superior court
did not cure the due process violation because the court would have
deferentially reviewed the Commission’s non-neutral findings of fact
pertinent to its subject matter jurisdiction. See A.R.S. § 12-910(E)
(amended 2017) (“The court shall affirm the agency action unless after
reviewing the administrative record and supplementing evidence
presented at the evidentiary hearing the court concludes that the action is
not supported by substantial evidence, is contrary to law, is arbitrary and
capricious or is an abuse of discretion.”); see also Horne, 242 Ariz. at 230 ¶ 14
(noting the “due process violation is magnified where the agency’s final
determination is subject only to deferential review”).
¶37 The Commission could have avoided this circumstance by
having only Commission employees serve in the prosecutorial role and
confining the commissioners’ role to be the ultimate decisionmaker. See
Horne, 242 Ariz. at 231 ¶ 16 (“[B]arring an agency head who makes an
ultimate decision from having even general supervisory authority over
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LEGACY V. CITIZENS CLEAN ELECTIONS
Opinion of the Court
agency employees involved in the prosecution of a case would unduly
hamper agency operations. Due process will be satisfied if the agency
head who serves as the ultimate adjudicator does not also serve in an
advocacy role in the agency proceedings.”). And when serving in that
role, those employees (or counsel) should not also serve in an advisory role
for the commissioners. Due process requires an agency to separate
prosecutorial and adjudicative functions. See id. at 234 ¶ 27 (stating that
agency heads “must be isolated from advocacy functions and strategic
prosecutorial decisionmaking and must supervise personnel involved in
those functions in an arms-length fashion”). We recognize that the Act
and the Arizona Administrative Procedures Act together empowered the
Commission to both initially and finally determine that the Act has been
violated without de novo review by a neutral decisionmaker. See
§§ 12-910(E); 16-957. Nevertheless, the Commission must carefully carry
out these functions in a manner that complies with due process for its
decision to carry preclusive effect. That did not occur here.
CONCLUSION
¶38 For the foregoing reasons, we vacate the court of appeals’
opinion, reverse the superior court’s judgment, and remand to that court to
determine whether the Commission had subject matter jurisdiction without
giving preclusive effect to the final administrative decision. We deny
Legacy’s request for attorney fees pursuant to A.R.S. § 12-348 without
prejudice to seeking those fees from the superior court should it ultimately
prevail.
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