Campaign Integrity Watchdog, LLC v. Colorado Citizens Protecting our Constitution

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
February 8, 2018
2018COA16
No. 16CA1522, Campaign Integrity Watchdog, LLC v. Colorado
Citizens Protecting our Constitution — Election Law —
Campaign Finance — Major Purpose Test
A division of the court of appeals considers whether an
administrative law judge properly applied the “major purpose” test
described in Buckley v. Valeo, 424 U.S. 1, 79 (1976), and Colorado
Right to Life Committee, Inc. v. Coffman, 498 F.3d 1137 (10th Cir.
2007), to determine whether an organization qualified as a political
committee. The division concludes that (1) the major purpose test
applied to this case; and (2) the record supported the administrative
law judge’s determination that the organization was not a political
committee because, based on the amount of its spending on
political advocacy for candidates, it did not have the major purpose
of nominating or electing candidates.
The division also concludes that the administrative law judge
did not err when he (1) evaluated a consecutive twelve-month
period, instead of a calendar year period, in considering the
organization’s spending for political advocacy for candidates; and (2)
excluded expenditures from his analysis that the organization did
not make within the consecutive twelve-month period.
The division therefore affirms the administrative law judge’s
order.
COLORADO COURT OF APPEALS 2018COA16
Court of Appeals No. 16CA1522
Colorado Office of Administrative Courts No. 0S2016-0005
Campaign Integrity Watchdog, LLC,
Petitioner-Appellant,
v.
Colorado Citizens Protecting our Constitution,
Respondent-Appellee,
and
Colorado Secretary of State,
Intervenor-Appellee.
ORDER AFFIRMED
Division VII
Opinion by JUDGE BERNARD
Berger and Freyre, JJ., concur
Announced February 8, 2018
Matthew Arnold, Authorized Representative, Denver, Colorado, of Campaign
Integrity Watchdog, LLC
Holland & Hart LLP, Douglas L. Abbott, Denver, Colorado, for Respondent-
Appellee
Cynthia H. Coffman, Attorney General, Matthew D. Grove, Assistant Solicitor
General, Denver, Colorado, for Intervenor-Appellee
¶1 This appeal asks us to review the decision of an administrative
law judge who employed the “major purpose test,” which the United
States Supreme Court first set forth in Buckley v. Valeo, 424 U.S. 1,
79 (1976), to determine whether an organization was a political
committee. We conclude that the record supports the judge’s
holding that the organization was not a political committee because
it did not have the major purpose of nominating or electing
candidates.
¶2 The organization in question was Colorado Citizens Protecting
our Constitution, which we shall call “Colorado Citizens.”
Campaign Integrity Watchdog, LLC, which we shall call “Campaign
Integrity,” filed a complaint against Colorado Citizens, alleging that
it had not registered as a political committee when it should have.
The judge dismissed the complaint. Campaign Integrity appeals.
We affirm.
I. Background
¶3 Between September and November 2015, Colorado Citizens
paid for a radio advertisement that supported the candidacy of Bob
Gardner for state senate. The advertisement stated as follows:
1
He’s a conservative leader who’s served our
community and our country his entire life.
Now he’s running to represent Colorado
Springs in the state senate. Bob Gardner. As
a young cadet at the Air Force Academy, he
learned the true meaning of leadership. Then
Bob Gardner fought for school choice as a
founder of Cheyenne Mountain Charter
Academy. And as a state legislator, Bob
Gardner stood up against trial lawyers,
teachers’ unions, and big spending politicians,
earning him multiple legislator of the year
awards. Now Bob Gardner is running for state
senate. To make sure our veterans get the
care they deserve. To fight for our rights on
guns, school choice, and health care. And to
take on the big spenders in both parties. A
fiscal hawk with the unflinching guts to stand
up for what’s right. Bob Gardner. Paid for by
Colorado Citizens Protecting our Constitution.
¶4 The advertisement ran on one or more radio stations in
Colorado Springs from September through November 2015.
¶5 Following the advertisement’s airing, Campaign Integrity filed
a complaint with the Colorado Secretary of State. It alleged that
Colorado Citizens had not registered as a political committee, as
required by article XXVIII of the Colorado Constitution and the Fair
Campaign Practices Act, sections 1-45-101 to -118, C.R.S. 2017.
The Secretary’s office referred the case to the Office of
2
Administrative Courts, which assigned an administrative law judge
to preside over it.
¶6 The Secretary moved to intervene in the proceedings. The
judge granted the motion in part, noting that the Secretary would
be allowed to intervene only to “submit[] an amicus-style brief
addressing the legal issues relevant in the complaint.”
¶7 Both Colorado Citizens and the Secretary moved for summary
judgment. Relying on Colorado Right to Life Committee, Inc. v.
Coffman, 498 F.3d 1137 (10th Cir. 2007), and Alliance for
Colorado’s Families v. Gilbert, 172 P.3d 964 (Colo. App. 2007),
Colorado Citizens contended that it was not a political committee
because it did not have the “major purpose” of supporting or
opposing candidates. The Secretary supported that contention, but
it added that Colorado Citizens could not be a political committee
because it did not make or receive contributions. Because of the
Secretary’s limited party status, the judge construed the motion as
a legal brief supporting Colorado Citizens’ position. The judge
denied both summary judgment motions.
¶8 The judge then held a hearing on the merits to determine
Colorado Citizens’ major purpose. He found that, based on the
3
financial information admitted into evidence, Colorado Citizens’
spending on political candidates only accounted for little more than
one-third of its total spending, while the majority of its spending
involved political issues. So he concluded that Colorado Citizens
was not a political committee because it did not have the major
purpose of nominating or electing political candidates.
II. Standard of Review and General Legal Principles
¶9 We will uphold the decision of an administrative law judge
unless his or her decision is arbitrary, capricious, unsupported by
the evidence, or contrary to law. See Sherritt v. Rocky Mountain Fire
Dist., 205 P.3d 544, 545 (Colo. App. 2009). “[W]e accept [a judge’s]
factual findings unless they are clearly erroneous or unsupported
by evidence in the record.” Colo. Educ. Ass’n v. Rutt, 184 P.3d 65,
77 (Colo. 2008). But whether the judge applied the correct legal
standard is a question of law that we review de novo. See Cerbo v.
Protect Colo. Jobs, Inc., 240 P.3d 495, 500-01 (Colo. App. 2010); see
also Stamm v. City & Cty. of Denver, 856 P.2d 54, 57 (Colo. App.
1993)(noting that “[a] reviewing court is required to set aside the
final orders of an administrative agency if the agency applied an
erroneous legal standard”).
4
¶ 10 In an administrative hearing, evidence is admissible if it
“possesses probative value commonly accepted by reasonable and
prudent persons in the conduct of their affairs.” Colo. Motor Vehicle
Dealer Licensing Bd. v. Northglenn Dodge, Inc., 972 P.2d 707, 713
(Colo. App. 1998). But a judge “has discretion to determine the
relevancy of evidence.” Aviado v. Indus. Claim Appeals Office, 228
P.3d 177, 179 (Colo. App. 2009). “Evidentiary decisions are firmly
within a[] [judge’s] discretion . . . and will not be disturbed absent a
showing of abuse of that discretion.” Youngs v. Indus. Claim
Appeals Office, 2013 COA 54, ¶ 40. “An abuse of discretion occurs
when the [judge’s] order is beyond the bounds of reason, as where it
is unsupported by the evidence or contrary to law.” Heinicke v.
Indus. Claim Appeals Office, 197 P.3d 220, 222 (Colo. App. 2008).
III. “The Major Purpose” Test
¶ 11 Campaign Integrity contends that the judge erred when he
held that Colorado Citizens was not a political committee. The error
arose, this contention continues, from the judge’s misapplication of
the major purpose test. We disagree.
5
A. Additional Background
¶ 12 The judge’s decision applied the major purpose test that the
United States Supreme Court set forth in Buckley, 424 U.S. at 79.
He determined that, “although the major purpose test is not
expressly included within Article XXVIII’s definition of political
committee, [he could not] constitutionally apply that definition to
[Colorado Citizens] unless the evidence proves that [Colorado
Citizens’] major purpose was to support or oppose one or more
political candidates.”
¶ 13 The judge analyzed the major purpose issue from two
perspectives. First, he looked at Colorado Citizens’ “statement of
organizational purpose.” He found that this statement did not
mention political advocacy, but “political advocacy in one form or
another is all [that Colorado Citizens] did over the one-year period
under study.” So he “attache[d] little weight to [its] statement of
organizational purpose.”
¶ 14 The judge then looked at Colorado Citizens’ financial records.
He found that spending on candidates for a year beginning in 2015
and ending in 2016 accounted for only 33.5 percent of its total
spending. Because more than half of Colorado Citizens’ spending
6
went to something other than candidates, he found that it was not a
political committee.
B. Law
¶ 15 Section 2(12)(a) of article XXVIII of the Colorado Constitution
defines a “[p]olitical committee” as “any person, other than a
natural person, or any group of two or more persons, including
natural persons that have accepted or made contributions or
expenditures in excess of $200 to support or oppose the nomination
or election of one or more candidates.”
¶ 16 In interpreting similar language under federal campaign law,
the United State Supreme Court held that, to qualify as a political
committee, the organization must either (1) be “under the control of
a candidate”; or (2) have “the major purpose of which is the
nomination or election of a candidate” to qualify as a political
committee. Buckley, 424 U.S. at 79. Because there is no evidence
in this case that Colorado Citizens was controlled by any candidate,
including Mr. Gardner, we are only concerned with the second
consideration, which is known as the “major purpose test.” See
Alliance for Colorado’s Families, 172 P.3d at 970. (The Supreme
Court adopted the major purpose test to avoid “serious problems of
7
vagueness” that might have “deter[red] those who [sought] to
exercise protected First Amendment rights.” Buckley, 424 U.S. at
76-77.)
¶ 17 As far as political committees are concerned, the major
purpose test does not appear in either Colorado’s Constitution or in
any Colorado statute. But the Tenth Circuit, when analyzing the
definition of political committee in our state constitution, held that
it would be unconstitutional as applied if it did not incorporate the
major purpose test. Colo. Right to Life Comm., Inc., 498 F.3d at
1154. In incorporating the major purpose test, the Tenth Circuit
provided further guidance on how to apply it. Relying on Federal
Election Commission v. Massachusetts Citizens for Life, 479 U.S.
238, 252 (1986), the circuit stated that there were two ways to
determine an organization’s major purpose. Colo. Right to Life
Comm., Inc., 498 F.3d at 1152. First, a court could examine its
“central organizational purpose.” Id. Second, a court could
compare “the organization’s independent spending with overall
spending to determine whether the preponderance of expenditures
are for express advocacy or contributions to candidates.” Id.
8
¶ 18 In Alliance for Colorado’s Families, a division of this court
decided that the major purpose test from Buckley, as augmented by
Colorado Right to Life Committee, Inc., was the proper test to apply
when analyzing whether an organization was a political committee.
(The division did not reach a definitive conclusion about whether
the major purpose test had been satisfied because the
administrative law judge had not made sufficient factual findings.
172 P.3d at 972. So the division remanded the case for “further
proceedings . . . guided by Colorado Right to Life Committee, Inc. . . .
and other relevant authority.” Id. at 973.)
C. Analysis
¶ 19 We begin by noting that Campaign Integrity agrees that the
definition of “political committee” found in Colorado’s Constitution
is “insufficient” because it does not incorporate Buckley’s major
purpose test. Campaign Integrity then asks us to “clarify the
standard for applying” that test to political committees. Based on
Campaign Integrity’s position, we shall proceed, as did the
administrative law judge, to decide this case employing the major
purpose test.
9
¶ 20 Campaign Integrity contends that the judge in this case
should have applied the statutory major purpose definition from
section 1-45-103(12)(b), C.R.S. 2017, which defines “issue
committee,” to Colorado Citizens’ conduct. It reasons that (1)
because the great extent of Colorado Citizens’ written and broadcast
communications supported a candidate, it was a political
committee, see § 1-45-103(12)(b)(II)(B); (2) the judge erred because
he did not consider whether Colorado Citizens’ support of Mr.
Gardner constituted a “considerable portion” of its total activities,
see § 1-45-103(12)(b)(II)(A); see also Cerbo, 240 P.3d at 501; and (3)
the judge did not consider Colorado Citizens’ “demonstrated pattern
of conduct,” see § 1-45-103(12)(b)(II). We disagree with these
contentions for several somewhat interconnected reasons.
¶ 21 First, the phrase “major purpose” does not appear in the
definition of political committee found in section 2(12)(a) of article
XXVIII. As we have explained above, Colorado Right to Life
Committee, Inc., held that this definition would be unconstitutional
without the major purpose test, and Alliance for Colorado’s Families
followed Colorado Right to Life Committee, Inc. We are persuaded by
the reasoning in Alliance for Colorado’s Families. So we, too, will
10
follow Colorado Right to Life Committee, Inc., and we will apply the
major purpose test in this case as augmented by the alternative
factors described in Colorado Right to Life Committee, Inc.
¶ 22 Second, we reject Campaign Integrity’s contention that we
should apply part of the definition of an “issue committee” to
determine whether Colorado Citizens was a political committee,
which is, as we have observed above, defined by a different
constitutional subsection. Unlike the definition of political
committee, the definition of “issue committee” in article 28, section
2(10)(a)(I), includes a reference to the issue committee’s major
purpose: “any person . . . [t]hat has a major purpose of supporting
or opposing any ballot issue or ballot question.” The term “major
purpose” as used in that definition is further defined in section 1-
45-103(12)(b). That section states that an organization’s major
purpose can be determined by
(I) An organization’s specifically identified
objectives in its organizational documents at the
time it is established or as such documents
are later amended; or
(II) An organization’s demonstrated pattern of
conduct based upon its:
11
(A) Annual expenditures in support of or
opposition to a ballot issue or ballot question;
or
(B) Production or funding, or both, of written or
broadcast communications, or both, in support
of or opposition to a ballot issue or ballot
question.
(Emphasis added.)
¶ 23 But, as we have suggested above, Campaign Integrity’s
contention contemplates apples when we must discuss oranges. A
“major purpose,” as defined in section 1-45-103(12)(b), only applies
to issue committees. And it ignores the importance of the
legislature’s choice to include a definition of “major purpose” for
issue committees but to exclude such a definition for political
committees. See § 1-45-103(14)(defining political committee); Colo.
Right to Life Comm., Inc., 498 F.3d at 1155 (“The inclusion of the
‘major purpose’ test in § 2(10)(a) indicates that the decision not to
include this requirement in the definition of political committee was
deliberate and consistent with the state’s citizenry’s intent.”).
Because issue committees and political committees are mutually
exclusive, see Colo. Const. art. XXVIII, § 2(10)(b)(stating that issue
committees do not include political committees), this legislative
12
choice makes clear that the definition of “major purpose” cannot
apply to both types of committees, see Turbyne v. People, 151 P.3d
563, 567-68 (Colo. 2007)(“We do not add words to [a] statute . . . .
[W]e cannot supply . . . missing language . . . .”).
¶ 24 Campaign Integrity’s contention is further undercut by the
language of the statutory definition of “major purpose” because
section 1-45-103(12)(b) refers to a major purpose of an
organization, not to the major purpose. See Cerbo, 240 P.3d at 501
(“[B]y using the indefinite article ‘a,’ the phrase ‘a major purpose’
brings within its ambit organizations for which promoting a ballot
issue is but one major purpose.” (citing Brooks v. Zabka, 168 Colo.
265, 269, 450 P.2d 653, 655 (1969))). Although, under this statute,
an issue committee could have more than one major purpose, the
United States Supreme Court made clear in Buckley that a political
committee can have only one. See Indep. Inst. v. Coffman, 209 P.3d
1130, 1137 (Colo. App. 2008)(noting that Buckley’s major purpose
test determines the “one, central purpose for which [a political
committee] is created”).
¶ 25 Third, we think that Campaign Integrity’s reliance on Colorado
Ethics Watch v. Gessler, 2013 COA 172M, is misplaced. In that
13
case, a division of this court struck down the Secretary’s rule
codifying the major purpose test. Id. at ¶ 38. But, unlike in this
case, the division’s analysis focused on a question of administrative
law: Has the legislature, either explicitly or implicitly, delegated the
authority to an administrative agency to fill a gap in a statute? Id.
at ¶ 22. The division’s analysis therefore did not touch upon
whether the major purpose test, as described in Colorado Right to
Life Committee, Inc., and Alliance for Colorado’s Families, should
apply to political committees in this case.
¶ 26 Fourth, Campaign Integrity asserts that Colorado Ethics Watch
required the judge to evaluate the major purpose test in terms of
whether Colorado Citizens “demonstrated [a] pattern of conduct
reflected in its annual activity and production and/or funding of
communications.” But this demonstrated pattern of conduct test
comes directly from section 1-45-103(12)(b), the statute defining
“major purpose” for issue committees. And, as we have already
twice observed, this statutory test is inapplicable to this case.
Colorado Ethics Watch did not suggest otherwise.
14
¶ 27 We therefore conclude that the judge properly applied the
major purpose test as described in Colorado Right to Life Committee,
Inc., and Alliance for Colorado’s Families.
¶ 28 We further conclude that the judge’s factual findings
supported his conclusion that Colorado Citizens was not a political
committee. The judge considered the alternatives of the major
purpose test. Our review of the record leads us to agree with him
that Colorado Citizens’ statement of its organizational purpose was
unhelpful because the statement and Colorado Citizens’ actual
activities were inconsistent. For example, the statement of purpose
referred to “educational outreach regarding the strengthening of
public education,” but it did not mention political activity or
political advocacy. But, after reviewing records from Colorado
Citizens, the judge found that it had engaged in political advocacy
for a year, although most of the advocacy was on behalf of issues,
not candidates.
¶ 29 And we therefore agree with the judge that employing the
second test from Colorado Right to Life Committee, Inc. — analyzing
Colorado Citizens’ spending activity — was the appropriate method
of inquiry. In doing so, as we will describe in more detail below, the
15
judge gave Campaign Integrity the benefit of the doubt when
analyzing Colorado Citizens’ spending activity. For example, he
treated unexplained spending in Colorado Citizens’ records as
spending on political advocacy for candidates. Yet, even giving
Campaign Integrity that benefit, the records merely showed that a
little over one-third of Colorado Citizens’ spending was on political
advocacy for candidates. We therefore conclude that the record
established that Colorado Citizens was not a political committee
because its major purpose — its “one, central purpose,” Indep. Inst.,
209 P.3d at 1137 — was not supporting candidates.
IV. Calendar Year Versus Consecutive Twelve Months
¶ 30 When applying the major purpose test, Campaign Integrity
contends that the judge should have considered Colorado Citizens’
spending in a calendar year, instead of in a consecutive
twelve-month period from June 2015 to May 2016. We disagree.
A. Additional Background
¶ 31 Campaign Integrity subpoenaed financial records from
Colorado Citizens from July 1, 2015, through April 1, 2016. In
response, Colorado Citizens produced bank statements from June
2015 to April 2016. Colorado Citizens also produced a profit and
16
loss summary showing expenses from July 2015 to May 2016.
Finally, Colorado Citizens produced several invoices.
¶ 32 The parties stipulated to admit these documents. But some of
them did not provide the judge with information about the purpose
of some of the expenditures. So, as we observed above, the judge
sanctioned Colorado Citizens by deciding that it would treat all
unexplained expenditures as spending on political advocacy for
candidates. The judge then analyzed Colorado Citizens’
contributions from June 2015 to May 2016, and, based on the
submitted records, he decided that Colorado Citizens’ contributions
to candidates constituted only slightly more than a third of its
overall expenditures.
¶ 33 Although Campaign Integrity did not subpoena documents
from the first half of 2015, it later told the judge that, for the
purposes of the major purpose test, he had to analyze Colorado
Citizens’ expenditures for the calendar year of 2015. It added that,
if the judge had done so, he would have decided that Colorado
Citizens had been a political committee in 2015.
17
B. Law and Analysis
¶ 34 We conclude, for the following reasons, that the judge did not
err when he decided to base the major purpose analysis on the
records of Colorado Citizens’ expenses in the consecutive twelve-
month period spanning 2015 and 2016.
¶ 35 First, Campaign Integrity undercut its contention because it
did not provide sufficient documentary evidence for the judge to
consider calendar years 2015 and 2016 separately. In an
administrative hearing, the burden is on an order’s proponent to
present sufficient evidence to support the requested order. See
§ 24-4-105(7), C.R.S. 2017; see also Velasquez v. Dep’t of Higher
Educ., 93 P.3d 540, 542 (Colo. App. 2003). So Campaign Integrity
had the burden to provide the judge with complete documentation
from 2015 if it expected the judge to analyze the financial
information on a calendar-year basis.
¶ 36 But Campaign Integrity only subpoenaed documents from the
second half of 2015 and from the first three months of 2016. It did
not subpoena any records from the first half of 2015. (As we will
describe in more detail below, the judge had some information
about expenditures in the first half of 2015 because Colorado
18
Citizens voluntarily disclosed it.) Campaign Integrity set the
parameters for the judge’s analysis, and it cannot now argue that
the judge should have considered evidence that it did not provide.
Because the time period that the judge chose included the months
in which Colorado Citizens paid for and ran the advertisement at
issue in the complaint, we conclude that the judge did not err when
he chose the 2015-2016 time period for analysis.
¶ 37 Second, even if Campaign Integrity had provided sufficient
documentary evidence, there is no legal authority requiring the
judge to conduct his analysis on a calendar-year basis. Although
Campaign Integrity mentions Buckley as a basis for this contention,
it cites nothing in that case that would lead us to the same
conclusion, and we have not found anything in our independent
reading of that case to support that contention. And Campaign
Integrity’s vague reference to the Internal Revenue Code’s reporting
requirements is similarly unconvincing. Campaign Integrity does
not cite any other cases, statutes, or constitutional provisions that
support its contention, and we have not found any.
19
V. Exclusion of $76,000 from March and April 2015
¶ 38 Campaign Integrity contends that the judge improperly
excluded evidence that Colorado Citizens had made $76,000 in
contributions to candidates during March and April of 2015. We
disagree.
A. Additional Background
¶ 39 Some evidence in the record showed that Colorado Citizens
donated $76,000 in March and April of 2015 to support candidates
in municipal elections in Colorado Springs. But the judge declined
to consider these contributions in its analysis “because [Campaign
Integrity] did not subpoena [Colorado Citizens’] financial records for
those months, [so] the evidentiary record [was] incomplete as to
[Colorado Citizens’] total spending in those months.” In other
words, although the records that the judge had before him showed
that Colorado Citizens had spent $76,000 in the first half of 2015
on political advocacy for candidates, the records did not show
whether Colorado Citizens spent additional funds on non-candidate
activity.
20
B. Law and Analysis
¶ 40 We conclude, for the following reasons, that the judge did not
abuse his discretion when he excluded the $76,000 from his
analysis because his decision was not beyond the bounds of reason
and because it was supported by the evidence. See Youngs, ¶ 40;
Aviado, 228 P.3d at 180; Heinicke, 197 P.3d at 222.
¶ 41 Campaign Integrity did not subpoena any records from March
and April of 2015; Colorado Citizens gave those records to the court
voluntarily. The judge determined that the financial records during
that period were incomplete because they did not include “any
evidence regarding non-candidate spending that may have occurred
in the same period.” And the judge also had no financial records
from May 2015, which created a gap between the March and April
records and those from the second half of 2015.
¶ 42 Finally, even if the judge had included the $76,000 in his
analysis, the total candidate spending for 2015 would still have
constituted less than fifty percent of Colorado Citizens’ overall
candidate-related expenditures, or less than what would constitute
the one, central purpose for which Colorado Citizens was created.
See Indep. Inst., 209 P.3d at 1137.
21
VI. Secretary’s Contentions
¶ 43 The Secretary urges us to affirm on an alternative basis —
Colorado Citizens was not a political committee because it did not
make or receive contributions — if we do not affirm the judge’s
order based on the major purpose test. Because we have concluded
that the judge properly (1) applied the major purpose test; (2) used
the year covered by the records before him instead of calendar year
2015; and (3) excluded $76,000 in Colorado Citizens’ expenditures
from his analysis, we decline to address the Secretary’s alternative
contention.
¶ 44 The order is affirmed.
JUDGE BERGER and JUDGE FREYRE concur.
22