Campaign Integrity Watchdog LLC v. Colorado Republican Party Independent Expenditure Committee

COLORADO COURT OF APPEALS 2017COA32
Court of Appeals No. 16CA0140
Office of Administrative Courts Case No. OS 2015-0020
Campaign Integrity Watchdog LLC,
Petitioner-Appellant,
v.
Colorado Republican Party Independent Expenditure Committee,
Respondent-Appellee,
and
Colorado Secretary of State,
Intervenor-Appellee,
and
Office of Administrative Courts,
Appellee.
ORDER AFFIRMED
Division I
Opinion by JUDGE NAVARRO
Taubman and Graham, JJ., concur
Announced March 9, 2017
Matthew Arnold, Authorized Representative, Denver, Colorado, of Campaign
Integrity Watchdog
Brownstein Hyatt Farber Schreck, LLP, Christopher O. Murray, David B.
Meschke, Denver, Colorado, for Respondent-Appellee
Cynthia H. Coffman, Attorney General, Matthew D. Grove, Assistant Solicitor
General, Denver, Colorado, for Intervenor-Appellee
No Appearance for Appellee
¶1 Campaign Integrity Watchdog LLC (CIW) alleges that the
Colorado Republican Party Independent Expenditure Committee
(CORE) violated various campaign finance laws. An administrative
law judge (ALJ) dismissed CIW’s claims. CIW appeals, but we affirm
the ALJ’s order. In doing so, we hold that the applicable campaign
finance provisions do not require an independent expenditure
committee (IEC) to disclose a donation unless the donation was
given for the purpose of making an independent expenditure.
I. Factual and Procedural History
¶2 According to CIW’s complaint, its claims stem from two earlier
campaign finance proceedings against CORE, both initiated by CIW
and resolved by an ALJ. In the first case, an ALJ penalized CORE
in the amount of $200. In the second case, an ALJ imposed a $600
aggregate penalty and an award of $255 in costs. The Colorado
Republican Party paid these penalties and costs on CORE’s behalf.
CORE did not disclose these payments in its periodic campaign
finance disclosure reports. Around the same time, a private person
paid $50,000 to a law firm to settle CORE’s legal expenses. CORE
disclosed this payment as a “contribution” in its periodic campaign
finance disclosure report.
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¶3 CIW filed a complaint alleging that CORE did not comply with
the disclosure requirements of article XXVIII of the Colorado
Constitution, the Fair Campaign Practices Act (FCPA), §§ 1-45-101
to -118, C.R.S. 2016, and the Colorado Secretary of State’s Rules
Concerning Campaign and Political Finance. CIW maintained that
CORE should have disclosed as “donations” or “contributions” the
payments made by the Colorado Republican Party and that CORE
should have disclosed as “expenditures” all the payments.
¶4 CORE moved to dismiss the complaint. The Colorado
Secretary of State moved to intervene as a respondent and filed his
own motion to dismiss. The ALJ permitted the Secretary to
intervene for a limited purpose and considered his motion as an
“amicus-style brief.”
¶5 The ALJ dismissed CIW’s complaint under C.R.C.P. 12(b)(5) for
failure to state a claim upon which relief could be granted. The ALJ
decided as follows:
 CORE, as an IEC, was not required to report as “donations”
the payments made on its behalf by the Colorado Republican
Party because they were made for the purpose of satisfying
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CORE’s fines and costs, not for the purpose of making an
independent expenditure.
 CORE was not required to report as “contributions” the
payments made on its behalf by the Colorado Republican
Party because the statute requiring disclosure of contributions
does not apply to an IEC.
 CORE was not required to report as “expenditures” the
payments made on its behalf by the Colorado Republican
Party and the private person because the payments were for
fines, costs, and legal services, not for express advocacy.
¶6 CIW appeals. Both CORE and the Secretary have filed answer
briefs defending the ALJ’s decision.
II. Analysis
¶7 As it asserted in the administrative proceedings, CIW contends
on appeal that CORE was required to report some of the subject
payments as “donations” or “contributions” and to report all the
payments as “expenditures.” CIW is mistaken.
¶8 First, even if we assume that some payments constituted
donations under the applicable statutory definition, CORE was not
required to report them because the statute does not require an IEC
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to report donations unless they were made for the purpose of an
independent expenditure (and they were not here). Second, the law
requiring some entities to report contributions does not apply to an
IEC. Third, although the law requires an IEC to disclose certain
information after making some expenditures, the payments here do
not qualify as expenditures under the relevant constitutional and
statutory definitions. And the broader definition of expenditure set
forth in the Secretary’s campaign finance rule does not apply to an
IEC.
A. Standard of Review and Interpretive Principles
¶9 We review de novo a decision to dismiss a complaint under
C.R.C.P. 12(b)(5). Allen v. Steele, 252 P.3d 476, 481 (Colo. 2011).
We accept all factual allegations in the complaint as true and view
them in the light most favorable to the plaintiff. Id.; see also Warne
v. Hall, 2016 CO 50, ¶¶ 9, 27 (recognizing that a court need not
accept as true legal conclusions or conclusory allegations). But “[a]
court may not consider information outside the confines of the
pleading.” Allen, 252 P.3d at 481. In addition, we review de novo
statutory provisions, constitutional provisions, and an
administrative agency’s conclusions of law. Campaign Integrity
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Watchdog v. Coloradans for a Better Future, 2016 COA 51, ¶ 16
(cert. granted Sept. 12, 2016).
¶ 10 We do not look beyond the plain language of a constitutional
or statutory provision if its meaning is clear on its face. Vigil v.
Franklin, 103 P.3d 322, 327 (Colo. 2004); see Colo. Republican Party
v. Williams, 2016 COA 26, ¶ 15 (“The rules of construction are
essentially the same for constitutional and statutory provisions.”).
Where a constitutional provision and a statute pertain to the same
subject matter, we construe them in harmony. Williams, ¶ 15.
B. CORE’s Status
¶ 11 Because CORE’s status informs our analysis, we emphasize
that CORE is an IEC as defined by the FCPA and as confirmed by a
division of this court. Id. at ¶ 34. An IEC is a person or group of
persons that makes independent expenditures of over $1000 or
collects over $1000 from other persons for the purpose of making
an independent expenditure. § 1-45-103(11.5), C.R.S. 2016.
“Expenditure” means a payment “expressly advocating the election
or defeat of a candidate or supporting or opposing a ballot issue or
ballot question.” Colo. Const. art. XXVIII, § 2(8)(a); § 1-45-103(10).
An “independent expenditure” is an expenditure not controlled by or
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coordinated with any candidate or agent of such candidate. Colo.
Const. art. XXVIII, § 2(9); § 1-45-103(11).
¶ 12 To the extent CIW contends in its reply brief that CORE does
not qualify as an IEC, we do not consider the contention for two
reasons. First, CIW did not assert in its complaint that CORE is
not an IEC. As noted, a division of this court has held that CORE is
an IEC because its standing rules protect against coordination with
the Colorado Republican Party or its candidates, Williams, ¶ 34.
CIW did not allege in its complaint that CORE had failed to follow
its standing rules.1 Thus, the ALJ did not resolve this question.
Second, CIW did not challenge CORE’s status as an IEC in its
opening brief in this court. See DeHerrera v. Am. Family Mut. Ins.
Co., 219 P.3d 346, 352 (Colo. App. 2009) (refusing to consider
argument raised for first time in reply brief). On the contrary, CIW
seemed to premise its opening brief on the fact that CORE is an IEC
and then argued that an IEC must make certain disclosures.
1 CIW suggested in its response to the motion to dismiss that CORE
might not qualify as an IEC. But CIW did not make such a claim in
its complaint. We recognize that CIW filed its complaint before
Colorado Republican Party v. Williams, 2016 COA 26, was
announced. Still, like the ALJ’s, our analysis must focus
exclusively on the allegations of the complaint at issue here.
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¶ 13 As a result, the disclosure requirements applicable to an IEC
matter here. Section 1-45-107.5, C.R.S. 2016, applies to an IEC.
See Williams, ¶ 7. In contrast, section 1-45-108(1)(a)(I), C.R.S.
2016, sets forth disclosure requirements for other entities:
“candidate committees, political committees, issue committees,
small donor committees, and political parties.” See also Dep’t of
State Regs. 10.2, 10.3, 8 Code Colo. Regs. 1505-6 (explaining that
the disclosure requirements in section 1-45-108(1) apply to all
committees “[e]xcept for independent expenditure committees”).
The Colorado Constitution does not mention an IEC at all, but the
constitution does require any person making an independent
expenditure of more than $1000 to disclose certain information
about the expenditure. See Colo. Const. art. XXVIII, § 5.
¶ 14 Therefore, section 1-45-107.5 and Colorado Constitution
article XXVIII, section 5 control this case.
C. Donations
¶ 15 As relevant here, section 1-45-107.5 requires an IEC to do the
following regarding donations:
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 Register with the Secretary if it accepts a “donation” over
$1000 “that is given for the purpose of making an independent
expenditure.” § 1-45-107.5(3)(a) (emphasis added).
 Disclose the name and address of any person who “donates”
more than $250 in one year “for the purpose of making an
independent expenditure” if the IEC makes independent
expenditures of more than $1000 in one year.
§ 1-45-107.5(4)(b) (emphasis added).
 Disclose, in accord with the schedule applicable to political
committees, any “donation” over $20 given “for the purpose of
making an independent expenditure” to an IEC making
independent expenditures of more than $1000 in one year.
§ 1-45-107.5(8) (emphasis added).
See also Dep’t of State Reg. 5.2, 8 Code Colo. Regs. 1505-6 (An IEC
“must report donations over twenty dollars given for the purpose of
making an independent expenditure.”) (emphasis added).
¶ 16 “Donation” means:
(I) The payment, loan, pledge, gift, or
advance of money, or the guarantee of a loan,
made to any person for the purpose of making
an independent expenditure;
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(II) Any payment made to a third party that
relates to, and is made for the benefit of, any
person that makes an independent
expenditure;
(III) The fair market value of any gift or loan
of property that is given to any person for the
purpose of making an independent expenditure;
or
(IV) Anything of value given, directly or
indirectly, to any person for the purpose of
making an independent expenditure.
§ 1-45-103(7.3)(a) (emphasis added).
¶ 17 CIW relies on the definition of donation in section
1-45-103(7.3)(a)(II) because that definition does not seem to require
the donation to be given for the purpose of making an independent
expenditure. And CIW correctly observes that the ALJ did not
explicitly address this particular aspect of section
1-45-103(7.3)(a)(II).
¶ 18 We need not decide, however, whether the payments here
constituted donations under section 1-45-103(7.3)(a)(II). Even if
they did, the plain language of section 1-45-107.5 does not require
CORE to disclose them unless they were given for the purpose of
making an independent expenditure, as the above citations show.
But CIW’s complaint asserted that the payments were made to
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satisfy CORE’s administrative penalties and costs. Accepting these
allegations as true, we conclude that these payments were not given
for the purpose of making an independent expenditure. Indeed,
CIW does not suggest they were given for that purpose.
¶ 19 Instead, CIW maintains that the broader disclosure
requirements of section 1-45-108(1) apply to an IEC because:
(1) section 1-45-107.5(4)(a) begins with the phrase “[i]n addition to
any other applicable disclosure requirements specified in this
article or in article XXVIII of the state constitution”; and (2) some of
the Secretary’s online disclosure forms cite section 1-45-108. We
disagree for two reasons.
¶ 20 First, while an IEC must comply with other “applicable”
constitutional and statutory disclosure requirements, the
constitution requires an IEC to disclose information about
expenditures not donations, and section 1-45-108(1) does not apply
to an IEC. See Colo. Const. art. XXVIII, art. 5; § 1-45-108(1)(a)(I);
Dep’t of State Regs. 10.2, 10.3, 8 Code Colo. Regs. 1505-6; cf. Colo.
Const. art. XXVIII, § 7 (“The disclosure requirements relevant to
candidate committees, political committees, issue committees, and
political parties, that are currently set forth in section 1-45-108,
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C.R.S., or any successor section, shall be extended to include small
donor committees.”). Second, although the Secretary’s “Detailed
Summary” form cites section 1-45-108 in connection with
disclosing monetary itemized donations of $20 or more, the
Secretary’s more specific “Itemized Donation Statement ($20 or
more)” form directs an IEC to “reference section 1-45-107.5 for
donation reporting requirements.” And the Secretary’s separate IEC
registration form cites section 1-45-107.5. In any event, the
constitution and relevant statutes, not the Secretary’s forms, direct
our analysis.
¶ 21 For all of these reasons, CORE did not have to disclose the
payments at issue as donations.
D. Contributions
¶ 22 Section 1-45-107.5 does not require an IEC to disclose a
“contribution.” This fact makes sense because the definition of
contribution does not include payments made to or for the benefit
of an IEC. “Contribution” includes payments made to or for the
benefit of “any candidate committee, issue committee, political
committee, small donor committee, or political party,” as well as
anything of value given to a candidate to promote the candidate’s
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election. Colo. Const. art. XXVIII, § 2(5)(a); § 1-45-103(6)(a); see
also § 1-45-103(6)(c) (expanding “contribution” to include some
payments to a “political organization,” which is different from an
IEC); § 1-45-103(14.5) (defining “political organization”).
¶ 23 Consequently, CORE was not required to disclose the
payments at issue as contributions.
E. Expenditures
¶ 24 Article XXVIII, section 5 of the Colorado Constitution, as well
as subsections (3)(a), (4)(a), and (6) of section 1-45-107.5, require
an IEC to register and to report certain information if it makes an
independent expenditure of over $1000 in aggregate in one year.
¶ 25 To repeat, “[e]xpenditure” generally means payments
“expressly advocating the election or defeat of a candidate or
supporting or opposing a ballot issue or ballot question.” Colo.
Const. art. XXVIII, § 2(8)(a); § 1-45-103(10). As the ALJ found,
however, the payments here were not expressly advocating the
election or defeat of a candidate or supporting or opposing a ballot
issue or ballot question, and so they did not satisfy the general
definition of expenditure.
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¶ 26 CIW invokes, however, the broader definition of “expenditure”
provided by a Secretary rule. See Dep’t of State Reg. 1.6, 8 Code
Colo. Regs. 1505-6. But that rule applies to expenditures and
obligations “as used in section 1-45-108(1)(a)(I),” and section
1-45-108(1)(a)(I) does not apply to an IEC, as we have explained. Id.
¶ 27 Accordingly, CIW was not required to report the payments as
expenditures.
III. Other Contentions
¶ 28 Because we have concluded that CORE was not required to
disclose the payments, we need not address CORE’s objections to
disclosure based on the First Amendment and Citizens United v.
Federal Election Commission, 558 U.S. 310 (2010).
IV. CIW’s Request for Costs
¶ 29 CIW requests “sanctions and costs” against CORE under
C.A.R. 39 and C.A.R. 39.1 (formerly C.A.R. 39.5). Because we rule
in favor of CORE, we deny CIW’s request for appellate costs and
sanctions. See C.A.R. 39(a).
V. Conclusion
¶ 30 The order of dismissal is affirmed.
JUDGE TAUBMAN and JUDGE GRAHAM concur.
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