Eighth Circuit Questions Minnesota Reporting Requirements for Independent Expenditures

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In a split decision, the full Eighth Circuit Court of Appeals reversed a Minnesota District Court’s denial of a motion for a preliminary injunction, noting that the appellants, Minnesota business entities, are likely to succeed on their claims that Minnesota campaign finance laws unconstitutionally infringe upon the right to engage in political speech through independent expenditures.

The appellants in the case consist of two 501(c)(4) social welfare organizations and a for-profit limited liability company. The appellants filed suit in July, 2010, alleging that certain provisions of Minnesota’s campaign finance laws violate free speech and association rights under the First and Fourteenth Amendments to the United States Constitution. Specifically, the appellants argued that Minnesota campaign finance laws impermissibly violate the right to (a) make contributions to candidates and political parties; and (b) to make independent expenditures advocating the election or defeat of candidates for public office. The district court denied the motion for a preliminary injunction, finding that the business entities had failed to establish a likelihood of success on the merits of any of their claims. On May 16, 2011, a divided three judge panel of the Eighth Circuit affirmed the district court’s denial of the preliminary injunction. The Eighth Circuit then granted a rehearing en banc and vacated the panel decision.

The full Court of Appeals found no abuse of discretion in the lower court’s denial of a preliminary injunction against Minnesota’s ban on direct contributions from corporations and unregistered associations to candidates and candidate committees. However, with respect to ongoing reporting requirements that are imposed upon corporations and associations that choose to make independent expenditures, the Court warned that the existing regulations are not likely to withstand review under either strict scrutiny or exacting scrutiny. The Court noted that “[u]nder Minnesota’s regulatory regime, an association is compelled to decide whether exercising its constitutional right is worth the time and expense of entering a long-term morass of regulatory red tape.” The opinion suggested that alternative reporting requirements would allow the state to achieve its disclosure goals through “less problematic measures.” The majority noted that individuals who wish to make independent expenditures are obligated to report such expenditures but are not subject to the same ongoing reporting requirements that are imposed on corporations and associations. The Eighth Circuit sent the case back to Federal District Court in Minnesota for further proceedings consistent with its opinion.

The State has the option of appealing the decision to the United States Supreme Court. Stay tuned to Inside the Minnesota Capitol for more information about this case and other campaign finance matters.