Arizona Supreme Court upholds dark money law, allows free speech challenge to proceed

The Arizona Supreme Court on Monday dismissed most of the challenges to a voter-approved anti-dark-money law, but allowed one of the challenges from deep-pocketed conservative opponents to move forward.  The remaining challenge questions whether disclosing the identities of political donors creates a chilling effect that violates the state constitution. 

Since voters in 2022 overwhelmingly approved Proposition 211, the Voters Right to Know Act, proponents of the anonymous campaign spending that has transformed American elections over the past 15 years have challenged its constitutionality. The law’s conservative opponents have argued that forcing disclosure of the source of political spending limits the free speech of wealthy people who want to influence voters, but don’t want those voters to know who is trying to persuade them. 

On Monday, months after hearing oral arguments, the Arizona Supreme Court ruled to dismiss a number of the challenges brought against the law, upholding the voter approved initiative. The court agreed to let live a challenge arguing that disclosing the identity of donors chilled free speech under Arizona’s constitution. 

The state constitution’s “Speak Freely Clause,” which provides protections to Arizonans’ freedom of speech and the press, was the main focus of the 4-3 opinion released Monday. 

The legal challenges that the court considered were brought by the anti-abortion advocacy group Center for Arizona Policy and the Arizona Free Enterprise Club, a dark money nonprofit. They were joined by two anonymous donors who said they feared harassment and violence if their political spending was disclosed. 

They argued that mandating disclosure of the source of political spending violates the Arizona Constitution’s protections of free speech, association, privacy and separation of powers. Lower courts have rejected arguments that Prop. 211 chills free speech and said the law complies with the state constitution, including a unanimous decision at the Arizona Court of Appeals.  

Republican legislative leaders made similar arguments in their failed attempt to overturn the ballot measure, which was broadly supported by Arizonans across all political ideologies and ultimately won the backing of more than 70% of voters. 

Under federal tax law, neither the Arizona Free Enterprise Club nor the Center for Arizona Policy’s political arm have to disclose donors. But under Prop. 211, they will be forced to do so for their election-related activities. 

The two groups campaigned against the passage of Prop. 211, claiming that it enshrined “cancel culture” into law. And the Center for Arizona Policy, which has a history of pushing anti-LGBTQ laws, said it feared the harassment it already received would be directed to its donors if they are revealed. 

The majority opinion, written by Chief Justice Ann Timmer, noted that Arizona’s constitution strongly favors protecting freedom of speech but also supports political campaign disclosures. 

“[T]he framers included a provision prohibiting corporations from making contributions ‘for the purpose of influencing any election or official action,’” Timmer wrote. “The Speak Freely Clause therefore does not prevent the prohibition of corporate campaign contributions…This is so despite the fact that the First Amendment prohibits such a restriction.”

While the U.S. Supreme Court deemed corporate campaign contributions protected speech under the infamous Citizens United ruling, Timmer and the majority concluded that Arizona’s constitution and its framers did not anticipate this and thus are not impacted by it.

The majority also wrote that landmark cases argued under Arizona’s Speak Freely Clause have focused more on “prohibiting punishment for expression” and did not address the chilling of speech. 

In one of those cases, the court determined that a City of Phoenix nondiscrimination ordinance could not force a Christian-owned company to create invitations for a same-sex couple.

The majority argued that the government has certain “police-power” rights over certain types of speech that were recognized by the authors of the Arizona Constitution, citing ordinances dating to 1910, prior to statehood. Those ordinances required residents to report contagious diseases, physicians to report births and deaths and poisons to be labeled. 

“These enactments, existing before and at statehood, evidence Arizonans’ understanding that the exercise of the State’s police powers for health, safety, and welfare—as illustrated—did not conflict with Arizonans’ right to speak “‘freely,’” Timmer wrote. 

However, Timmer and the majority noted the clash between the Speak Freely Clause and Arizona’s history of election spending transparency. Timmer wrote for the majority that donating to an organization for the “express purpose of funding campaign media” or knowing that it will be used for messaging is “expressive conduct protected by the Speak Freely Clause.” 

Spending that reflects the organization’s messaging is also seen as “expressive conduct” so both the Center for Arizona Police and the Free Enterprise Club have “adequately alleged that expression protected by the Speak Freely Clause is at issue.” 

But the state has a long history of favoring campaign disclosure, Timmer noted. 

“​​Using disclosure requirements to advance integrity and transparency in election spending is deeply rooted in Arizona’s history,” Timmer wrote. “On the eve of statehood, territorial law already required candidates and political committees to file detailed public reports disclosing the sources and expenditures of campaign funds, both direct and indirect through intermediaries.”

She wrote that with both those things taken together that “free-speech protections do not shield campaign-related contributions, even those made through intermediaries, or contributor identities from reasonable publicity requirements.” 

Not all of the court agreed. 

“We concur with the majority’s conclusion that Plaintiffs’ as-applied challenge under the Speak Freely Clause should not have been dismissed,” Justice Kathryn King wrote in the dissent. “But we depart from the majority in all other respects.” 

King, along with Vice Chief Justice John Lopez IV and Justice Clint Bolick, argued that the majority’s interpretation “creates a new limitation on free speech rights, permitting censorship and restraint on speech in ‘the state’s proper exercise of its regulatory authority.”

“Most fundamentally, this police power justification departs from clear constitutional text that limits the scope and exercise of legislative authority infringing on the right to speak freely to ‘abuse of that right,’” King wrote. “ But this police power justification is also nebulous and sweeping, invites government suppression of speech, and is unprecedented.” 

Timmer and the majority argue that isn’t the case and that electoral disclosures, restrictions on advertisements and other similar laws are all “police-power regulation affecting expression” that have never been deemed unconstitutional and do not impact one’s ability to “speak freely.” 

The dissenting justices also took umbrage with the possibility of an “indirect donor” having their private information exposed due to a second or third organization triggering the Voters Right to Know Act. The justices provided two scenarios they said were plausible under the law. 

In one of them a woman  “donates $5,100 to her church over the course of a year without designating her funds to be used in any way” and then her church donates those funds to a “social justice organization.” That organization then donates the money to an immigrant relief organization that then purchases campaign advertisements against a ballot measure seeking to prohibit local law enforcement agreements with U.S. Immigration and Customs Enforcement. 

“Under the Act, the woman will be publicly identified as supporting ‘anti-ICE’ campaign media spending, even if she strongly supports ICE,” King wrote. 

The group gave another example involving a man who donates a total of $5,005 to a non-profit that, with his donation eventually going to an organization that funds a gun rights group, even though the person “vehemently supports gun control and increased government restrictions on the purchase and use of guns.” 

“And not only are their names reported as supporting ballot measures and messages they fundamentally oppose, but their addresses, occupations, and employers are publicly reported too,” King wrote. “The notion that a citizen—who anonymously donates a total of $5,001 over two years to an organization that later uses the donation to speak through media on a matter of public interest—is a ‘major donor’ who represents a threat to our citizenry is contrary to the text and history of the Arizona Constitution.” 

Both groups of justices seem to agree that the opt-out option for donors who want to make sure their money is not used for campaign media is not entirely clear. 

“To be sure, the Act does not answer every question about how its notice and tracing provisions operate in all circumstances,” Timmer wrote.  “For example, it does not expressly specify who must provide upstream donors notice of the opt-out opportunity or require a covered person to investigate whether an immediate donor’s contribution includes original monies from upstream donors. We need not resolve those implementation questions here.”

Both also seemed to agree that both the Center for Arizona Police and the Free Enterprise Club have faced possible threats to their speech.

While both groups have “sufficiently alleged a concrete, non-speculative burden on protected expression” it does not impact their ability to “publicly communicate messages” as the act only impacts donations used for campaign media. 

“They do allege, however, that the prospect of public identification under the Act will cause major donors to fear harassment and retaliation, deterring them from contributing sufficient money and resources needed for CAP and FEC to engage in campaign media related to their issue advocacy,” Timmer wrote. “As a result, CAP and FEC allege that the Act ‘chills’ their speech by forcing them to curtail their campaign media messaging.” 

The Center for Arizona Policy provided an example of receiving death threats as did the Free Enterprise Club, both citing their advocacy on controversial issues as a basis for the harassment. 

The Goldwater Institute, which has been representing the two organizations, applauded Monday’s opinion. 

“This is an important victory for every Arizonan who believes people should be free to support the causes they care about without fear of government-compelled disclosure,” Scott Freeman, senior attorney at the Goldwater Institute said in a statement. “The Arizona Supreme Court recognized that our state constitution independently protects free speech and that citizens are entitled to prove that compelled donor disclosure violates those protections.”

The case will now head back to Maricopa County Superior Court where the Center for Arizona Police and Free Enterprise Club will be allowed to argue that the act is unconstitutional because it chills their clients’ speech.