Americans for Prosperity sues the state of California over disclosure of information

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Some LGBT groups felt differently about donor information 10 years ago

This is a strange U.S. Supreme Court session. First LGBTQ groups lined up on opposite sides of a case (see Mahanoy v. BL). Now, they’ve lined up opposite to where they were 10 years ago on another issue.

The latter comes in Americans for Prosperity v. California, which had oral arguments on April 26, 2021. The oral argument encompassed two cases out of California, one brought by Americans for Prosperity Foundation and the other by the Thomas More Law Center. The groups sued the state of California over its requirement that charities disclose to the state the names and addresses of their major donors. They say the forced requirement violates the First Amendment rights of the groups and their donors. And they note that charities that do not comply with the requirement are prohibited from fundraising in California. (Currently, only New York and New Mexico have similar requirements.)

Interestingly, 10 years ago, the Human Rights Campaign, the nation’s largest LGBT political group, chastised the anti-LGBT group National Organization for Marriage over its “aggressive legal strategy to keep its donors secret….” HRC said NOM’s position “begs the question, what are they hiding? Is it that they realize it’s no longer popular to be openly anti-gay?”

Around the time of the campaign to pass Proposition 8—to ban same-sex marriage—in California, various LGBT activists used information about contributors to anti-LGBT groups to target for protests, boycotts, and bad publicity.

NOM filed lawsuits in federal court, seeking to prevent the disclosure of its donor information. The reporting of such information is required each year on tax-exempt organizations’ Form 990 to the U.S. Internal Revenue Service. Specifically, it is reported on “Schedule B,” also known as “Schedule of Contributors.” NOM appealed its cases to the U.S. Supreme Court and was twice rebuffed for review.

LGBT individuals and groups are on opposite sides in the dispute

Fast-forward to Monday’s oral argument: Justice Brett Kavanaugh highlighted HRC’s support of the two groups fighting California’s donor disclosure requirement. Kavanaugh read a quote from the brief submitted by HRC, the NAACP, the ACLU, and others: “

“A critical corollary of the freedom to associate is the right to maintain the confidentiality of one’s associations absent a strong governmental interest in disclosure. If the state could categorically demand disclosure of associational information, the ability of citizens to organize to defend values out of favor with the majority would be seriously diminished.”

And, like with the Mahanoy case, LGBT individuals and groups are on opposite sides in the donor dispute. U.S. Senator Tammy Baldwin, one of the Senate’s two openly LGBT members, joined a brief submitted by other LGBT supporters, taking sides in support of California’s disclosure requirement. So, too, did the openly lesbian attorneys general of Massachusetts and Michigan.

Senator Cory Booker of New Jersey, Tammy Baldwin and both senators from Illinois and Massachusetts and others said, in their brief, “California has a clear and substantial government interest—namely, preventing fraud, self-dealing and criminal tax evasion—for requiring this limited confidential disclosure….”

Senators’ brief makes note that the “trajectory over the last ten years has been stark and unrelenting.” They cited the controversial Citizens United v. Federal Elections Commission decision in 2010 that said the government could not restrict corporate and organizational donations to political causes.

“Rampant violation of that decision’s transparency predicate has allowed such influencers to wield that power anonymously, through dark-money expenditures,” said Baldwin and the other senators. “The next goal, as the arguments by [Americans for Prosperity] and many amici make plain, is for dark-money contributors to secure broad constitutional protection of their anonymous influence, so they can attack any and all disclosure requirements in other contexts….”

the requirement protects the public against fraud said the court years ago

The Supreme Court, in the two consolidated cases over California’s donor disclosure requirement, is reviewing the  Ninth Circuit U.S. Court of Appeals decision that upheld the California requirement. The Ninth Circuit said the requirement serves the important governmental interest of protecting the public against fraud.

The information California’s requirement seeks is the same information provided by tax-exempt groups to the IRS on Schedule B of IRS Form 990. Neither the IRS nor California allow the information to be disclosed, but the groups challenging California’s requirement say the state has repeatedly failed to protect the confidentiality of the information.

“There’s nothing California can do at this point that would convince reasonable donors and charities that have seen the dismal record of confidentiality lapses that now those have truly been fixed,” said Derek Shaffer, an attorney for the Prosperity Foundation, during oral argument.

In a brief to the Supreme Court in support of the Prosperity and Law Center complaint, the anti-LGBT “Proposition 8 Legal Defense Fund” said there was a “well-documented and judicially acknowledged history of severe harm suffered by supporters of California’s Proposition 8 whose identities were publicly disclosed….” The statewide initiative Proposition 8 banned marriage for same-sex couples in that state in 2008 but was later overturned through litigation.

The acting solicitor general under President Trump weighed in on the side of the two charitable groups; the acting solicitor general under President Biden has weighed in on the side of the California requirement but urged the Supreme Court to vacate the Ninth Circuit decision.

“The federal reporting provision does not compel disclosure, but rather constitutes a condition for receiving a governmental subsidy in the form of tax exemptions and deductibility,” wrote Acting Solicitor General Elizabeth Prelogar. “….The disclosure requirement clearly furthers important governmental interests in policing fraud and abuse; other means of obtaining the same information would be less effective and less efficient; and petitioners have not shown that donors who contribute to charitable organizations in general will be exposed to a reasonable probability of threats and harassment as would be necessary to establish that the disclosure provision is facially invalid.”

But Prelogar said the Ninth Circuit ruling was “incomplete” and should be remanded to determine what burden the California requirement “places on the associational rights” of the challenging groups.

Meanwhile, LGBT legal activists will be watching the Supreme Court’s weekly orders list to hear whether the high court will take up two other cases of interest. One, Texas v. California, is a “Bill of Complaint” brought by Texas for California’s ban on state-sponsored travel to states which authorize discrimination against LGBT people. The other, Doe v. U.S., is an appeal brought by a female West Point cadet who says the federal government should be liable sexual assault and harassment injuries she sustained at the U.S. military academy.

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