CASE TITLE: Fair Political Practices Commission vs. Americans for Responsible LeadershipCASE NO:
expiration of the 14-day time period. ARL further contends that the FPPC initiated civil litigation without following the procedures identified in2 C.C.R. §18361.2(a)-(b). However, the "civil litigation" contemplated by the Act is one for "penaltiesand remedies" under the Act. (Gov't Code §91001.) Here, FPPC merely seeks to audit ARL, there hasbeen no investigation to determine whether there has been a violation of the Act, and no decision toseek penalties against ARL. Moreover, the Executive Director has been delegated authority to act in thename of the FPPC between meetings of the FPPC. (Gov't Code §83108.) Thus, the Executive Director did not violate its own procedures by filing the instant Petition and the Court rejects this argument.
In sum, the Court finds that the FPPC has satisfied its burden to demonstrate a probability of prevailingon the merits of the Petition. Specifically, that it has the general authority to audit ARL prior theNovember 6, 2012 General Election to determine: (1) whether the ARL is a committee pursuant to Gov'tCode §82013(a) or a "major donor" pursuant to Gov't Code §82013(c); (2) if it is a committee pursuant toGov't Code §82013(a), whether ARL violated the pre-election reporting requirements; and (3) whether any donations were earmarked for specific purposes. At oral argument, ARL argued that Gov't Code §90003 does not apply here because no "statement or report" has yet to be filed. FPPC argued, and the Court agrees, that the Act must be "liberally construedto accomplish its purpose" which is, in part, that "receipts and expenditures in election campaigns shouldbe fully and truthfully disclosed in order that the voters may be fully informed and improper practicesmay be inhibited." (Gov't Code §§81002, 81003.) The language of Gov't Code §90003 states that theFPPC may conduct audits and investigations "with respect to any report or statement." The statute doesnot limit the ability of the FPPC to conduct an audit or investigation with respect to reports or statementonly after they have been filed. The Court, therefore, liberally construing Gov't Code §90003 consistentwith the provisions of the Government Code, finds that FPPC has the authority to conduct an audit or investigation prior to a report or statement being filed.Balancing of HarmsThe Court finds that the balancing of the harms clearly favors FPPC. ARL argues that ordering theproduction of documents will violate ARL's, as well as, its donors' First Amendment Rights. ARL fearsthat "once disclosed, this information can never be fully withdrawn from the public record, and noremedy exists to make whole the victim of the unlawful disclosure." (Supplemental Opposition, 13:7-9.)Here, ARL's concerns are alleviated because FPPC keeps its audit records confidential. (Reply, fn. 30.) As FPPC confirms "[t]he FPPC's audit of Respondent's records may in fact show that disclosure hasbeen appropriate and lawful. Or it may show that further disclosure is needed. In either case,
therecords of the audit will not be subject to public release
and all legal requirements and processes will befollowed by the FPPC." (Reply, 13:14-17. Emphasis Added.)In addition, ARL's due process rights will not be violated because, in the event the audit finds a violation,the FPPC is required to follow certain procedures prior to imposing a penalty. The Court has no quarrelwith the premise cited by ARL in its Supplemental Opposition that non-profit corporations haveconstitutional rights and that citizens may associate together in non-profit corporations to exercise their constitutional rights (
Citizens United v. FEC
(2010) 130 S.Ct. 876, 900), that, however, is not theconstitutional right at stake here and that case is inapposite. By this preliminary injunction, however, theFPPC is not seeking to restrict, and the Court is not, limiting expenditures by ARL. The Court is simplyconcluding that the FPPC, under its statutory authority can conduct an audit to determine whether it hascomplied with applicable California law and regulations and whether, under applicable Californiaregulations, the FPPC can determine whether the donors' identities must be disclosed. Nothing in
prohibits this state-mandated disclosure.MINUTE ORDERDATE: 10/31/2012Page 3DEPT: 54Calendar No.