COLORADO COURT OF APPEALS Court Address: 2 East 14th Avenue Denver, CO 80203 District Court, City and County

of Denver Honorable J. Eric Elliff, Judge Case Nos. 2012CV2133 and 2012CV2153 ______________________________________ Appellees/Cross-Appellants: COLORADO ETHICS WATCH and COLORADO COMMON CAUSE And Appellees: DAVID PALADINO; MICHAEL CERBO; PRO-CHOICE COLORADO PAC; PPRM BALLOT ISSUE COMMITTEE; and CITIZENS FOR INTEGRITY, INC. v. Appellant/Cross-Appellee: SCOTT GESSLER, in his official capacity as Colorado Secretary of State _______________________________________ Attorneys for Colorado Ethics Watch: Luis Toro, #22093 Margaret Perl, #43106 1630 Welton Street, Suite 415 Denver, CO 80202 Telephone: 303-626-2100 Email: ltoro@coloradoforethics.org pperl@coloradoforethics.org Attorney for Colorado Common Cause: Jennifer H. Hunt, #29964 Hill & Robbins, PC 1441 18th Street, Suite 100 Denver, CO 80202 Telephone: 303-296-8100 Email: jhunt@hillandrobbins.com ▲ COURT USE ONLY ▲ ________________________ Case No. 12 CA 1712

JOINT REPLY BRIEF

CERTIFICATE OF COMPLIANCE I hereby certify that this brief complies with all requirements of C.A.R. 28 and C.A.R. 32, including all formatting requirements set forth in these rules. Specifically, I certify that: The brief complies with C.A.R. 28(g).  It contains 2284 words.  It does not exceed 18 pages.

I acknowledge that my brief may be stricken if it fails to comply with any of the requirements of C.A.R. 28 and C.A.R. 32. /s/ Margaret Perl Margaret Perl Attorney for the Appellee/Cross-Appellant Colorado Ethics Watch

TABLE OF CONTENTS I. INTRODUCTION ..................................................................................................1 II. ARGUMENT ........................................................................................................2 A. Whether Rule 1.7 is “identical to” prior Rule 9.4 – even if that were true – is not the proper standard for reviewing the Secretary’s Rule under C.R.S. § 24-4-106. .......................................................................................................2 B. Colorado state precedent on electioneering communications does not mandate the constitutional provision be limited by a “functional equivalent” standard. ...........................................................................................................4 C. Rule 1.7 is arbitrary, capricious, and contrary to law because Citizens United refused to impose a “functional equivalent” limitation on disclosure only campaign finance laws. ...........................................................................8 III. CONCLUSION ..................................................................................................10

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TABLE OF AUTHORITIES
Cases

Am. Tradition Partnership v. Bullock, 132 S.Ct. 2490, 2491 (2012) ......................10 Bd. of Cnty. Comm’rs v. Colo. Pub. Utils. Comm’n, 157 P.3d 1083, 1088 (Colo. 2007) ....................................................................................................................10 Citizens United v. Fed. Election Comm’n, 558 U.S. 310, 368 (2010).......................2 Colo. Common Cause v. Gessler, 2012 COA 147 .....................................................1 Colo. Ethics Watch v. Colo. League of Taxpayers, No. OS 2009-0001 ....................3 Colo. Ethics Watch v. Senate Majority Fund, LLC, 2012 CO 12 ..............................6 Colorado Citizens for Ethics in Gov’t v. Comm. for Am. Dream, 187 P.3d 1207 (Colo. App. 2008) ..................................................................................................5 Ctr. for Individual Freedom v. Madigan, 697 F.3d 464, 484 (7th Cir. 2012) ...........9 Fed. Election Comm’n v. Wisconsin Right to Life, 551 U.S. 449, 470 (2007) ..........3 Harwood v. Senate Majority Fund, 141 P.3d 962 (Colo. App. 2006) .......................5 In Re Interrogatories Propounded by Governor Ritter, Jr. Concerning the Effect of Citizens United v. Fed. Election Comm’n, 558 U.S.___ (2010) on Certain Provisions of Article XXVIII of The Constitution of the State of Colorado ........10 McConnell v. Fed. Election Comm’n, 540 U.S. 93 (2003)........................................7 Nat’l Org. for Marriage v. McKee, 649 F.3d 34, 54-55 (1st Cir. 2011) ...................9 Sanger v. Dennis, 148 P.3d 404, 413 (Colo. App. 2006) ..........................................2 Zaner v. City of Brighton, 917 P.2d 280, 283 (Colo. 1996) ......................................1
Statutes

C.R.S. § 1-45-111.5 ...................................................................................................1 C.R.S. § 24-4-106 ......................................................................................................2

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I. INTRODUCTION “When construing a constitutional amendment courts must ascertain and give effect to the intent of the electorate adopting the amendment.” Zaner v. City of Brighton, 917 P.2d 280, 283 (Colo. 1996). There is no dispute that the “electioneering communications” definition adopted by voters in Art. XXVIII § 2(7) includes no “functional equivalent of express advocacy” limitation. The Secretary has limited authority under Art XXVIII and the Fair Campaign Practices Act to “promulgate such rules…as may be necessary to enforce and administer” the law. See Colo. Const. art. XXVIII § 9(1)(b); C.R.S. § 1-45-111.5(1). The only justification offered by the Secretary to explain Rule 1.7’s explicit addition of such a limitation is that the restrictions are required to conform to the First Amendment of the U.S. Constitution pursuant to federal case law. Yet, as the district court ruled with regard to the other new rules at issue in this case, it is not the Secretary’s place to rewrite campaign finance law based on his own interpretation of First Amendment jurisprudence. Order, CD page 385-395; see also Colo. Common Cause v. Gessler, 2012 COA 147, ¶ 18 (“the agency does not have the authority to promulgate rules that modify or contravene statutory or constitutional provisions”). The voters, not the Secretary, exercise the power to amend the Colorado Constitution.

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Equally important, the U.S. Supreme Court has specifically held that the First Amendment does not demand that laws requiring disclosure of electioneering communications apply only to advertisements that constitute express advocacy or its functional equivalent. See Citizens United v. Fed. Election Comm’n, 558 U.S. 310, 368 (2010). Thus, Rule 1.7 exceeds the Secretary’s authority by modifying the constitutional provision. See Sanger v. Dennis, 148 P.3d 404, 413 (Colo. App. 2006) (“[t]he Secretary’s ‘definition’ is much more than an effort to define the term. It can be read to effectively add, to modify, and to conflict with the constitutional provision by imposing a new condition”). II. ARGUMENT A. Whether Rule 1.7 is “identical to” prior Rule 9.4 – even if that were true – is not the proper standard for reviewing the Secretary’s Rule under C.R.S. § 24-4-106. Under C.R.S. § 24-4-106, a court must strike the Secretary’s rule if the Secretary has “exceeded [his] constitutional or statutory authority or made an erroneous interpretation of law.” Colo. Common Cause, 2012 COA 147, ¶¶ 15-16; see also C.R.S. § 24-4-106(7) (“shall hold unlawful and set aside the agency action and shall restrain the enforcement” where agency action is arbitrary or capricious, in excess of statutory authority, or otherwise contrary to law). Thus, the district court erred by not evaluating Rule 1.7 on its own and instead according deference

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to the Secretary’s interpretation based on the alleged similarity between Rule 1.7 and the prior electioneering communications Rule 9.4. As discussed below, Rule 1.7 enacts an additional requirement, based on a misinterpretation of law, and therefore it should be struck down. Contrary to the Secretary’s suggestion, Rule 1.7 as adopted in 2012 is not “identical” to the prior Rule 9.4 in form or in substance. See Secretary’s AnswerReply Br. at 30. While it is true that Rule 1.7 defines the new phrase “functional equivalent of express advocacy” in part using the prior language of Rule 9.4, the new “negative definition” (as the Secretary calls it) includes a three-part test to immunize an advertisement from any public disclosure obligation regardless of whether the ad would otherwise function as express advocacy. Although the language in Rule 1.7.3 was drawn from Fed. Election Comm’n v. Wisconsin Right to Life, 551 U.S. 449, 470 (2007) (“WRTL”), the factual considerations used by the U.S. Supreme Court to decide whether the particular advertisement in that case met the new “functional equivalent” test have not been applied in Colorado electioneering communications cases prior to 2012 enactment of the rule. Attempting to argue that Rule 1.7 reflects the long-settled test in Colorado, the Secretary cites Colo. Ethics Watch v. Colo. League of Taxpayers, No. OS 2009-0001 (Final Agency Decision, April 29, 2009) (“Colo. League of

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Taxpayers”). However, the respondent in that case stipulated that the mailers were electioneering communications subject to disclosure under the requirements of Art. XXVIII § 2(7). See id. at 3. Thus, there was no occasion for the ALJ to interpret or apply Rule 9.4. The ALJ did remark in a footnote that then-Rule 9.4 “adds a requirement” to the constitutional test: that the communication can be subject to “no reasonable interpretation other than as an appeal to vote for or against a specific candidate.” Id. at 3, n. 1; see also Section II.B. below. Then, without any analysis of the advertisement – and certainly without applying the three-prong safe harbor stated in current Rule 1.7 – the ALJ noted “[t]he Carter mail pieces meet this additional test.” Id.1 B. Colorado state precedent on electioneering communications does not mandate the constitutional provision be limited by a “functional equivalent” standard. The plain language of Rule 1.7 carves out certain types of advertisements that would otherwise meet the constitutional standard, and therefore be required to be disclosed to voters as “electioneering communications,” and deems them not

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It is telling that the ALJ acknowledged that the rule explicitly added requirements to the constitutional definition of “electioneering communications.” Indeed, the complaint in Colo. League of Taxpayers actually alleged that then-Rule 9.4 was unconstitutional, but that issue was not reached since the respondent conceded the violation.

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subject to Art. XXVII § 2(7). For that reason alone, the district court should have invalidated the rule. The Secretary’s defense of Rule 1.7 relies upon a selective history of Colorado court decisions construing the “electioneering communications” provision in Art. XXVIII. Harwood v. Senate Majority Fund, 141 P.3d 962 (Colo. App. 2006) is presented as the controlling test for electioneering communications, despite the shift in U.S. and Colorado law regarding the constitutionally permissible limits on regulation of these types of advertisements in the last six years and despite the fact that Harwood never controlled the question.2 Two years after Harwood – and a year after WRTL – this Court considered the reach of Art. XXVIII § 2(7) in Colorado Citizens for Ethics in Gov’t v. Comm. for Am. Dream, 187 P.3d 1207 (Colo. App. 2008) (“CCEG”). Looking at the plain language of the constitution, this Court held that the definition of “electioneering communications” applies to any communication that mentions the candidate and is broadcast to an audience that includes electors for that office during the last thirty or sixty days before an election “without regard to the communication’s purpose.”
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The Secretary admits, as he must, that Harwood’s adoption of an “intent-based test” was no longer controlling after the U.S. Supreme Court issued the “functional equivalent” test in WRTL. See Secretary’s Answer-Reply Br. at 33-34, 36. Yet, the Secretary enacted Rule 1.7 in 2012 on the premise that the U.S. Supreme Court’s rejection of the “functional equivalent” standard in Citizens United had no effect on the Harwood test.

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Id. at 1214. This Court did not add any limitations from either Harwood or WRTL to the constitutional definition before determining if the advertisements met the definition of “electioneering communications,” instead stating: This unambiguous reference to “any communication” does not distinguish between express advocacy and advocacy that is not express. The word “any” means “all.” Id. Given that there is no post-WRTL case in Colorado stating that the “functional equivalent” limitation must be applied to Art. XXVIII § 2(7), the Secretary is wrong to argue that Rule 1.7 somehow adopted an “accepted definition” of electioneering communications. See Secretary’s Answer-Reply Br. at 36. The Secretary argues that Rule 1.7’s validity is confirmed by the Colorado Supreme Court’s decision in Colo. Ethics Watch v. Senate Majority Fund, LLC, 2012 CO 12 ( “Senate Majority Fund”).3 That case involved only the definition of “expenditure” in Art. XXVIII, § 2(8), as the Supreme Court noted, “Ethics Watch does not allege that either SMF or CLF violated . . . the disclosure requirements applicable to political organizations that engage in electioneering communications.” Senate Majority Fund at ¶ 1; ¶ 7 & n.1. The Supreme Court

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Senate Majority Fund cannot reasonably be cited by the Secretary as the basis for enacting Rule 1.7 as the holding was released on February 21, 2012, merely one day before the Secretary issued Rule 1.7 and three months after the proposed Rule 1.7 was noticed in November 2011.

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distinguished WRTL (and its predecessor McConnell v. Fed. Election Comm’n, 540 U.S. 93 (2003)) on the ground that both of these decisions “involved ‘electioneering communications,’ which are statutorily defined to apply in more limited circumstances than the ‘express advocacy’ at issue in the present case.” Senate Majority Fund, ¶ 31. But the Senate Majority Fund court did not hold that WRTL and McConnell necessarily limit the electioneering communications definition in Art. XXVIII, § 2(7)(a). To the contrary, the Supreme Court described that section as “defining ‘electioneering communications’ broadly in the sense that it covers speech that ‘unambiguously refers’ to any candidates but also narrowly in the sense that it only applies within the limited ‘electioneering’ window and to speech costing more than $1000.” Id. at ¶ 36 n.8. The Secretary’s arguments regarding Senate Majority Fund reveal that Rule 1.7 is not based on any existing law, but is actually based on the Secretary’s prediction that a hypothetical future constitutional challenge to Colorado’s “electioneering communication” definition would succeed. But it is not the Secretary’s job to rewrite Colorado law based on the anticipated result of a hypothetical future challenge. It is his job to apply the law as written. See Colo. Common Cause, 2012 COA 147, ¶ 18; Sanger, 148 P.3d at 413. Moreover, if anything is clear from the precedents, it is that a challenge to the “electioneering

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communications” definition would fail because Citizens United squarely held that such disclosure laws need not apply only to express advocacy or its functional equivalent. C. Rule 1.7 is arbitrary, capricious, and contrary to law because Citizens United refused to impose a “functional equivalent” limitation on disclosure-only campaign finance laws. As discussed above, the “functional equivalent” limitation on electioneering communications is not a creation of the Colorado Constitution, nor any Colorado case law. Since Rule 1.7 is explicitly intended to be an application of federal law to Colorado’s state law (citing WRTL as authority in the Rule), it is disingenuous at best for the Secretary to argue that “Colorado law” governs and subsequent federal cases like Citizens United and other circuits applying this same federal law to similar state electioneering provisions must be ignored. See Secretary’s AnswerReply Br. at 36. Although the U.S. Supreme Court directly spoke to the need to graft a “functional equivalent” limitation onto pre-existing electioneering communications provisions (the purpose of Rule 1.7), the discussion was not in the context of Hillary: The Movie, but of advertisements for the film that could reasonably be interpreted as proposing a commercial transaction and not her defeat as a candidate. See Citizens United, 558 U.S. at 367-68 (“[W]e reject Citizens United’s

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contention that the disclosure requirements must be limited to speech that is the functional equivalent of express advocacy”). Indeed, the Court critiqued the “functional equivalent” standard and the complex regulations implementing it at the federal level as the equivalent of a prior restraint on speech. Id. at 335. Ignoring all of this, the Secretary insists WRTL controls and requires something like Rule 1.7 to limit the constitutionally-required public disclosure adopted by Colorado voters. Around the country, post-Citizens United decisions make it clear that state disclosure-only laws are not required to impose a “functional equivalent” standard to survive constitutional muster. “With just one exception, every circuit that has reviewed First Amendment challenges to disclosure requirements since Citizens United has concluded that such laws may constitutionally cover more than just express advocacy and its functional equivalents, and in each case the court upheld the law.” Ctr. for Individual Freedom v. Madigan, 697 F.3d 464, 484 (7th Cir. 2012); see also Nat’l Org. for Marriage v. McKee, 649 F.3d 34, 54-55 (1st Cir. 2011) (finding express advocacy standard “has no place” in the review of state disclosure-oriented laws). There should be no doubt that Citizens United’s refusal to impose a WRTL-style “functional equivalent” test on electioneering communications disclosure provisions applies as controlling First Amendment law

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in Colorado now that the Colorado Supreme Court has limited Art. XXVIII to disclosure-only regulation of these advertisements. See In Re Interrogatories Propounded by Governor Ritter, Jr. Concerning the Effect of Citizens United v. Fed. Election Comm’n, 558 U.S.___ (2010) on Certain Provisions of Article XXVIII of The Constitution of the State of Colorado, 227 P.3d 892, 894 (Colo. 2010). See also Am. Tradition Partnership v. Bullock, 132 S.Ct. 2490, 2491 (2012) (“The question presented in this case is whether the holding of Citizens United applies to the Montana state law. There can be no serious doubt that it does.”). Thus, even if the Secretary had the authority to implement his interpretation of the First Amendment through rulemaking contrary to the plain language of Art. XXVIII, this Court need not defer to that legal interpretation in its de novo review. See Bd. of Cnty. Comm’rs v. Colo. Pub. Utils. Comm’n, 157 P.3d 1083, 1088 (Colo. 2007); Colo. Common Cause, 2012 COA 147, ¶ 22 (“we are not bound by an agency’s interpretation of judicial precedent”). This Court must declare Rule 1.7 void because the Secretary’s legal interpretation is simply wrong. III. CONCLUSION For these reasons, Colorado Ethics Watch and Colorado Common Cause respectfully request that this Court reverse the district court’s judgment upholding

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Campaign and Political Finance Rule 1.7, and remand this case to that court with instructions to enter judgment that the rule is void as exceeding the Secretary of State’s rulemaking authority.

Respectfully submitted on May 16, 2013.

signed original on file /s/ Jennifer H. Hunt___________ Jennifer H. Hunt Hill & Robbins, P.C. 1441 18th Street, Suite 100 Denver, CO 80202-1256 Attorney for Appellee/Cross-Appellant Colorado Common Cause

signed original on file /s/ Margaret Perl________________ Luis Toro Margaret Perl Colorado Ethics Watch 1630 Welton Street, Suite 415 Denver, CO 80202 Attorneys for Appellee/Cross-Appellant Colorado Ethics Watch

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CERTIFICATE OF SERVICE The undersigned hereby certifies that on the 16th day of May, 2013, service of the foregoing JOINT REPLY BRIEF was made via Lexis-Nexis File and Serve, addressed as follows: LeAnn Morrill Frederick R. Yarger Matthew Grove State Services Section Office of the Attorney General 1525 Sherman Street, 7th Floor Denver, CO 80203 Mark Grueskin Heizer Paul Grueskin LLP 2401 15th Street, Suite 300 Denver CO 80202

signed original on file

/s/ Margaret Perl

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