Case 16-3310, Document 30, 01/06/2017, 1942183, Page1 of 90

16-3310

United States Court of Appeals
for the

Second Circuit
CITIZENS UNITED AND CITIZENS UNITED FOUNDATION,
Plaintiffs-Appellants,

v.

ERIC SCHNEIDERMAN, IN HIS OFFICIAL CAPACITY AS N.Y. ATTORNEY GENERAL,
Defendant-Appellee.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK (STEIN, D.J.)
APPELLANTS’ OPENING BRIEF
Donald F. McGahn
James Burnham
Andrew Bentz
JONES DAY
51 Louisiana Avenue, N.W.
Washington, D.C. 20001
Tel: (202) 879-3939
Fax: ( 202) 626-1700
dmcgahn@jonesday.com

Michael Boos
General Counsel
CITIZENS UNITED
& CITIZENS UNITED FOUNDATION
Boos Law Office
4101 Chain Bridge Rd. Ste 216
Fairfax, VA 22030
Tel: (703) 691-7717
Fax: (703) 691-7543
michaelboos@verizon.net

Counsel for Appellants

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CORPORATE DISCLOSURE STATEMENT
Pursuant to Federal Rule of Appellate Procedure 26.1, Appellants Citizens
United and Citizens United Foundation state the following: Neither Appellant has
a parent corporation and there are no publicly held corporations that own 10% or
more of either Appellant.

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TABLE OF CONTENTS
Page
CORPORATE DISCLOSURE STATEMENT .........................................................i
TABLE OF AUTHORITIES ...................................................................................iv
INTRODUCTION ....................................................................................................1
JURISDICTIONAL STATEMENT .........................................................................3
ISSUES PRESENTED..............................................................................................3
STATEMENT OF THE CASE .................................................................................4
A.

The Organizations And Their Missions ...............................................5

B.

Disclosure Requirements......................................................................7

C.

The New York Attorney General Changes His Policy ........................8

D.

Procedural History..............................................................................10

SUMMARY OF ARGUMENT ..............................................................................14
STANDARD OF REVIEW ....................................................................................19
ARGUMENT ..........................................................................................................20
I.

PLAINTIFFS ADEQUATELY PLED THAT THE REGISTRATION AND
DISCLOSURE RULES VIOLATE THE FIRST AMENDMENT.................................20
A.

The Complaint Adequately Pled That Requiring Organizations
To Register and Disclose Their Donors To The Government
Before Speaking Is An Unconstitutional Prior Restraint ....................21
1.

The Attorney General’s policy is presumed to be
unconstitutional. .......................................................................21

2.

The district court’s contrary conclusion was erroneous. .........24

B.

The Organizations Adequately Pled That The Attorney
General’s Policy Is Facially Unconstitutional....................................31

C.

The Organizations Adequately Pled An As-Applied Challenge........40

II.

THE ORGANIZATIONS’ CLAIM THAT THE ATTORNEY GENERAL
VIOLATED DUE PROCESS WHEN HE ADOPTED HIS DISCLOSURE POLICY
IS RIPE FOR ADJUDICATION ...........................................................................43

III.

THE ATTORNEY GENERAL’S DISCLOSURE POLICY IS PREEMPTED .................46
ii

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TABLE OF CONTENTS
(continued)
IV.

Page

THE ATTORNEY GENERAL’S REQUIREMENT AS APPLIED TO SOCIAL
WELFARE ORGANIZATIONS VIOLATES NEW YORK’S CONSTITUTION ............49
A.

The Attorney General Has Acted Ultra Vires ....................................50

B.

The District Courts Contrary Conclusion Was Erroneous .................53

C.

At A Minimum This Court Should Certify The State-Law
Question To The New York Court Of Appeals .................................55

CONCLUSION .......................................................................................................56
REQUEST FOR ORAL ARGUMENT ..................................................................56
CERTIFICATE OF COMPLIANCE
SPECIAL APPENDIX
CERTIFICATE OF SERVICE

iii

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TABLE OF AUTHORITIES
Page(s)
CASES
Alexander v. Sandoval,
532 U.S. 275 (2001) ............................................................................................54
Allstate Ins. Co. v. Rivera,
911 N.E.2d 817 (N.Y. 2009)...............................................................................49
Americans for Prosperity Found. v. Harris,
182 F. Supp. 3d 1049 (C.D. Cal. 2016) ............................................34, 35, 36, 42
Arista Records v. Doe 3,
604 F.3d 110 (2d Cir. 2010) ...............................................................................30
Arizona v. United States,
132 S. Ct. 2492 (2012) ........................................................................................49
Ashcroft v. Iqbal,
556 U.S. 662 (2009) ............................................................................................19
Bantam Books, Inc. v. Sullivan,
372 U.S. 58 (1963) ........................................................................................23, 26
Barenboim v. Starbucks Corp.,
698 F.3d 104 (2d Cir. 2012) ...............................................................................56
Beauvoir v. Israel,
794 F.3d 244 (2d Cir. 2015) ...............................................................................19
Bell Atl. Corp.v. Twombly,
550 U.S. 544 (2007) ............................................................................................19
Boreali v. Axelrod,
517 N.E.2d 1350 (N.Y. 1987).......................................................................51, 52
Boykin v. KeyCorp,
521 F.3d 202 (2d Cir. 2008) ...............................................................................20
Buckley v. Valeo,
424 U.S. 1 (1976) ..............................................................................34, 35, 36, 40
Cantwell v. Connecticut,
310 U.S. 296 (1940) ............................................................................................27
Children First Found., Inc. v. Fiala,
790 F.3d 328 (2d Cir.) ............................................................................29, 30, 50
iv

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TABLE OF AUTHORITIES
(continued)

Page(s)

Citizens United v. FEC,
558 U.S. 310 (2010) ............................................................................5, 34, 38, 42
City of Lakewood v. Plain Dealer Publ’g Co.,
486 U.S. 750 (1988) ............................................................................................26
City of Los Angeles v. Preferred Commc’ns, Inc.,
476 U.S. 488 (1986) ............................................................................................32
City of Renton v. Playtime Theatres, Inc.,
475 U.S. 41 (1986) ..............................................................................................32
Cox v. New Hampshire,
312 U.S. 569 (1941) ............................................................................................26
Ctr. for Competitive Politics v. Harris,
784 F.3d 1307 (9th Cir. 2015) ............................................................................35
Davis v. FEC,
554 U.S. 724 (2008) ............................................................................................34
Doe v. Reed,
561 U.S. 186 (2010) ............................................................................................34
FCC v. Fox Television Stations, Inc.,
132 S. Ct. 2307 (2012) ............................................................................17, 43, 44
Fed. Land Bank of St. Paul v. Bismark Lumber Co.,
314 U.S. 95 (1941) ..............................................................................................53
Forsyth Cty., Ga. v. Nationalist Movement,
505 U.S. 123 (1992) ..........................................................................25, 26, 27, 28
FW/PBS, Inc. v. City of Dallas,
493 U.S. 215 (1990) ............................................................................................32
Gade v. Nat’l Solid Wastes Mgm’t Ass’n,
505 U.S. 88 (1992) ..............................................................................................46
Graff v. City of Chicago,
9 F.3d 1309 (7th Cir. 1993) ................................................................................32
Grosjean v. Am. Press Co.,
297 U.S. 233 (1936) ......................................................................................21, 23
v

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TABLE OF AUTHORITIES
(continued)

Page(s)

Holt v. Hobbs,
135 S. Ct. 853 (2015) ..........................................................................................38
Illinois ex rel. Madigan v. Telemarketing Assocs.,
538 U.S. 600 (2003) ......................................................................................20, 31
In re Davis’ Will,
137 N.Y.S. 427 (Sur. 1912) ................................................................................50
Int’l Paper Co. v. Ouellette,
479 U.S. 481 (1987) ......................................................................................46, 48
Joseph v. Athanasopoulos,
648 F.3d 58 (2d Cir. 2011) .................................................................................56
Kurcsics v. Merchants Mut. Ins. Co.,
403 N.E.2d 159 (N.Y. 1980)...............................................................................50
Matson v. Bd. of Educ. of City Sch. Dist. of N.Y.,
631 F.3d 57 (2d Cir. 2011) .................................................................................19
Matter of Gen. Elec. Cap. Corp. v. N.Y. State Div. of Tax Appeals,
810 N.E.2d 864 (N.Y. 2004)...............................................................................49
McConnell v. FEC,
540 U.S. 93 (2003) ..............................................................................................42
McCutcheon v. FEC,
134 S. Ct. 1434 (2014) ........................................................................................47
McIntyre v. Ohio Elections Commission,
514 U.S. 334 (1995) ......................................................................................36, 40
Med. Soc’y of State v. Serio,
800 N.E.2d 728 (N.Y. 2003)...............................................................................49
Members of City Council of Los Angeles v. Taxpayers for Vincent,
466 U.S. 789 (1984) ............................................................................................32
Mich. Canners & Freezers Ass’n v. Agric. Mktg. & Bargaining Bd.,
467 U.S. 461 (1984) ............................................................................................46
N.Y. Coalition of Hispanic Chambers of Com. v. N.Y. City Dep’t of
Health and Mental Hygiene,
970 N.Y.S. 2d 200 (N.Y. App. Div. 2013) .........................................................51
vi

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TABLE OF AUTHORITIES
(continued)

Page(s)

NAACP v. Alabama,
357 U.S. 449 (1958) ................................................................................20, 40, 41
Nebraska Press Ass’n v. Stuart,
427 U.S. 539 (1976) ............................................................................................22
Nixon v. Shrink Missouri Gov’t PAC,
528 U.S. 377 (2000) ............................................................................................32
People ex rel. Watchtower Bible & Tract Society, Inc. v. Haring,
170 N.E. 2d 677 (N.Y. 1960)..............................................................................50
Powhatan Steamboat Co. v. Appomattox R. Co.,
65 U.S. (24 How.) 247 (1860) ............................................................................45
Rescuecom Corp. v. Google Inc.,
562 F.3d 123 (2d Cir. 2009) ...............................................................................19
Shuttlesworth v. City of Birmingham,
394 U.S. 147 (1969) ............................................................................................27
Southeastern Promotions, Ltd. v. Conrad,
420 U.S. 546 (1975) ..........................................................................23, 24, 25, 27
Speiser v. Randall,
357 U.S. 513 (1958) ............................................................................................32
Susan B. Anthony List v. Driehaus,
134 S. Ct. 2334 (2014) ........................................................................................44
Talley v. California,
362 U.S. 60 (1960) ..............................................................................................40
The Pentagon Papers Case. New York Times Co. v. United States,
403 U.S. 713 (1971) ................................................................................22, 23, 24
Trustees of Dartmouth College v. Woodward,
17 U.S. 518 (1819) ..............................................................................................50
United States v. Stevens,
559 U.S. 460 (2010) ................................................................................33, 34, 44
United States v. Virginia,
518 U.S. 515 (1996) ............................................................................................38
vii

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TABLE OF AUTHORITIES
(continued)

Page(s)

Vill. of Schaumburg v. Citizens for a Better Env’t,
444 U.S. 620 (1980) ................................................................................23, 31, 39
Walker v. Texas Div., Sons of Confederate Veterans, Inc.,
135 S. Ct. 2239 (2015) .............................................................................................29

Williams-Yulee v. Florida Bar,
135 S. Ct. 1656 (2015) ..................................................................................31, 35
Wis. Dep’t of Indus., Labor, & Human Relations v. Gould, Inc.,
475 U.S. 282 (1986) ......................................................................................46, 49
Wisconsin Right To Life, Inc. v. Barland,
751 F.3d 804 (7th Cir. 2014) ..............................................................................38
Young v. Am. Mini Theatres, Inc.,
427 U.S. 50 (1976) ..............................................................................................32
STATUTES & CONSTITUTIONAL PROVISIONS
13 N.Y.C.R.R. § 90.1 (Article 8 of the Estates, Powers and Trusts
Law) ..........................................................................................................8, 52, 54
13 N.Y.C.R.R. § 90.2(a) ......................................................................................8, 52
13 N.Y.C.R.R. § 91.5(c) ......................................................................................8, 23
13 N.Y.C.R.R. § 92.3(b)(2) (2003) ............................................................................ 8
26 U.S.C. § 501(c) ............................................................................................passim
26 U.S.C. § 6103 ..................................................................................................7, 47
26 U.S.C. § 6104 ............................................................................................7, 47, 48
28 U.S.C. § 1291 ........................................................................................................3
28 U.S.C. § 1331 ........................................................................................................3
28 U.S.C. § 1343 ........................................................................................................3
28 U.S.C. § 1367 ........................................................................................................3
28 U.S.C. § 2201 ........................................................................................................3
28 U.S.C. § 2202 ........................................................................................................3
52 U.S.C. § 30104(c)(2)(C) .....................................................................................37
viii

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TABLE OF AUTHORITIES
(continued)

Page(s)

N.Y. Const., Article III, § 1 .....................................................................................49
N.Y. Exec. Law § 171-a(1) ..........................................................................14, 50, 53
N.Y. Exec. Law § 172 (Charitable Solicitation Law).......................................passim
N.Y. Exec. Law § 172-d(10) ......................................................................................7
N.Y. Exec. Law § 177(2) ...............................................................................9, 10, 45
U.S. Const. amend. I .........................................................................................passim
OTHER AUTHORITIES
2d Cir. L. R. 27.2 .....................................................................................................55
4 Blackstone, Commentaries ...................................................................................21
11 CFR 104.20(c)(9) ................................................................................................37
11 CFR 109.10(e).....................................................................................................37
Fed. R. Civ. P. 12(b)(6)........................................................................................4, 19
Illinois Form AG990-IL Filing Instructions ............................................................38
Michigan Renewal Solicitation Registration Form .................................................38
Milton, Appeal for the Liberty of Unlicensed Printing (1644) ................................21
Oregon Form CT-12F ..............................................................................................39
S. Rep. No. 91-552 (1969), reprinted in 1969 U.S.C.C.A.N. 2027 ........................47

ix

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INTRODUCTION
Citizens United and Citizens United Foundation (“Organizations”) are nonprofits that depend on the generosity of their donors. For years, they have solicited
donations in New York without state interference. Every year, they have filed their
otherwise-public IRS Form 990 with the state. But now, after the election of Mr.
Schneiderman as New York’s Attorney General, and without prior notice, the
Attorney General is demanding that the Organizations tell him who their donors
are. If the Organizations decline, he can fine them or effectively ban them from
soliciting contributions in New York by revoking or suspending their registrations.
The Organizations sued, alleging this requirement was unconstitutional. But
the district court erroneously dismissed the complaint by applying a heightened
pleading standard and committing multiple legal errors. First, the district court
found that the policy was not unconstitutional (despite no evidentiary record)
because the Organizations did not prove it was unconstitutional. That holding
turns free speech on its head. Because the Attorney General is attempting to
burden speech, it is the Attorney General’s burden to prove that doing so is
acceptable. And he must show that with evidence, not mere assertions.
Second, the district court rejected the Organizations’ other claims for equally
erroneous reasons. For example, the Organizations alleged that by not notifying
them of the new policy before its enactment, the Attorney General violated due
1

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process. The district court, however, sua sponte found this claim not ripe because
no punishment has been imposed and (in the district court’s view) the disclosure
requirement is constitutional. But the Supreme Court has already squarely rejected
that reasoning. The Organizations face sanctions if they do not comply with the
Attorney General’s policy; that credible threat of enforcement makes their claims
ripe under well-established legal principles.
The district court also erred in dismissing the Organizations’ claim that
federal law preempted the Attorney General’s policy. The new policy frustrates
the detailed federal scheme for protecting donor lists—a scheme that already
provides state officials with a way to obtain that information—and it is therefore
preempted. The district court likewise wrongly dismissed the Organizations’ claim
that the Attorney General has exceeded his authority under state law by regulating
Citizens United (a “social welfare organization”), even though state law gives the
Attorney General the power to regulate only charitable organizations, while
defining that term to exclude social welfare organizations.
At bottom, this appeal asks whether a state may forbid a charity from
exercising its First Amendment right to solicit charitable contributions simply
because that charity wishes to keep its donors private.

Neither the First

Amendment nor federal tax law permits such a sanction. And even if they did, that

2

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requirement certainly could not be imposed retroactively without notice. The
Organizations’ claims should not have been dismissed.
JURISDICTIONAL STATEMENT
The district court had jurisdiction under 28 U.S.C. §§ 1331, 1343, 1367,
2201-02. The district court dismissed the Organizations’ complaint on August 29,
2016. The district court’s judgment became final on September 13, 2016. SA1920.1 Appellants timely noticed their appeal on September 26, 2016. JA328. This
Court has jurisdiction under 28 U.S.C. § 1291.
ISSUES PRESENTED
Before being permitted to ask for donations in the state of New York,
charities must now register with the Attorney General and disclose the names of
their contributors. The issues presented are:
1.

Whether the Organizations adequately pled that (a) the Attorney

General’s policy violates the First Amendment because it is a prior restraint that
forbids speech before governmental approval; (b) the Attorney General’s policy is
facially unconstitutional because it is not narrowly tailored to further a compelling
governmental interest; and (c) the Attorney General’s policy is unconstitutional as
applied to the Organizations because the Organizations’ donors fear public
backlash, financial harm, and worse if their identities are disclosed.
1

Citations to “SA” are to the Special Appendix attached to this brief. Citations to “JA”
are to the Joint Appendix filed simultaneously with this brief.

3

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2.

Whether the Organizations’ claim is ripe that the Attorney General

violated their due process rights by failing to give any notice that he was
abandoning years of established practice when adopting the new disclosure policy.
3.

Whether federal law, which establishes a general rule of non-

disclosure of tax information and an extensive regulatory regime to govern and
protect the release of tax information, preempts the Attorney General’s disclosure
requirement.
4.

Whether the Attorney General violated New York’s nondelegation

doctrine by asserting the power to regulate “social welfare organizations,” when
the statute permitting him to regulate “charitable organizations” specifically
defines “charitable organization” without including social welfare organizations.
STATEMENT OF THE CASE
In their First Amended Complaint, the Organizations alleged that the New
York Attorney General had abandoned years of consistent practice by suddenly
requiring charities to give him a list of their donors as a precondition for soliciting
donations in New York. The Organizations challenged the Attorney General’s
about-face, arguing that the disclosure requirement violated the First Amendment
and due process, was preempted by federal law, and was beyond the Attorney
General’s statutory authority.

Judge Sidney Stein, however, dismissed the

Organizations’ complaint for failure to state a claim under Rule 12(b)(6). The
4

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opinion is available at 2016 WL 4521627 (S.D.N.Y. Aug. 29, 2016), and is
reproduced at SA1-18.
A.

The Organizations And Their Missions

Both organizations are nonstock, nonprofit membership corporations that
enjoy tax-exempt status under 26 U.S.C. § 501(c). (JA245-46.) Citizens United,
perhaps best known to the legal world by the eponymous case Citizens United v.
FEC, 558 U.S. 310 (2010), is dedicated to advancing the principles of limited
government, free enterprise, strong families, and national security. (JA245.) In
pursuit of that goal, Citizens United produces documentaries that include
interviews with national leaders, as well as advertisements. (JA247.) Citizens
United’s advocacy is decidedly political, and is thus organized and operated
“exclusively for the promotion of social welfare” under § 501(c)(4). (JA245.)
Citizens United Foundation, by contrast, is dedicated to education. Thus, the
Foundation is organized “exclusively for … educational purposes” under
§ 501(c)(3). (Id.) The Foundation seeks to inform the American people about
public policy issues which relate to traditional American values, including: the
Constitution as the supreme limit on federal power; a strong national defense as the
primary role of the federal government; and belief in God and Judeo-Christian
values as the fundamental attribute of our way of life. (JA245–46.) Although
distinct from Citizens United, the Foundation uses similar means to get its message
5

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out. In particular, the Foundation produces educational films that document world
leaders and events.

(JA247.)

For example, the Foundation has released

documentaries about Pope John Paul II, 9 Days That Changed The World, and
President Ronald Reagan, Rendezvous With Destiny. (Id.) The Foundation’s films
have been recognized for their excellence, winning many awards. (Id.)
Making award-winning films costs money and the Organizations’ continued
production of those films and other materials is entirely dependent on the
donations they are able to raise. That is why the Organizations have fundraising
efforts in almost all fifty states. New York is a particularly important source of
donations for the Organizations because it is home to millions of individuals who
agree with the Organizations. Thus, the Organizations reach out by mail, phone,
and even in person to encourage New Yorkers to support their important work.
(JA247-48.)
The people who donate their money to the Organizations understandably
value their privacy, and donate on the understanding that their identities will not be
made public.

The Organizations know that some of their positions are

controversial and that their donors fear public backlash, financial harm, and worse
if their support of controversial causes is publicly released.

Thus, the

Organizations specifically assure all of their donors that their identities will be
protected and remain confidential. (JA248.)
6

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B.

Disclosure Requirements

As non-profit corporations, the Organizations annually file a Form 990 with
the IRS. (JA249.) One of the attachments to that form is Schedule B, which
(among other things) lists donors to each organization.

(Id.)

Federal law,

however, protects this information as “confidential” and prevents the government
from “disclos[ing] any … return information,” except as specifically authorized by
law. 26 U.S.C. §§ 6103, 6104.
New York’s Charitable Solicitation Law requires every “charitable
organization” to “file with the attorney general a prescribed registration form,” as a
condition of its ability “to solicit contributions from persons in this state.” N.Y.
Exec. Law § 172(1). The charitable organization must do this “prior to any
solicitation.” Id. These forms “become public records of the attorney general.”
N.Y. Exec. Law §172(8).

A charitable organization may not solicit “for a

charitable purpose or engage in any other fund raising activities without being a
registered charitable organization in compliance with all filing requirements of this
article.” N.Y. Exec. Law § 172-d(10).
The regulations implementing the Charitable Solicitation Law define a
“charitable organization” to include “an organization that is organized and/or
operated for charitable purposes,” including “organizations exempt from Federal
income taxation” under § 501(c)(3), as well as those “exempt from Federal income
7

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taxation pursuant to another code section that are organized and/or operated for
charitable purposes.”

13 N.Y.C.R.R. § 90.2(a).

The regulation then defines

“charitable” to mean “charitable, religious, educational, scientific, literary, cultural,
testing for public safety, fostering national or international sports competition,
benevolent, promoting social welfare, for a public benefit or for the prevention of
cruelty to children or animals,” as well as “philanthropic, patriotic, eleemosynary
or for law enforcement support.” 13 N.Y.C.R.R. 90.1(a)-(b).
The Attorney General has promulgated a form, CHAR 500, that must be
submitted as part of an organization’s annual report.

Id. § 91.5(c).

As an

attachment, organizations “must include … a copy of the complete IRS form 990.”
Id. § 91.5(c)(3)(i)(a). Before 2006, New York’s regulations explicitly required that
filers provide, in addition to Form 990, copies of “Schedules A and B and any
other schedules or statements” when they filed CHAR 500.

Id. § 92.3(b)(2)

(2003). But the current rule, adopted in 2006, omits all reference to Schedule B.
Both Organizations have registered with the Attorney General every year
since 1995, and have never been asked—until now—to submit their full Schedule
B list of donors to maintain a valid registration. (JA250.)
C.

The New York Attorney General Changes His Policy

For tax year 2011, the Organizations each submitted CHAR 500 without a
Schedule B list of donors attached, as they had for years. (Id.) For the first time,
8

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however, each Organization received a “Deficiency Notice” stating that each group
must file Schedule B to maintain its registration. (JA260-62 (Ex. B to First
Amended Cmplt. (“Deficiency Notices”).)

The notices provided: “You must

submit a complete Schedule B with the names of contributors and the amount
contributed.” (Id.) The notices further threatened that if the Organizations did not
comply, they may face fines. (Id.) Indeed, the law provides for civil penalties of
up to $100 a day for noncompliance.

N.Y. Exec. Law § 177(2)(b).

These

notifications were the first time the Organizations learned of any requirement to
disclose its list of donors. (JA250.)
In 2012, following the election of Mr. Schneiderman as Attorney General,
the Attorney General implemented a new policy to require the filing of Schedule B
donor lists, and was sending deficiency notices to some organizations that did not.
The Attorney General did not notify the public of this change in advance—indeed,
the Attorney General did not reveal this policy until this litigation commenced.
(Id.) And he has not enforced his policy against all organizations; rather, the
Attorney General exercises unfettered discretion over which groups receive those
notices. (JA251.)
The Organizations refused to comply. To date, they have not provided a list
of donors. Indeed, the IRS explicitly warns nonprofits not to provide the Schedule
B (the donor list) to States, because they “might inadvertently make the schedule
9

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available for public inspection.” (Id.) The Organizations have followed the IRS’s
advice because disclosure of their donors’ names, addresses, and other identifying
information to New York authorities would severely curtail donations, and thereby
chill each group’s speech. (Id.)
Nonetheless, the Attorney General continues to insist that the Organizations
submit copies of Schedule B, and the Organizations face serious consequences if
they decline. See N.Y. Exec. Law § 177(2). The Attorney General does not intend
to maintain the donors lists in confidence. (Id.) In fact, such filings have been
made publicly accessible by the Attorney General’s office in the past. And since
his election, Mr. Schneiderman has engaged in a systematic effort to obtain and
publicize the identity of donors to non-profit organizations that the Attorney
General dislikes. (JA251-52)
D.

Procedural History

The Organizations filed their complaint in mid-2014 and sought a
preliminary

injunction

against

the

Attorney

General’s

donor-disclosure

requirement. They specifically claimed that the requirement violated the First
Amendment, that the Attorney General’s adoption of the requirement without any
notice violated the Due Process Clause, and that federal law preempted the
Attorney General’s requirement.

The district court denied the preliminary

injunction, repeatedly emphasizing the record before it. (JA127-53.) The court
10

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held that based on “the record adduced to date in this litigation,” the Organizations
had not made the “clear showing” required for a preliminary injunction. (JA131.)
The Organizations then filed an amended complaint, clarifying the
constitutional claims and adding a claim that the Attorney General lacked the
power under state law to regulate Citizens United as a “charitable organization”
because it is a “social welfare” group—not a “charitable organization.” (JA254.)
The Attorney General moved to dismiss the complaint, and the district court
granted that motion. (SA1-19.)
First Amendment. The court first concluded that the Organizations had not
adequately alleged that the new policy was an unconstitutional prior restraint.
Beginning from the proposition that prior restraints “are not unconstitutional per
se,” the court concluded that the Attorney General had “cabined” the statute’s
“broad delegation” of discretion by passing the current regulations. (SA4.) In
particular, the court found that there was a “closed set” of required documents (the
donor list among them) that charities have to file. (SA5.) “If a charity files the
documents the regulations require,” the court reasoned, “the attorney general must
grant that charity a license to solicit donations in New York.” (Id.) That was
permissible under the First Amendment according to the court. The court also
concluded that the “attorney general’s power to change which documents must be
filed to solicit in New York does not render intolerable any risk of self11

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censorship.”

(Id.)

Finally, the court refused to consider the Organizations’

allegation that the Attorney General had targeted certain charities for disclosure
because that allegation was made “on information and belief.” (SA6.)
The court next rejected the Organizations’ facial challenge. The court began
by saying that facial challenges “can only survive if the complaint plausibly alleges
that no set of circumstances exists under which the policy would be valid.” (SA7.)
Then, examining the disclosure requirement under “exacting scrutiny,” the court
found the law had a substantial relationship to a sufficiently important
governmental interest. (Id.) The interest was “ensuring that charities do not serve
as fronts for fraud or crime.” (SA8.) As to the relationship, the court explained,
“No facts alleged in the complaint plausibly suggest that the attorney general’s
disclosure requirement is unusually divorced from the state’s important
governmental interests.” (Id.)
Turning to the Organization’s as-applied challenge, the court explained that
such a claim is “viable if plaintiffs plausibly allege that there is a reasonable
probability that their donors would face threats, harassment, or reprisals if their
names were disclosed.”

(SA10.)

The court found that the Organizations’

allegations did not reach “the requisite specificity or severity.” (SA12.)
Due Process. The court next turned to the Organizations’ claim that the
Attorney General violated due process when he changed a many-years-long
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practice without any public notice. The court declined to consider the merits of
this claim. Instead, it concluded the claim was “not ripe.” (SA13.) The court
explained that the Attorney General had not yet “stripped [the Organizations] of
any rights or imposed any penalty.” (Id.) Further, the imposition of a fine or the
rescinding of a license depended on “contingent future events that may not occur,”
including the possibility that the Organizations would comply with “the attorney
general’s policy after this Court upholds its constitutionality.” (SA14.) It was thus
“premature” for the court to consider the claim. (Id.)
Preemption. The court then rejected the Organizations’ last federal claim—
that federal law preempts the Attorney General’s policy. Federal law establishes a
general rule of non-disclosure of tax information and an extensive regulatory
regime to protect that information.

The Attorney General’s policy, the

Organizations argued, was an obstacle to the federal regime. The court rejected the
argument finding that “nothing in the Internal Revenue Code or its legislative
history demonstrates the clear and manifest purpose of Congress to prohibit states
from requiring tax-exempt organizations to disclose to the state portions of their
federal tax filings.” (SA15 (internal citation omitted).) The court concluded that
“[s]tates may therefore require tax-exempt organizations to disclose” their donor
lists. (SA15-16.)
Ultra vires. Finally, the court rejected the claim that the Attorney General
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was acting ultra vires by regulating Citizens United as a “charitable organization.”
New York law gives the Attorney General the authority to regulate “charitable
organizations.” N.Y. Exec. Law § 172.

State law then defines “charitable

organizations” as “benevolent, philanthropic, patriotic, [and] eleemosynary”
groups. N.Y. Exec. Law § 171-a(1). Citizens United, which is a 501(c)(4) “social
welfare” group, accordingly claimed that the Attorney General had no authority to
include “social welfare groups” within the definition of “charitable organizations.”
The court rejected that argument, finding the Attorney General was free to “fill in
the interstices in the legislative product.” (SA16.) In the court’s view, even
though state law defines “charitable organization” in specific terms, the Attorney
General could consider a “social welfare” group to be a “charitable organization.”
Further, the court held it did not matter that the Attorney General’s own rules
defined “charitable organizations” to include “501(c)(3)” organizations as
charitable organizations, while leaving out 501(c)(4) entities (like Citizens United).
The court concluded that Citizens United was a “charitable organization” because
it “promot[es] social welfare.” (SA17.)
This appeal followed.
SUMMARY OF ARGUMENT
I.

The Organizations adequately pled that the Attorney General’s

registration and disclosure policy violate the First Amendment.
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A. Because the Attorney General requires charities to register with him and
disclose their donors before they are permitted to speak, his policy is plausibly a
prior restraint and is thus presumed to be unconstitutional. The district court,
however, erroneously dismissed the Organizations’ prior-restraint claim, finding
the policy was constitutional. The court did so by essentially holding that the
Organizations had the burden to show that the Attorney General had too much
discretion in applying his policy. First, it is the Attorney General who bears the
burden, and he cannot set forth evidence that his prior restraint is constitutional
because this is the motion-to-dismiss stage. Second, the quantum of discretion is
not what makes a prior restraint constitutional (or not). To the contrary, the degree
of bureaucratic discretion is dispositive only when the issue is government
regulation of competing uses of public forums—in that context, regulations are
permissible only if the discretion of government officials is appropriately cabined.
That analysis has nothing to do with the issue here—which is whether it is
constitutional for the government to require charities to disclose their donors
before they are permitted to speak.

But regardless, even if discretion were

dispositive, the Attorney General has far too much. Under the Attorney General’s
policy, he is free to set forth whatever requirements he wants, whenever he wants.
For these reasons, the complaint adequately pled that the policy is an
unconstitutional prior restraint and should not have been dismissed.
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B. The Organizations also adequately alleged that the Attorney General’s
policy is facially unconstitutional by pleading that the policy was not narrowly
tailored to meet a compelling interest. Given that this case is at the pleading stage,
there is no way to determine whether the Attorney General’s disclosure
requirement meets that standard. But rather than wait until summary judgment to
adjudicate such claims—as it should have—the district court dismissed the
Organizations’ facial challenge by finding that the policy survived exacting
scrutiny. This finding was incorrect on multiple levels. First, that is the wrong
standard. That standard comes from campaign-finance law—which this case is not
about—and is satisfied by the need to avoid the appearance of corruption in
politics. Second, even if exacting scrutiny—where the government must prove (1)
it has a sufficiently important interest, and (2) its policy is substantially related to
that interest—were the right standard, the district court misapplied it.

The

Attorney General has never established that ferreting out fraud—the interest the
district court found—is the interest served by disclosure. Indeed, 47 other states
ably police fraud without requiring donor disclosure. And the Attorney General
has a number of less restrictive means of achieving the same interest. For one, he
can actually prosecute fraudulent charities. Or he could request the donor lists
from the IRS, which has a method for protecting the donors’ confidentiality. The
availability of less-burdensome alternatives means the policy is unconstitutional.
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C.

The Organizations also adequately alleged that the disclosure

requirement is unconstitutional as applied to them because their donors fear public
backlash, financial harm, and worse, should their support of controversial causes
become known. The district court, however, dismissed this allegation because it
found the Organizations’ pleading lacked the requisite specificity required for an
as-applied challenge. The district court’s requirement for more specifics, however,
presents a Catch-22.

The Organizations cannot give more details about why

specific donors fear being identified because what the donors object to is
identifying themselves. And in any event, discovery will demonstrate that donors
are rightly worried about the public discovering their identities and pillorying them
for their charitable giving.
II. The Organizations alleged the Attorney General violated due process by
not giving the Organizations any prior notice of the disclosure requirement. The
district court, however, sua sponte held that this claim was not ripe because (1) the
Attorney General has not yet penalized the Organizations and (2) now that the
court has concluded the policy is constitutional, the Organizations might comply.
That holding directly contradicts FCC v. Fox Television Stations, Inc., where the
Supreme Court held that the FCC violated due process by not giving television
broadcasters notice that certain images and words were verboten. 132 S. Ct. 2307,
2317 (2012). The Supreme Court held that even though the FCC promised not to
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punish Fox. If a claim where the government has agreed not to prosecute is viable,
then so too is a claim where the government has given no assurances whatsoever.
Finally, the district court’s musings that the Organizations might comply with the
policy now that it has been declared constitutional are irrelevant. Whether the law
violates the First Amendment does not affect the due process analysis.
III. Federal law preempts the Attorney General’s policy. Federal law sets
out a detailed method by which charities disclose their donors to the federal
government, while also imposing significant safeguards to keep that information
confidential. Federal law further provides a method by which state officials can
view those disclosures. The Attorney General’s policy attempts an end-run around
this carefully designed system and thus collides directly with it. In such collisions,
federal law wins.
IV. Finally, the Attorney General violated the New York Constitution by
rewriting a duly enacted statute. New York law gives the Attorney General the
power to regulate “charitable organizations,” and defines that term narrowly to
mean a “benevolent, philanthropic, patriotic, or eleemosynary person.”

The

Attorney General’s policy, however, purports to reach organizations engaged in
“promoting social welfare.” That includes Citizens United, which is a 501(c)(4)
organization. But state law and the Attorney General’s own rules exclude these
types of organizations. Because the Attorney General is attempting to rewrite the
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law, his policy must be struck down as to Citizens United.

At a minimum,

however, this Court should certify the state-law question to the New York Court of
Appeals.
STANDARD OF REVIEW
This is an appeal of the district court’s dismissal of the Organizations’
complaint under Rule 12(b)(6).

This Court reviews the dismissal de novo.

Beauvoir v. Israel, 794 F.3d 244, 247 (2d Cir. 2015). The Court also “must accept
as true all of the factual allegations set out in plaintiff ’s complaint, draw inferences
from those allegations in the light most favorable to plaintiff, and construe the
complaint liberally.” Rescuecom Corp. v. Google Inc., 562 F.3d 123, 127 (2d Cir.
2009). “Where the complaint involves a civil rights violation, as it does here, the
standard is to be applied with particular strictness.” Matson v. Bd. of Educ. of City
Sch. Dist. of N.Y., 631 F.3d 57, 63 (2d Cir. 2011).
The federal rules require “only a short and plain statement of the claim
showing that the pleader is entitled to relief.” Bell Atl. Corp.v. Twombly, 550 U.S.
544, 555 (2007). While a complaint must contain “more than an unadorned, the
defendant-unlawfully-harmed-me accusation,” it does not need “detailed factual
allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). And a plaintiff can
plead facts “upon information and belief” where the facts are peculiarly within the

19

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possession and control of the defendant. Boykin v. KeyCorp, 521 F.3d 202, 215
(2d Cir. 2008).
ARGUMENT
I.

PLAINTIFFS ADEQUATELY PLED THAT THE REGISTRATION
DISCLOSURE RULES VIOLATE THE FIRST AMENDMENT

AND

Before getting to what this case is about, it is important to say what it is not
about. First, this is not a case about campaign finance. Rather, this case is about
whether the government can ban organizations from exercising the “First
Amendment … right to engage in charitable solicitation” (Illinois ex rel. Madigan
v. Telemarketing Assocs., 538 U.S. 600, 611 (2003)) unless they agree to the
“restraint on freedom of association” occasioned by “compelled disclosure” of its
“affiliates” (NAACP v. Alabama, 357 U.S. 449, 452, 462 (1958)).
Second, this is not a case about whether the requirements at issue in fact
burden First Amendment rights. Rather, it is about whether the Organizations
adequately pled that the requirements burden their rights.
When properly framed, there can be little doubt that the complaint
adequately alleges that the Attorney General’s policy requiring organizations to
register with the government and disclose their donors’ identities before speaking
violates the First Amendment. That policy is plausibly a prior restraint, facially
unconstitutional, and unconstitutional as applied to the Organizations because their
donors fear reprisals. Because the district court erred in dismissing these claims by
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applying too strict of a pleading standard and contorting First Amendment law,
reversal and remand is required.
A.

The Complaint Adequately Pled That Requiring Organizations
To Register and Disclose Their Donors To The Government
Before Speaking Is An Unconstitutional Prior Restraint
1.

The Attorney General’s policy is presumed to be
unconstitutional.

In 1644, John Milton assailed an act of Parliament that permitted censoring
the press prior to publication.

Milton, Appeal for the Liberty of Unlicensed

Printing (1644). Milton “vigorously defended the right of every man to make
public his honest views ‘without previous censure’; and declared the impossibility
of finding any man base enough to accept the office of censor and at the same time
good enough to be allowed to perform it duties.” Grosjean v. Am. Press Co., 297
U.S. 233, 245-46 (1936).
A century later, freedom from licensing had become one of the bedrock
rights of Englishmen. As Blackstone put it, “The liberty of the press is indeed
essential to the nature of a free state: but this consists in laying no previous
restraints upon publications, and not in freedom from censure for criminal matter
when published.” 4 Blackstone, Commentaries *151. To subject Englishmen “to
the restrictive power of a licenser … is to subject all freedom of sentiment to the
prejudices of one man, and make him the arbitrary and infallible judge of all
controverted points in learning, religion and government.” Id. at *152.
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Following our English forebears, we have long understood that “[p]rior
restraints on speech and publication are the most serious and the least tolerable
infringement on First Amendment rights.” Nebraska Press Ass’n v. Stuart, 427
U.S. 539, 559 (1976).

Such restraints are therefore “presumptively

unconstitutional.” Id. at 558.
Perhaps the most famous case involving a prior restraint in this country is
The Pentagon Papers Case. New York Times Co. v. United States, 403 U.S. 713
(1971) (per curiam). In that case the government sought to enjoin the publication
of classified documents related to the Vietnam conflict. The Court found that such
an injunction was an unconstitutional prior restraint, and explained that “[a]ny
prior restraint on expression comes to this Court with a ‘heavy presumption’
against its constitutional validity.” Id. at 723. It was therefore the government’s
“heavy burden” to show “justification for the imposition of such a restraint.” Id. at
714. And even though the interest at stake in The Pentagon Papers Case was
national security, an interest of surpassing importance, the Court was not willing to
permit a prior restraint to stand. Id.
As Justice Black’s lead opinion put it, “The guarding of military and
diplomatic secrets at the expense of informed representative government provides
no real security for our Republic.” Id. at 719 (Black, J., op.). Justice Brennan
echoed that sentiment as well saying that “[o]nly governmental allegation and
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proof that publication must inevitably, directly, and immediately cause the
occurrence of an event kindred to imperiling the safety of a transport already at sea
can support even the issuance of an interim restraining order.” Id. at 726-27
(Brennan, J., op.). Thus, absent a truly compelling interest of the highest order a
prior restraint is immediately presumed to be unconstitutional.
Moreover, the Court has not limited prior restraint analysis to court-issued
injunctions. In Grosjean, for example, the court found that a gross receipts tax on
newspapers was a prior restraint. 297 U.S. at 245-51. Similarly, in Bantam Books,
Inc. v. Sullivan, the Court struck down as a prior restraint a system where a
commission identified certain books and magazines as objectionable for sale to
minors. 372 U.S. 58, 69-70 (1963). And in Southeastern Promotions, Ltd. v.
Conrad, the Court struck down a city’s refusal to rent a municipal theater for a
production of “Hair,” because it was an unconstitutional prior restraint. 420 U.S.
546 (1975).
Turning to this case, charitable organizations in New York are forbidden
from engaging in expressive action—soliciting donations, (see Vill. of Schaumburg
v. Citizens for a Better Env’t, 444 U.S. 620, 632 (1980))—unless they first register
with the Attorney General and disclose their donors’ identities (N.Y. Exec. Law
§ 172; 13 N.Y.C.R.R. § 91.5(c)). That prohibition should cause any reasonable
observer to sit up and take notice—because, as the complaint alleges, and the court
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below essentially agreed, this is a classic prior restraint on speech. (JA253; SA4
(“[I]t is clear that the regime is plausibly a prior restraint.”).)
The

Attorney

General’s

policy

is

accordingly

presumed

to

be

unconstitutional and the Organizations need allege nothing more to survive a
motion to dismiss. Once it is alleged that a law is a prior restraint, a “heavy
burden” shifts to the government “of showing justification.” The Pentagon Papers
Case, 403 U.S. at 714 (per curiam). And the government cannot carry that burden
on a motion to dismiss, because it is required to prove—with evidence—that the
prior restraint is constitutional.
2.

The district court’s contrary conclusion was erroneous.

The district court, however, dismissed the Organizations’ claim, finding that
the Attorney General had proven that his prior restraint was constitutional. That
conclusion is astonishing considering the Attorney General has not even filed an
answer in this case. The genesis of the district court’s error lies in its statement
that prior restraints “are not unconstitutional per se.” SA4. That assertion, lifted
from Southeastern Promotions (420 U.S. at 558), is taken wildly out of context.
Southeastern Promotions—which struck down the prior restraint at issue—
immediately followed that observation with the admonition that “[a]ny system of
prior restraint, however, comes to this Court bearing a heavy presumption against
its constitutional validity.” Id. at 558. That presumption is “heavier—and the
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degree of protection broader—than that against limits on expression imposed by
criminal penalties.” Id. at 558-59. And this presumption is based on “a theory
deeply etched in our law” (going back to Milton): “a free society prefers to punish
the few who abuse rights of speech after they break the law than to throttle them
and all others beforehand.” Id. at 559.
The district court, however, utterly ignored the fact that prior restraints are
presumed unconstitutional. Instead, it contorted a narrow exception to that general
rule into a new legal standard requiring that plaintiffs show this prior restraint
violates the First Amendment.

According to the court below, “[T]he First

Amendment does not countenance a system of prior restraint when it vests
unbridled discretion in a government official over whether to permit or deny
expressive activity.” (SA4.) It then found that the Organizations had not shown
the Attorney General had unbridled discretion. Id. But “unbridled discretion” is
not the standard for judging prior restraints. It is an element within an exception to
the general rule. And that exception is inapplicable to the case at hand.
The exception the district court latched onto is that the government can
impose a prior restraint when it is issuing permits for public forums—an exception
one might call the “parade-permit exception.”

The “government, in order to

regulate competing uses of public forums, may impose a permit requirement on
those wishing to hold a march, parade, or rally.” Forsyth Cty., Ga. v. Nationalist
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Movement, 505 U.S. 123, 130 (1992); see also Cox v. New Hampshire, 312 U.S.
569, 574-576 (1941). That narrow rule makes eminent sense. Without some
governmental control over public forums, they would be a mosh pit of protestors
and performers. To avoid that, the government must be permitted to allocate
public commons.
But whatever allocation scheme the government develops, that scheme must
still “meet certain constitutional requirements.” Forsyth, 505 U.S. at 130. For one,
“[i]t may not delegate overly broad licensing discretion to a government official.”
Id.

When a licensor enjoys “unfettered discretion” over whether to approve

speech, parties may “censo[r] their own speech, even if the discretion and power
are never actually abused.” City of Lakewood v. Plain Dealer Publ’g Co., 486
U.S. 750, 757 (1988). Thus, prior restraints that merely control access to public
forums are constitutional as long as they do not give bureaucrats too much
discretion.
This narrow exception does not—as the district court mistakenly thought it
did—mean that a prior restraint is unconstitutional only if there is unbridled
discretion.

(SA4.)

To the contrary, all prior restraints are presumed

unconstitutional. Bantam Books, 372 U.S. at 70. It is only if the government can
show it is regulating “competing uses of public forums” that the government may
impose a permit requirement (subject to appropriate safeguards). Forsyth, 505
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U.S. at 130. But the Attorney General has presented no evidence to show that his
prior restraint triggers this parade-permit exception. And again, it is his burden to
do so. Id. That requires discovery.
More importantly, however, there is no evidence that could plausibly fit
New York’s registration law within the permit exception.

The law is not

regulating scarce communal resources, such as public roads or an elementary
school theater.

It is regulating private speech between organizations and

individuals who may wish to support the organizations’ message.

The

Organizations here are trying to engage in private speech. (JA248.)
Moreover, even if the amount of discretion were the proper analysis, the
district court still got the analysis wrong. As the Supreme Court has held, “a law
subjecting the exercise of First Amendment freedoms to the prior restraint of a
license” must contain “narrow, objective, and definite standards to guide the
licensing authority.” Shuttlesworth v. City of Birmingham, 394 U.S. 147, 150-51
(1969). “The reasoning is simple” (Forsyth, 505 U.S. at 131): if the permit scheme
“involves appraisal of facts, the exercise of judgment, and the formation of an
opinion” by the licensing authority (Cantwell v. Connecticut, 310 U.S. 296, 305,
(1940)), then “the danger of censorship and of abridgment of our precious First
Amendment freedoms is too great” to be permitted (Southeastern Promotions, 420
U.S. at 553).
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Here, the district court found that even though the law was a “broad
delegation” to the Attorney General, the Attorney General had “cabined” his
discretion (SA5) by setting “forth a ‘closed set’ of required documents which
substantially fetter the attorney general’s discretion.” (Id.) As long as the “charity
files the documents the regulations require, the attorney general must grant that
charity a license to solicit donations in New York.” (Id.) But state law does not
cabin the Attorney General’s discretion at all. All the statute provides is that
charities must file a “prescribed registration form,” the content of which is entirely
controlled by the Attorney General. N.Y. Exec. Law § 172(1). The form must
“include[],” but is not necessarily “limited to,” certain information such as the
name of the organization and when its fiscal year ends. Id. The rest is made up by
the Attorney General—he can, under his view, add whatever requirements to the
form that he desires. So even if the Attorney General’s current registration form is
in some sense “definite,” he nonetheless enjoys unfettered discretion to change his
mind and draft a new form requiring something more, at any time—as the events
of this litigation illustrate. That is hardly a “definite” standard to guide his exercise
of discretion. Forsyth, 505 U.S. at 131.
The district court held otherwise, finding that “[t]he attorney general’s
power to change which documents must be filed to solicit in New York does not
render intolerable any risk of self-censorship” or “discrimination against
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disfavored speech.” (SA5.) But this issue (if even relevant) cannot be resolved
without a factual record. See Children First Found., Inc. v. Fiala, 790 F.3d 328,
344-45 (2d Cir.) (emphasis added), abridged on other grounds by Walker v. Texas
Div., Sons of Confederate Veterans, Inc., 135 S. Ct. 2239 (2015).
On that point, Children First is instructive. The plaintiffs in that case
challenged the state’s policy of refusing to “promote or display politically sensitive
messages” on license plate designs. 790 F.3d at 345. This Court first evaluated
whether the policy was “well-established,” which required examining both the
relevant regulation, as well as all “pertinent agency policies and practices, written
or unwritten.” Id. at 344 (emphasis added). But the “inquiry [did] not end there …
because in order to pass constitutional muster the Department’s policy must also be
‘uniformly applied.’” Id. at 345. The Second Circuit then thoroughly evaluated
the state’s record of enforcement. Id. at 346-47.
As Children First holds, it is not enough to have a policy; the policy must be
well-established and “uniformly enforced,” which is a fact question, and which is
why Children First arose after discovery and a motion for summary judgment.
The Attorney General asserted below that his Schedule B policy is supported by
well-established practice, but that is precisely what discovery and trial will test. Is
it supported by well-established practice? (If so, why are the Organizations just
now learning of it?) What are the “procedures by which” the Attorney General
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selects who will receive deficiency notices? Id. at 346. (Are they viewpointneutral? Arbitrary? Objective?) What “unwritten” “practices” exist, and for how
long? Id. at 344. These are crucial questions on which the Attorney General bears
the burden of proof.
Moreover, the Organizations have alleged that the Attorney General has not
applied his new policy uniformly. In particular, the Organizations alleged that “not
all organizations who have declined to file full Schedules B have been sent
deficiency notices”; that the Attorney General “has exercised ” “unfettered
discretion to select which organizations will receive [deficiency] notices”; and that
the Organizations have never before been asked to submit their list of donors to
maintain a valid registration. (JA250-51 (emphasis added).) These allegations put
at issue precisely what the Attorney General must prove.
The district court, however, did not consider the Organizations’ allegation
that the policy has not been “uniformly applied,” because the Organizations made
that allegation on “information and belief.” (JA251.) This holding is wrong
because such pleadings are permitted when the facts supporting the claim are
“peculiarly within the possession and control of the defendant.” Arista Records v.
Doe 3, 604 F.3d 110, 120 (2d Cir. 2010). It is obvious that the Attorney General is
the only one with records showing whether or not he has uniformly applied his
policy. After all, he is the one who applies the policy.
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In short, the district court turned the First Amendment and pleading
standards on their head. The court required the plaintiffs to prove, at the pleading
stage of a First Amendment case, that the government’s policy of requiring
registration and disclosure before speaking does not fall within a narrow exception
to the presumption of unconstitutionality. That holding was incorrect and should
be reversed.
B.

The Organizations Adequately Pled That The Attorney General’s
Policy Is Facially Unconstitutional

“The First Amendment protects the right to engage in charitable
solicitation.” Madigan, 538 U.S. at 611. As the Supreme Court made clear
decades ago: “Solicitation and speech [are] so intertwined that a prior permit could
not be required.” Schaumburg, 444 U.S. at 631 (citing Thomas v. Collins, 323 U.S.
516, 538 (1945)). And more recently, the Supreme Court made clear that laws
“restricting the solicitation of contributions to charity” may be upheld “only if they
are narrowly tailored to serve a compelling interest.” Williams-Yulee v. Florida
Bar, 135 S. Ct. 1656, 1664 (2015).
The Organizations adequately alleged that the Attorney General’s policy is
facially unconstitutional, because they pled that the Attorney General’s policy was
not narrowly tailored to meet a compelling interest. (JA253, JA255.) Given that
this case is at the pleading stage, there is no way to determine whether the Attorney
General’s disclosure requirement meets that standard. And it is his burden to show
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that the policy is narrowly tailored to meet a compelling governmental interest.
See Speiser v. Randall, 357 U.S. 513, 526-27 (1958).
The Attorney General must come forward with evidence—not simply an
ipse dixit that his policy is constitutional. Courts have “never accepted mere
conjecture as adequate to carry a First Amendment burden.” Nixon v. Shrink
Missouri Gov’t PAC, 528 U.S. 377, 392 (2000). And courts “may not simply
assume that the ordinance will always advance the asserted state interests
sufficiently to justify its abridgment of expressive activity.” City of Los Angeles v.
Preferred Commc’ns, Inc., 476 U.S. 488, 496 (1986).
Indeed, that is why when it comes to First Amendment challenges “the norm
is to wait until the summary judgment stage of the litigation to address the ultimate
question of whether the ordinance should stand.” Graff v. City of Chicago, 9 F.3d
1309, 1322 (7th Cir. 1993); see FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 221
(1990);

City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 45 (1986);

Members of City Council of Los Angeles v. Taxpayers for Vincent, 466 U.S. 789,
793 (1984); Young v. Am. Mini Theatres, Inc., 427 U.S. 50, 55 (1976). For that
reason alone, the district court’s dismissal of the Organizations’ facial challenge
should be reversed.
Disregarding this norm, however, the district court dismissed the
Organizations’ facial challenge by applying the wrong standard of review and then
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finding that the Attorney General had met that standard. Once again, the court’s
analysis faltered at the starting line. The court held a facial challenge “can only
survive if the complaint plausibly alleges that no set of circumstances exists under
which the [policy] would be valid.” (SA7.) The court further held that “a facial
challenge must fail where the [policy] has a plainly legitimate sweep.” (Id.)
But that is not the standard for First Amendment cases. “In the First
Amendment context, … this Court recognizes a second type of facial challenge,
whereby a law may be invalidated as overbroad if a substantial number of its
applications are unconstitutional, judged in relation to the statute’s plainly
legitimate sweep.” United States v. Stevens, 559 U.S. 460, 473 (2010). The
district court never considered whether a substantial number of its applications are
unconstitutional, because it held the Organizations to a higher standard. It required
them to show that “the First Amendment prohibits the Attorney General from
requiring any charity—from the most popular and least controversial one to the
least popular and most controversial one—to disclose to New York State its
funding sources.” (SA7.) In other words, as long as it is constitutional to require
even one charity to disclose its donor list, the Organizations lose.
That is not how courts judge facial challenges in the First Amendment
context. In Stevens, the Court did not require the defendant to show that the animal
cruelty statute was unconstitutional in every application (indeed, it was arguably
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constitutional as applied to defendant Stevens). See 559 U.S. at 494-95 (Alito, J.,
dissenting).

Instead, the Court asked whether a substantial number of the

applications of the statute were unconstitutional. That is what the district court
should have done here. And though no record was built on this point (because no
discovery has been allowed), we already know the law would be unconstitutional
in at least some applications. See Americans for Prosperity Found. v. Harris, 182
F. Supp. 3d 1049 (C.D. Cal. 2016) (“AFPF”) (striking down California’s
disclosure requirement as applied). The question is whether those unconstitutional
applications are substantial in number.
After identifying the wrong facial-challenge standard, the district court also
applied the wrong case law.

The court held, “It is well established that the

Schedule B policy must satisfy exacting scrutiny, [b]ecause the Schedule B policy
is a disclosure requirement.” (SA7 (citing, inter alia, Doe v. Reed, 561 U.S. 186
(2010); Citizens United, 558 U.S. 310). The court then explained that exacting
scrutiny “requires a substantial relation between the disclosure requirement and a
sufficiently important governmental interest.” (Id.)
Once again, this is not the right test. This test comes from campaign-finance
disclosure law. See Buckley v. Valeo, 424 U.S. 1, 64 (1976) (on which the district
court relies at SA8, SA10, SA11 n.1); see also Citizens United, 558 U.S. at 366;
Doe, 561 U.S. at 196; Davis v. FEC, 554 U.S. 724, 744 (2008). But this is not a
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case about campaign finance regulations—it is about charitable donations. And
the Supreme Court has never applied the campaign-finance standard outside of the
campaign-finance context. See Ctr. for Competitive Politics v. Harris, 784 F.3d
1307, 1312 n.2 (9th Cir.), cert. denied, 136 S. Ct. 480 (2015) (recognizing as
much). 2

In fact, the Supreme Court has specifically explained otherwise:

“noncommercial solicitation is characteristically intertwined with informative and
perhaps persuasive speech,” and “speech about public issues … commands the
highest level of First Amendment protection,” that is strict scrutiny. WilliamsYulee, 135 S. Ct. at 1665.
It makes sense that the looser “exacting scrutiny” standard is limited to
campaign finance. “In the context of elections and campaign finance disclosure
laws, which have been the majority of cases in recent years applying exacting
scrutiny, unique considerations apply that specifically shape and define the
application of exacting scrutiny.” AFPF, 182 F. Supp. 3d at 1054. In that context,
there are substantial governmental interests in “provid[ing] the electorate with
information” about the sources of election-related spending, in “deter[ring] actual
corruption,” in “avoid[ing] the appearance of corruption,” and in “gathering the
data necessary to detect violations of ... contribution limit[s].” Buckley, 424 U.S.
2

In fact, Buckley precluded the sort of donor disclosure sought here, limiting it only to
those instances where directly linked to campaign finance, and striking it with respect to the sort
of issue discussion desired by the Organizations. 424 U.S. at 79-80.

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at 66-68. Thus, the Supreme Court has held that campaign-finance disclosure
requirements are per se “the least restrictive means” of achieving the government’s
interests. Id. at 68.
But the interest in avoiding political corruption has no place in the
charitable-solicitation context. As one court recently explained, “That holding is
properly limited to the electoral context. In the context of associational rights,
however, even though the governmental purpose [may] be legitimate and
substantial, that purpose cannot be pursued by means that broadly stifle
fundamental personal liberties when the end can be more narrowly achieved.”
AFPF, 182 F. Supp. 3d at 1054 (quoting Louisiana v. NAACP, 366 U.S. 293, 296
(1961)).
Take McIntyre v. Ohio Elections Commission, where Mrs. McIntyre was
fined for distributing anonymous leaflets. 514 U.S. 334, 337-38 (1995). In that
case, the government “vigorously” argued that campaign-finance disclosure cases
should apply, especially since Mrs. McIntyre’s leaflets were about an upcoming
vote on a tax levy. Id. at 353. The Supreme Court, however, firmly rejected the
government’s argument: “Required disclosures about the level of financial support
a candidate has received from various sources are supported by an interest in
avoiding the appearance of corruption that has no application to this case.” Id. at

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354. There can be little doubt then that the district court erred by applying the
campaign-finance standard in this case. 3
But even accepting the district court’s test—that the government must prove
(1) it has a sufficiently important governmental interest, and (2) its policy is
appropriately tailored to that interest—the court misapplied it. First, the court
found that the Attorney General’s interest was in “investigat[ing] potential
violations of the charitable solicitation laws, and ... protect[ing] New York
residents from fraudulent solicitations.” Second, the court concluded that “[n]o
facts alleged in the complaint plausibly suggest that the attorney general’s
disclosure requirement is unusually divorced from the state’s important
governmental interests.” (SA8.) The district court was wrong on both counts.
Interest. While protecting New Yorkers from fraud is surely an important
governmental interest, the Attorney General has never established that ferreting out
fraud is the interest served by disclosure. Indeed, this justification appears to be
nothing more than a post hoc rationalization. And under any regime of heightened
scrutiny the proffered justification “must be genuine, not hypothesized or invented

3

Indeed, Citizens United Foundation is a 501(c)(3) organization that cannot participate in
political campaigns. And even though Citizens United is subject to some specific disclosure
requirements when it comes to electioneering, those do not provide any support for the Attorney
General’s blanket disclosure policy. E.g., 52 U.S.C. § 30104(c)(2)(C); 11 CFR 109.10(e); 11
CFR 104.20(c)(9).

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post hoc in response to litigation.” United States v. Virginia, 518 U.S. 515, 533
(1996) (first emphasis added).
Moreover,

unlike

the

disclaimer

requirements

of

electioneering

communications, which may “avoid confusion by making clear that the ads are not
funded by a candidate or political party,” (Citizens United, 558 U.S. at 368),
disclosure of donor identities as a condition of solicitation serves no purpose that
the Attorney General has been able to explain. Of what possible relevance is the
identity of past donors to policing future solicitations? Wisconsin Right To Life,
Inc. v. Barland, 751 F.3d 804, 841 (7th Cir. 2014) (“Why impose [such] duties so
indiscriminately? The Board does not explain.”).
The policy does not serve the purpose of ferreting out fraud. If it did, other
states would have similar policies. But New York is one of only three states
(California and Hawaii are the other two) that seek donor information in
connection with solicitation registration.

When 47 states get along just fine

without disclosure, it is hard to argue that disclosure serves a compelling interest.
See Holt v. Hobbs, 135 S. Ct. 853, 866 (2015). In fact, many states (and the IRS)
explicitly warn charities not to file Schedule B with state authorities. E.g., Illinois
Form AG990-IL Filing Instructions ¶3 (directing charities to file “IRS form 990
(excluding Schedule B)”); Michigan Renewal Solicitation Registration Form at 2,
(instructing charities that “if you file Form 990 … do not provide a copy of
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Schedule B”); Oregon Form CT-12F at 7 (“Organizations which file Form 990 . . .
are not required to attach the Schedule B.”); 4 JA251 (“Schedule B explicitly warns
nonprofits not to provide the form to States, because they ‘might inadvertently
make the schedule available for public inspection.’”).
Perhaps most revealing of all, the Attorney General did not deem disclosure
necessary to his law enforcement efforts until recently. (JA250.) For years,
disclosure was not necessary to combat fraud. The practice of 48 other states and
the Attorney General’s own past practices confirm that this new policy does not
advance the interest of uncovering fraud.
Tailoring. But even if combating fraud were an interest served by the
Attorney General’s requirement, a solicitation ban is not the least intrusive means
of achieving it—not even close.

Just as was the case in Schaumburg, any

“legitimate interest in preventing fraud can be better served by measures less
intrusive than a direct prohibition on solicitation.” 444 U.S. at 637. For one,
“[f]raudulent misrepresentations can be prohibited and the penal laws used to
punish such conduct directly.” Id. Alternatively, the Attorney General could
permit charitable solicitation, but request charitable groups’ Schedules B directly
from the IRS, and abide by the attendant confidentiality requirements.

4

That

These forms are available at https://goo.gl/9TMh1d (Illinois); https://goo.gl/msAFGS
(Michigan); and https://goo.gl/MkmZpz (Oregon).

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restricts no speech at all, and gives the Attorney General everything he purports to
want.
The district court did not engage in this analysis at all. Instead, it (once
again) shifted the burden to the Organizations to show that the “disclosure
requirement is unusually divorced from the state’s important governmental
interests.” (SA8 (emphasis added).) Where that standard comes from is anyone’s
guess. But under a proper analysis, the Attorney General bears the burden to show
that his policy is narrowly tailored to meet a compelling governmental interest.
And because this case is at the pleading stage, he has not done so.
C.

The Organizations Adequately Pled An As-Applied Challenge

The Organizations adequately alleged that as-applied to them, the Attorney
General’s disclosure requirement is unconstitutional.

“It is hardly a novel

perception that compelled disclosure of affiliation with groups engaged in
advocacy may constitute [an] effective … restraint on freedom of association.”
NAACP, 357 U.S. at 462. Likewise, the state cannot require the identification of
the people who prepared, sponsored, or distributed communications as a condition
of permitting their public distribution. Talley v. California, 362 U.S. 60, 65
(1960); see also McIntyre, 514 U.S. at 353.

Thus, an organization’s donor

information is private, highly sensitive information that cannot be demanded by
government authorities without a compelling justification. See Buckley, 424 U.S.
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at 66 (holding that the disclosure of donor information implicates the First
Amendment because “financial transactions can reveal much about a person’s
activities, associations, and beliefs”).
In this case, the Organizations alleged that their donors “fear public
backlash, financial harm, and worse, should their support of politically contentious
and controversial causes become known publicly.” (JA248.) That is because the
Organizations (due to Citizens United’s victory in another First Amendment case)
have achieved “a special measure of notoriety in recent years,” have been
“compared to al-Qaeda,” described as an “enemy of the people,” and indeed seems
to have earned special enmity from the Attorney General himself. (JA252 (noting
the Attorney General’s public pledge to bring organizations like Citizens United
“into the light”).)

The Organizations have thus alleged, as they must, that

“compelled disclosure of [their] membership is likely to affect adversely” their
ability “to pursue their collective effort to foster beliefs which they admittedly
have the right to advocate, in that it may induce members to withdraw … and
dissuade others from joining it because of fear of exposure of their beliefs shown
through their associations and of the consequences of this exposure.” NAACP, 357
U.S. at 462-63. Whether evidence will show that is a question for another day.
The district court, however, dismissed this allegation because it found the
Organizations’ pleading lacked the “requisite specificity” or “severity” required for
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an as-applied challenge.

(SA12.)

But as the Supreme Court explained in

McConnell v. FEC, a disclosure requirement is unconstitutional as applied if there
is a reasonable probability that the group’s members would face threats,
harassment, or reprisals if their names were disclosed. 540 U.S. 93, 198 (2003),
overruled on other grounds by Citizens United, 558 U.S. 310. Moreover, the
district court’s requirement for more specifics presents a Catch-22.

The

Organizations cannot give more specifics because what the donors object to is
identifying themselves. (JA248.)
The Organizations’ allegations were sufficient and they should proceed to
discovery and trial. Indeed, in a case almost identical to this one, a federal court
struck down California’s disclosure requirement because at trial “the Court heard
ample evidence establishing that [the organization], its employees, supporters and
donors face public threats, harassment, intimidation, and retaliation once their
support for and affiliation with the organization becomes publicly known.” AFPF,
182 F. Supp. 3d at 1055.
The Organizations in this case should be permitted to proceed to discovery,
just like the organization in California was. The Organizations have alleged that
their donors “fear public backlash, financial harm, and worse, should their support
of politically contentious and controversial causes become known publicly.”
(JA248.) That is enough to survive a motion to dismiss.
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II.

THE ORGANIZATIONS’ CLAIM THAT THE ATTORNEY GENERAL VIOLATED
DUE PROCESS WHEN HE ADOPTED HIS DISCLOSURE POLICY IS RIPE FOR
ADJUDICATION
“A fundamental principle in our legal system is that laws which regulate

persons or entities must give fair notice of conduct that is forbidden or required.”
Fox, 132 S. Ct. at 2317. This “requirement of clarity in regulation is essential to
the protections provided by the Due Process Clause.” Id. As here, when “speech
is involved,” especially “rigorous adherence” to the usual requirement of
“precision and guidance” is necessary “so that those enforcing the law do not act in
an arbitrary or discriminatory way.” Id.
The Organizations alleged they were not given any notice of the donordisclosure requirement. (JA250.) For years the New York Attorney General
permitted charities to file redacted versions of their Schedules B; but in 2012 he
unilaterally changed that policy without providing notice. (Id.)

If the

Organizations do not comply they “face serious consequences,” including loss of
their registration plus civil penalties of up to $100 per day. (JA251 (citing N.Y.
Exec. Law § 177(2).)
The district court, however, sua sponte held that the claim was not ripe (how
ironic the district court gave no notice of this issue). (SA13.) The court explained,
“Plaintiffs have not alleged that the attorney general has stripped them of any
rights or imposed any penalty as a consequence of their failure to provide
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unredacted Schedules B.” (Id.) The court also found that whether the government
will penalize the Organizations depends on “contingent future events.” (SA14.)
The court asked, “Will plaintiffs continue to violate the attorney general’s policy
after this Court upholds its constitutionality?” (Id.)
That holding directly contradicts Supreme Court precedent. Fox, 132 S. Ct.
at 2318; Susan B. Anthony List v. Driehaus, 134 S. Ct. 2334, 2346 (2014). In Fox,
the Court found the FCC violated due process by not giving television broadcasters
notice that certain images and words were verboten. Previously, the FCC had long
held that isolated instances of indecent conduct would not result in a fine. But the
FCC changed its policy without telling the broadcasters of the change. Fox, 132 S.
Ct. at 2314, 2319. That lack of notice violated due process. Importantly, the Court
found a due process violation even though the FCC said it would not fine Fox or
“consider the indecent broadcasts either when considering whether to renew
stations’ licenses or in any other context.” Id. at 2318. In other words, the
government promised that there would be no penalties for violating the
unannounced policy. But the Court held, “This ‘policy of forbearance,’ as the
Government calls it, does not suffice to make the issue moot.” Id. Put another
way, due process “does not leave [regulated parties] ... at the mercy of noblesse
oblige.” Stevens, 559 U.S. at 480.

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If a case is still a live controversy when the government affirmatively
promises not to punish the regulated party, it is all the more live when the
government has given no assurances whatsoever. At the end of the day, the
Attorney General can impose a fine on the Organizations for failing to comply with
the unannounced disclosure policy or he can effectively ban them from soliciting
contributions in New York by revoking or suspending their respective registrations.
See N.Y. Exec. L. § 177(2)(b). That is enough to make this a case or controversy
within the meaning of Article III. “[W]here the statute inflicts a penalty for doing
an act, although the act itself is not expressly prohibited, yet to do the act is
unlawful, because it cannot be supposed that the Legislature intended that a penalty
should be inflicted for a lawful act.” Powhatan Steamboat Co. v. Appomattox R.
Co., 65 U.S. (24 How.) 247, 252 (1860) (Clifford, J.).
Moreover, the district court’s contingencies are irrelevant to due process
analysis.

The court asked, “Will plaintiffs continue to violate the attorney

general’s policy after this Court upholds its constitutionality?” (SA14.) Whether
or not the law violates the First Amendment does not affect the due process
analysis.

There would be very few due-process challenges if only otherwise

unconstitutional laws could be challenged: since it is constitutional to imprison the
guilty, the government need not afford the accused notice or a hearing (as long as

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the person is guilty). Such reasoning flies in the face of due process, and this
Court should reverse.
III.

THE ATTORNEY GENERAL’S DISCLOSURE POLICY IS PREEMPTED
The Attorney General’s policy is preempted by federal law. Under the

Supremacy Clause, any state law that “frustrates the full effectiveness of federal
law is rendered invalid.” Gade v. Nat’l Solid Wastes Mgm’t Ass’n, 505 U.S. 88,
106 (1992).

This type of preemption is known as conflict preemption, and

requires a court to analyze the “structure and purpose of the statute as a whole.” Id.
at 98 (O’Connor, J., for the Court). The court is not “guided by a single sentence
or member of a sentence.” Id. at 99. Instead, it examines the “balance of interests”
Congress struck, (Int’l Paper Co. v. Ouellette, 479 U.S. 481, 495 (1987)), the
“theme[s]” Congress emphasized (Mich. Canners & Freezers Ass’n v. Agric. Mktg.
& Bargaining Bd., 467 U.S. 461, 471 (1984)), and the remedies Congress made
available (Wis. Dep’t of Indus., Labor, & Human Relations v. Gould, Inc., 475 U.S.
282, 287 (1986)). Conflict preemption occurs not only when it is impossible to
abide by both the state and federal enactments but also when “state law stands as
an obstacle to the accomplishment and execution of the full purposes and
objectives of Congress.” Mich. Canners, 467 U.S. at 469.
In this case, the district court found that “nothing in the Internal Revenue
Code or its legislative history demonstrates the clear and manifest purpose of
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Congress to prohibit states from requiring tax-exempt organizations to disclose to
the state portions of their federal tax filings.” (SA15 (internal citation omitted).)
That holding was wrong. One of the objectives of federal tax law is to protect the
confidentiality of donors to tax-exempt organizations like the plaintiffs here.
Under federal tax law, nonprofits “are not required to publicly disclose their
donors.” McCutcheon v. FEC, 134 S. Ct. 1434, 1460 (2014) (plurality op.). A
nonprofit charity must make “available to the public” every part of its tax return
except for the “name or address of any contributor” to the organization. 26 U.S.C.
§ 6104(b). And though organizations are required to disclose donor identities to
the IRS, the “[g]eneral rule” is that “return information shall be confidential.” Id.
§ 6103(a). In particular, “the name or address of any contributor” is generally not
to be disclosed.

Id. § 6104(b).

And if that text were not clear enough, the

legislative history of the tax code explains that Congress explicitly provided for
donor privacy “because some donors prefer to give anonymously” and to “require
public disclosure in these cases might prevent the gifts.” S. Rep. No. 91-552
(1969), reprinted in 1969 U.S.C.C.A.N. 2027, 2081.
But Congress was also aware that federal and state officials sometimes need
access to return information. It therefore also established a comprehensive system
to provide federal and state officials information in limited circumstances, and with
robust safeguards. See 26 U.S.C. § 6104. For example, the IRS may “notify the
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appropriate State officer of a refusal to recognize” an organization under
§ 501(c)(3), and—upon request—make available information relevant to that
determination to the appropriate State officer. Id. § 6104(c)(1). For other taxexempt organizations, the IRS “may make available for inspection or disclosure
returns and return information … for the purpose of, and only to the extent
necessary in, the administration of State laws regulating the solicitation or
administration of the charitable funds or charitable assets of such organizations.”
Id. § 6104(c)(3). In that circumstance, the return information may not be disclosed
by the State officer to anyone else. And no disclosure to State officials may occur
if “the Secretary determines that such disclosure would seriously impair Federal
tax administration.” Id. § 6104(c)(5).
This is a comprehensive and detailed system. Compare Int’l Paper, 479
U.S. at 490-92 (finding preemption, in part, because of the comprehensive nature
of the federal regulatory regime and range of federal penalties for violations). By
generally requiring that a nonprofit’s tax return be publicly disclosed, but
specifically exempting the “name or address of any contributor” from the
disclosure requirement, Congress signaled that donor information is entitled to
special solicitude—consistent with the First Amendment concerns surrounding
release of such information.

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To end-run the specific method that Congress provided for return
information is a clear case of frustrating the objectives of a federal law. See Gould
Inc., 475 U.S. at 286 (noting that “conflict is imminent whenever two separate
remedies are brought to bear on the same activity”). A State may not “frustrate
federal policies.” Arizona v. United States, 132 S. Ct. 2492, 2503 (2012). And that
is precisely what the Attorney General’s disclosure policy does here.
IV.

THE ATTORNEY GENERAL’S REQUIREMENT AS APPLIED TO SOCIAL
WELFARE ORGANIZATIONS VIOLATES NEW YORK’S CONSTITUTION
By attempting to regulate “social welfare organizations,” the Attorney

General has violated the New York Constitution. The legislative power of New
York state is vested in the Senate and Assembly. N.Y. Const., art. III, § 1. “While
the Legislature may endow administrative agencies with the power to adopt
regulations to implement a legislative mandate, the legislative branch may not
constitutionally cede its fundamental policy-making responsibility to a regulatory
agency.” Med. Soc’y of State v. Serio, 800 N.E.2d 728, 734 (N.Y. 2003).
In turn, an agency may only “fill in the interstices in the legislative product
by prescribing rules and regulations consistent with the enabling legislation.”
Allstate Ins. Co. v. Rivera, 911 N.E.2d 817, 820 (N.Y. 2009). An agency cannot
adopt rules that are “inconsistent with the statutory language or its underlying
purposes.” Matter of Gen. Elec. Cap. Corp. v. N.Y. State Div. of Tax Appeals, 810
N.E.2d 864, 867 (N.Y. 2004). Thus, if a “regulation runs counter to the clear
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wording of a statutory provision, it should not be accorded any weight.” Kurcsics
v. Merchants Mut. Ins. Co., 403 N.E.2d 159, 163 (N.Y. 1980). The same principle
necessarily applies to an agency’s own rules—it cannot take actions beyond what
its rules authorize, lest that action itself be ultra vires.
A.

The Attorney General Has Acted Ultra Vires

New York law does not permit the Attorney General to regulate “social
welfare organizations.” New York’s statute authorizes the Attorney General to
regulate “charitable organizations.” N.Y. Exec. Law § 172. The statute defines
“charitable

organization”

as

a

“benevolent,

philanthropic,

patriotic,

or

eleemosynary person.” N.Y. Exec. Law § 171-a(1). Those are well-established
terms of art, used to describe a traditional charity. 5 See In re Davis’ Will, 137
N.Y.S. 427, 427 (Sur. 1912), aff ’ d, 141 N.Y.S. 1115 (N.Y. App. Div. 1913) (per
curiam) (mem.) (“The words ‘charitable use’ are a term of art.”).

“The

eleemosynary sort of corporations are such as are constituted for the perpetual
distributions of the free-alms or bounty of the founder of them, to such persons as
he has directed.” Trustees of Dartmouth College v. Woodward, 17 U.S. 518, 56263 (1819); see also People ex rel. Watchtower Bible & Tract Society, Inc. v.
Haring, 170 N.E. 2d 677, 359 (N.Y. 1960).
5

If that were not the case—if these terms were not being used as terms of art—they
would be so vague (what organization does not regard itself, in some sense, as “benevolent”?)
that they would be an invalid prior restraint for failing to provide guidance as to who must
register. See Children First, 790 F.3d at 328.

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Despite the clear statutory language and New York’s robust separation of
powers doctrine (see N.Y. Coalition of Hispanic Chambers of Com. v. N.Y. City
Dep’t of Health and Mental Hygiene, 970 N.Y.S. 2d 200 (N.Y. App. Div. 2013)),
the Attorney General has attempted to apply his new donor-disclosure policy to
Citizens United. But Citizens United “is not a charitable organization” under New
York (or federal) law. (JA245.) It is “operated exclusively for the promotion of
social welfare.” 26 U.S.C. § 501(c)(4)(A). That is an important distinction under
the tax laws that New York’s regulations incorporate.

Under 26 U.S.C.

§ 501(c)(3), for example, a charitable organization can have “no substantial part”
of its activities directed “to influence legislation,” and may not participate or
intervene in “any political campaign on behalf of (or in opposition to) any
candidate for public office.” Under § 501(c)(4), however, Citizens United can
attempt (within certain parameters) to influence legislation or speak in political
campaigns, and contributions to it are treated differently for personal income tax
purposes.
Given that New York’s statute only reaches traditional charities, the
Attorney General has no authority to require Citizens United to register as a
“charitable organization.” And by deciding otherwise, the Attorney General “has
improperly assumed for [himself] the open-ended discretion to choose ends, which
characterizes the elected Legislature’s role in our system of government.” Boreali
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v. Axelrod, 517 N.E.2d 1350, 1355 (N.Y. 1987) (internal citation and brackets
omitted). That violates New York’s separation of powers doctrine. See id.
In fact, by applying his donor-disclosure policy to non social-welfare
organizations, the Attorney General is also violating his own regulations. It is true
that the Attorney General’s regulations that require registration purport to reach not
just “charitable” organizations, but also those engaged in “promoting social
welfare.”

13 N.Y.C.R.R. § 90.1(a)-(b).

Nonetheless, the structure of the

regulations confirms the registration requirement only applies to traditional
charitable organizations (as envisioned by the statute). The regulations give as
examples of a “charitable organization,” “organizations exempt from Federal
income taxation pursuant to United States Internal Revenue Code … section
501(c)(3),” and omits (c)(4) organizations, such as Citizens United.

Id.

§ 90.2(a)(3). The rules, in other words, explicitly incorporate the categories of the
federal tax code (and New York’s), and distinguish between those that are
organized under sections that require them to be operated for “charitable purposes”
and those that are not—in no small part to provide the required certainty about who
must register.
Thus, even under his own regulations, the Attorney General’s application of
his new donor-disclosure policy to Citizens United is ultra vires.

52

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B.

The District Courts Contrary Conclusion Was Erroneous

The district court rejected Citizens United’s claim, instead holding that
“social welfare groups” are “properly regulated” as “charitable organization[s].”
(SA17.) The court gave two reasons, both of which are erroneous.
First, the court rejected Citizens United’s argument that the state statute did
not permit the Attorney General to define “charitable organization” as a “social
welfare organization,” because defining “charitable organization” to include
“social welfare organization” is not “inconsistent” with the statute. (SA16-17.)
But as explained above, the statute is quite specific that “charitable organization”
means a “benevolent, philanthropic, patriotic, or eleemosynary” organization.
N.Y. Exec. Law § 171-a(1). The statute does not preface the list with “including”
or say that the definitions are “illustrative.” See Fed. Land Bank of St. Paul v.
Bismark Lumber Co., 314 U.S. 95, 100 (1941) (“[T]he term ‘including’ is not one
of all-embracing definition, but connotes simply an illustrative application of the
general principle.”). The types of organizations that can be charitable are those
four—benevolent, philanthropic, patriotic, and eleemosynary—no more.
Contrary to the conclusion of the district court, the Attorney General’s
adding of “social welfare organizations” to the statute’s definition of “charitable
organization” is not a gap filling measure. The definition of “charitable” as set
forth in the Attorney General’s regulations does not purport to provide guidance as
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to the meaning of the terms employed by the legislature in this statute. Instead, the
regulation’s definition of charitable organization starts with a far broader definition
of the term, which is found in an entirely different statute—Article 8 of the Estates,
Powers and Trusts Law. See 13 N.Y.C.R.R. § 90.1(a). That definition includes a
wide array of organizations, including those promoting “religious, educational,
scientific, literary, and cultural” purposes, “testing for public safety, fostering
national or international sports competition,” and, as relevant here, “promoting
social welfare.” Id. The regulation then explicitly amends Article 7A of the
Executive Law (the law at issue in this case): “Charitable shall mean … pursuant
to article 7A of the Executive Law (article 7-A), all purposes deemed charitable
pursuant to the [Estates, Powers, and Trusts Law].” Id. § 90.1(b). That is a classic
example of unconstitutional law making by a regulatory agency. “Agencies may
play the sorcerer’s apprentice but not the sorcerer himself.”

Alexander v.

Sandoval, 532 U.S. 275, 291 (2001).
Second, the court rejected Citizens United’s argument that the Attorney
General’s own regulations defining “charitable organization” exempt social
welfare organizations, because “[s]tate regulations clearly recognize that
‘promoting social welfare’ may indeed be ‘charitable.’” (SA17.) But the court
ignored the fact that the Attorney General’s regulations directly refer to Section
501 of the IRS Code.

Section 501, in turn, makes quite clear that some
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organizations are organized for charitable purposes, and some for the promotion of
social welfare, and that the two are different. The tax consequences are different,
what sorts of advocacy the organizations may engage in is different, and New
York’s regulations recognize this, by distinguishing between those organizations
that Section 501 treats as “charitable” and those that it does not.
The tax code draws a clear distinction between charitable and social-welfare
organizations. New York’s rules incorporate those distinctions, and the Attorney
General is therefore without authority to require Citizens United—a social welfare
organization—to register as a charitable organization.
C.

At A Minimum This Court Should Certify The State-Law
Question To The New York Court Of Appeals

As explained above, the Attorney General is acting beyond his authority.
But if this Court has doubts about New York law, Citizens United respectfully
submits that it would be appropriate to certify the state-law question to the New
York Court of Appeals. See Second Circuit Local R. 27.2. Before certifying a
question, this Court must answer three others: “(1) whether the New York Court of
Appeals has addressed the issue and, if not, whether the decisions of other New
York courts permit us to predict how the Court of Appeals would resolve it; (2)
whether the question is of importance to the state and may require value judgments
and public policy choices; and (3) whether the certified question is determinative

55

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of a claim before us.” Barenboim v. Starbucks Corp., 698 F.3d 104, 109 (2d Cir.
2012).
The answers to each of those questions favor certification. First, the New
York Court of Appeals has not decided the precise question presented in this case.
Second, the question certainly “is of importance to the state” and is the type of
question that “may require value judgments and public policy choices.” Id. And
third, as to Citizens United’s claim, the Court of Appeals’ decision would be
determinative if the court agrees with Citizens United.
In short, certification is appropriate, because it is this Court’s “preference
that states determine the meaning of their own laws in the first instance.” Joseph v.
Athanasopoulos, 648 F.3d 58, 68 (2d Cir. 2011).
CONCLUSION
For these reasons, the judgment below should be reversed. As to the statelaw claim, this Court should also reverse, but alternatively certify the question to
the New York Court of Appeals.
REQUEST FOR ORAL ARGUMENT
While the district court’s errors are clear, the Organizations respectfully
request oral argument to answer any questions the Court may have.

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Dated:

January 6, 2017

Respectfully submitted,
By: /s/ Michael Boos
Michael Boos
General Counsel
CITIZENS UNITED
& CITIZENS UNITED FOUNDATION
Boos Law Office
4101 Chain Bridge Rd. Ste 216
Fairfax, VA 22030
Tel: (703) 691-7717
Fax: (703) 691-7543
michaelboos@verizon.net
Donald F. McGahn
James Burnham
Andrew Bentz
51 Louisiana Avenue, N.W.
Washington, D.C. 20001
Tel: 202.879.3939
Fax: 202.626.1700
dmcgahn@jonesday.com
Attorneys for Plaintiffs-Appellants
Citizens United and Citizens United
Foundation

57

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CERTIFICATE OF COMPLIANCE
1.

This brief complies with the type-volume limitation of Federal Rule of

Appellate Procedure 28.1(e)(2)(A). It contains 12,761 words, excluding the parts
of the brief exempted by Federal Rule of Appellate Procedure 32(a)(7)(B).
2.

This brief complies with the typeface requirements of Federal Rule of

Appellate Procedure 32(a)(5) and the type-style requirements of Federal Rule of
Appellate Procedure 32(a)(6) because the brief has been prepared in a
proportionally spaced typeface using Microsoft Word 2007 in 14-point Times New
Roman type.
/s/ Michael Boos
Michael Boos
Dated: January 6, 2017

Case 16-3310, Document 30, 01/06/2017, 1942183, Page69 of 90

SPECIAL APPENDIX TABLE OF CONTENTS
Document Description

Page

Opinion & Order of the Southern District of New York, No. 14-Cv-3703
(SHS) (August, 29, 2016)

SA1

Judgment of the Southern District of New York, No. 14-Cv-3703 (SHS)
(August, 29, 2016)

SA19

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

USDCSDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: ---_____,,.---DATE FILED:

----------------------------------------------------------x
CITIZENS UNITED and CITIZENS
UNITED FOUNDATION,
Plaintiffs,

14-Cv-3703 (SHS)

-againstOPINION & ORDER
ERIC SCHNEIDERMAN, in his official
capacity as New York Attorney General,
Defendant.

----------------------------------------------------------x
SIDNEY H. STEIN, U.S. District Judge.
Plaintiffs Citizens United and Citizens United Foundation challenge the
New York Attorney General's policy of requiring charities to disclose to him
the names, addresses, and total contributions of their donors in order to be
permitted to solicit funds in the state. Last year, this Court denied plaintiffs'
motion for a preliminary injunction on the grounds that plaintiffs were not
likely to succeed on the merits of their claims. Plaintiffs subsequently
amended their complaint and Attorney General Eric Schneiderman has now
moved to dismiss it. For the reasons that follow, the attorney general's
motion is granted.
I.

BACKGROUND

Citizens United is a nonprofit corporation which has federal taxexernpt status as a "social welfare" organization, see 26 U.S.C. § 501(c)(4).
(First Arn. Cornpl. ("PAC") <j[ 3.) Citizens United Foundation has federal taxexernpt status pursuant to 26 U.S.C. § 501(c)(3). (PAC <j[ 4.) Both plaintiffs
pursue similar goals: they "seek[] to promote the traditional American
values of limited government, free enterprise, strong families, and national
sovereignty and security." (PAC <j[ 3; see also PAC <j[ 4.) The social welfare
entity-Citizens United -advocates these positions by producing "highirnpact documentaries on political themes." (PAC <j[ 11.) By contrast,
Citizens United Foundation, as a section 501(c)(3) organization, cannot

SA1

Case 16-3310, Document 30, 01/06/2017, 1942183, Page71 of 90

advocate but instead simply "inform[s]" and "educate[s]" the American
public about essentially identical issues and themes. (FAC <JI<JI 4, 12.)
Plaintiffs' ability to produce their advocacy documentaries (Citizens
United) and their educational materials (Citizens United Foundation)-and
to operate their organizations generally-is "entirely dependent on the
donations they are able to raise" from their supporters. (FAC <JI 15.)
Plaintiffs are well-known entities. Indeed, they allege that they "have
gained a special measure of notoriety in recent years" and have even "been
compared to al-Qaeda, described as an 'enemy of the people,' and worse."
(FAC <JI 35.) The amended complaint also alleges that plaintiffs' donors
"value their privacy and donate to plaintiffs with the understanding that
their names and other identifying information will not become public
information." (FAC <JI 15.) According to plaintiffs, their donors "reasonably
fear public backlash, financial harm, and worse, should their support of
politically contentious and controversial causes become known publicly."
(FAC <JI 17.)
This brings us to the subject of this action: New York requires every
"charitable organization" -whose definition includes both plaintiffs,
defendant says, (see FAC <JI 26)-to "file with the attorney general a
prescribed registration form" in order for that charity to be able to solicit
funds in New York. N.Y. Exec. Law § 172(1). The attorney general has
promulgated regulations to set the requirements of that form. See 13
N.Y.C.R.R. § 91.5. One regulation requires charitable organizations to
submit for the attorney general's review a copy of a form that plaintiffs file
annually with the Internal Revenue Service-Form 990 and its Schedule Bwhich lists each of plaintiffs' donors and amounts contributed. (F AC <JI<JI 20,
23, 26); 13 N.Y.C.R.R. § 91.5(c)(3)(i)(a). Charities must submit this Schedule
B-and thus reveal their donors' identities and amounts contributed-prior
to soliciting funds in New York. (FAC <JI<JI 23, 26.)
Both plaintiffs (together, "Citizens United") have submitted to the
attorney general their Schedule B forms "every year since 1995." (FAC <JI 25.)
Traditionally, however, they "filed only the first page of their Schedule B,
which does not include any donor information." (FAC <JI 30.) In 2012, they
filed the first pages of their Schedules B as usual but received deficiency
notices in response stating that they would need to file Schedules B that

2

SA2

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were unredacted. (FAC <JI 26.) Plaintiffs have refused to comply. (FAC <JI 29.)
Consequently, they "face the loss of their registration, which would prohibit
them from soliciting funds, as well as civil penalties of up to $100 per day
for noncompliance." (FAC <JI 31 (citing N.Y. Exec. Law§ 177(2).)
After plaintiffs initiated this action they moved for a preliminary
injunction, which this Court denied, Citizens United v. Schneiderman, 115 F.
Supp. 3d 457 (S.D.N.Y. 2015). Plaintiffs subsequently amended their
complaint, and, as noted above, defendant has now moved to dismiss it in
its entirety. Fed. R. Civ. P. 12(b)(6).
II. DISCUSSION

A. Legal Standard
The standard of review governing this motion is well-established: the
Court must dismiss the complaint if it fails to allege facts that show
plaintiffs' claims are "plausible." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009);
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Neopharm Ltd. v. WyethAyerst Int'l LLC, _ F. Supp. 3d
2016 WL 1076931, at *2 (S.D.N.Y. Mar. 18,
2016). Plaintiffs, however, cite to the retired standard set forth in Conley v.
Gibson, 355 U.S. 41 (1957), which merely required a plaintiff's complaint to
give a defendant "fair notice of what the plaintiff's claim is." Id. at 47. Conley
no longer states the applicable law: The modem "plausibility" standard has
governed motions to dismiss pleadings in federal court since 2007. E.g.,
Iqbal, 556 U.S. at 670; Twombly, 550 U.S. at 570; E.E.O.C. v. Port Au th. Of N. Y.
& N.]., 768 F.3d 247, 253 (2d Cir. 2014).
___J

Not all allegations are created equal in assessing the plausibility of a
claim. Allegations that are conclusory or that simply parrot legal standards
need not be credited. See, e.g., Iqbal, 556 U.S. at 678; Port Auth., 768 F.3d at
253; Fisher v. JP Morgan Chase & Co., 703 F. Supp. 2d 374, 390 (S.D.N.Y. 2010).
And facts that are pleaded merely "upon information and belief" can only
be credited. when those facts are "peculiarly within the possession and
control of the defendant," or where plaintiffs' "information" or "belief" is
"based on factual information that makes" the sought inference "plausible."
Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010); Moffett v. Town
of Poughkeepsie, No. 11-cv-6243, 2012 WL 3740724, at *3, *5, *8 (S.D.N.Y. Aug.
29, 2012). Facts alleged properly, however, must be credited as true and

3

SA3

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viewed in the "light most favorable to the plaintiff." Cruz v. FXDirectDealer,
LLC, 720 F.3d 115, 118 (2d Cir. 2013).

B. First Amendment.
Citizens United has brought three First Amendment claims; Attorney
General Schneiderman argues that none is plausible. The Court examines
each in tum.

1.

Prior Restraint.

Plaintiffs contend first that New York's charitable registration scheme
is an unconstitutional prior restraint on speech. At the outset, it is clear that
the regime is plausibly a prior restraint. See Citizens United, 115 F. Supp. 3d
at 469. Charitable organizations in New York are allegedly forbidden from
engaging in expressive action-soliciting donations, see, e.g., Vill. of
Schaumburg v. Citizens for a Better Env't, 444 U.S. 620, 632 (1980)-unless and
until they file forms required by the attorney general's implementing
regulations. See N.Y. Exec. Law§ 172; 13 N.Y.C.R.R. § 91.5(c). This includes
the attorney general's requirement that charities file unredacted versions of
their Schedules B that disclose to the attorney general the names and
contributions of Citizens United's donors. (FAC <JI 26.)
Prior restraints are generally disfavored but are not "'unconstitutional
per se."' Hobbs v. Cty. of Westchester, 397 F.3d 133, 148 (2d Cir. 2005) (quoting
Southeastern Promotions, Ltd. v. Conrad, 420 U.S. 546, 558 (1975)). In
particular, the First Amendment does not countenance a system of prior
restraint when it vests "unbridled discretion in a government official over
whether to permit or deny expressive activity." City of Lakewood v. Plain
Dealer Publ'g Co., 486 U.S. 750, 755 (1988); Field Day, LLC v. Cty. of Suffolk, 463
F.3d 167, 176 (2d Cir. 2006). However, if a system of prior restraint contains
"'narrow, objective, and definite standards to guide the licensing
authority'" it survives a First Amendment challenge. Forsyth Cty. v.
Nationalist Movement, 505 U.S. 123, 131 (1992) (quoting Shuttlesworth v. City
of Birmingham, 394 U.S. 147, 150-51 (1969)).
The analysis begins with the governing statutory and regulatory text.
See City of Lakewood, 486 U.S. at 769-70. The statute-the New York Executive
Law-requires all charities to "file with the attorney general an annual
written financial report, on forms prescribed by the attorney general." N.Y.

4

SA4

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Exec. Law§ 172-b(l); accord N.Y. Exec. Law§ 172(1). That broad delegation
to defendant was cabined when he formally promulgated regulations that
limit the documents that charities need to file upon registering, including,
inter alia, "a copy of the complete IRS form 990... with schedules." 13
N.Y.C.R.R. § 91.5(c)(3)(i)(a). Those regulations set forth a "closed set" of
required documents which substantially fetter the attorney general's
discretion. Citizens United, 115 F. Supp. 3d at 469. See also Forsyth Cty, 505
U.S. at 131; City of Lakewood, 486 U.S. at 770. If a charity files the documents
the regulations require, the attorney general must grant that charity a
license to solicit donations in New York. If not, not. This the First
Amendment allows. See Children's First Found. v. Fiala, 790 F.3d 328, 347-48,
withdrawn in part by 611 F. App'x 741 (2d Cir. 2015).
The Amended Complaint alleges, however, that in practice the attorney
general exercises far more discretion over this licensing regime than the
First Amendment can tolerate. Specifically, according to plaintiffs, for
nearly two decades charities were allowed to file redacted versions of
Schedule B. (FAC <JI 25-27.) But in 2012, plaintiffs allege, defendant
unilaterally changed this practice. (FAC <JI<JI 26-27.) Plaintiffs contend that
the attorney general-even if he ultimately lacks discretion to grant or deny
charities the right to solicit in New York-has too much power to change
the overall registration requirements.
Not all types of discretion render a license regime such as New York's
unconstitutional. See Children's First Found., 790 F.3d at 347. Indeed, the
prohibition of such discretion is a "prophylactic" means of reducing the risk
of two First Amendment injuries. See id. at 342 (citation omitted). First,
prohibited discretion raises the specter of self-censorship insofar as
individuals who seek to engage in expressive activity may be deterred from
seeking a required speaking license if the requirements to gain that license
are insufficiently clear. City of Lakewood, 486 U.S. at 757-58; Children's First
Found., 790 F.3d at 342-43. Second, discretion risks discrimination "against
disfavored speech." City of Lakewood, 486 U.S. at 758. If officials can hide
behind broad, discretionary standards to deny licenses to speak, they can
surreptitiously silence the disfavored. Children's First Found., 790 F.3d at 347.
The attorney general's power to change which documents must be filed
to solicit in New York does not render intolerable any risk of self-censorship.
All licensing systems are changeable in theory, whether by legislative edict,

5

SA5

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executive fiat, or judicial decree. But the First Amendment does not and
cannot prohibit all such regimes. Cf Children's First Found., 790 F.3d at 347;
Field Day, 463 F.3d at 181. The U.S. Constitution clearly tolerates a slight risk
that a speaker might be deterred from speaking because the government is
free to alter licensing requirements. This is especially true where changes
are infrequent. Here, for instance, the complaint only alleges one such
change-filing unredacted versus redacted Schedules B-and thus there is
no indication that the requirements of New York's charitable solicitation
regime are so slippery that the regime at large discourages a theoretical
speaker from even trying to use her voice.
Moreover, the discretion to change the charitable solicitation licensing
requirements does not engender a constitutionally intolerable risk of
discrimination. See Children's First Found., 790 F.3d at 347. When charities
seek to register in New York, they need to file certain documents. If the
charity fails to file those documents, the attorney general is empowered to
deny the charity permission to solicit donations in New York. Any such
denial would be based on a "'narrow, objective, and definite"' reason.
Forsyth Cty., 505 U.S. at 131 (quoting Shuttlesworth, 394 U.S. at 150-51). The
regime provides no cover for government officials to discriminate against
disfavored charities, so long as the regime is "uniformly applied," City of
Lakewood, 486 U.S. at 770 n.11, and any policy changes are justifiable in their
own right. See Part 11.B.2-3, infra.
Plaintiffs do, of course, contend that the policy has not been "uniformly
applied," but the allegations supporting that argument are ineffectual. The
relevant allegation is made "[o]n information and belief." (FAC <JI 28.) The
Amended Complaint fails to set forth what facts plaintiffs' information and
belief are based upon and similarly fails to even attempt to explain why any
such facts are "peculiarly within the possession and control of the
defendant." Arista Records, 604 F.3d at 120. The Court therefore cannot-and
does not-consider this allegation. Id. As a result, Citizens United has not
plausibly pleaded that the attorney general's Schedule B policy is not
"uniformly applied."
Plaintiffs' last argument to sustain their prior restraint claim is from a
bygone era. They contend that whether the policy is "well-established" and
"uniformly enforced" -i.e., whether it is excessively discretionaryrequires the development of a factual record through discovery. But merely

6

SA6

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attempting to plead the existence of a prior restraint is not a sufficient basis
upon which to grant discovery.
Plaintiffs have failed to state a plausible claim that the alleged prior
restraint is applied in an unconstitutionally discretionary manner. The prior
restraint claim is therefore dismissed without prejudice.
2.

Facial Challenge.

Defendant next moves to dismiss plaintiffs' claim that the Schedule B
disclosure requirement facially violates the First Amendment, (see FAC
'lI 54.) Such facial challenges are "disfavored," Wash. State Grange v. Wash.
State Republican Party, 552 U.S. 442, 450 (2008), and can only survive if the
complaint plausibly alleges that '"no set of circumstances exists under
which the [policy] would be valid,"' id. at 449 (quoting United States v.
Salerno, 481 U.S. 739, 745 (1987)). Plaintiffs' facial challenge is only viable if
the First Amendment prohibits the attorney general from requiring any
charity-from the most popular and least controversial one to the least
popular and most controversial one-to disclose to New York State its
funding sources. See id. However, a facial challenge "must fail where the
[policy] has a 'plainly legitimate sweep."' Id. (quoting Washington v.
Glucksberg, 521 U.S. 702, 739-40 & n.7 (1997) (Stevens,]., concurring in the
judgment) (emphasis added).
It is well established that the Schedule B policy must satisfy "exacting
scrutiny," "[b]ecause the Schedule B policy is a disclosure requirement."
Citizens United, 115 F. Supp. 3d at 463. See, e.g., Doe v. Reed, 561U.S.186, 196
(2010); Citizens United v. Fed. Election Comm'n, 558 U.S. 310, 366 (2010); Ctr.
for Competitive Politics v. Harris, 784 F.3d 1307, 1312 (9th Cir. 2015); Ctr. for
Individual Freedom v. Madigan, 697 F.3d 464, 477 (7th Cir. 2012); Nat'l Org. for
Marriage v. McKee, 649 F.3d 34, 55 (1st Cir. 2011). The standard of exacting
scrutiny "requires a 'substantial relation' between the disclosure
requirement and a 'sufficiently important governmental interest." Doe, 561
U.S. at 196 (citations omitted). To withstand exacting scrutiny, '"the strength
of the governmental interest must reflect the seriousness of the actual
burden on First Amendment rights."' Id. (citation omitted). Disclosure laws
such as the one at issue here have long been considered "a less restrictive
alternative to more comprehensive regulations of speech," Citizens United,
558 U.S. at 369, and their facial validity has long seemed sure. See Riley v.

7

SA7

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Nat'l Fed'n of the Blind of N.C., 487 U.S. 781, 795 (1988); Sec'y of State of Md. v.
Joseph H. Munson Co., 467 U.S. 947, 962 n.9, 967 n.16 (1984).

The attorney general contends that the Schedule B policy supports the
state's interests in "investigat[ing] potential violations of the charitable
solicitation laws, and ... protect[ing] New York residents from fraudulent
solicitations." (Mem. of Law in Supp. of Def.' s Mot. To Dismiss the First Am.
Compl. At 9, Dkt. No. 61 (citing Viguerie Co. v. Paterson, 94 A.D. 2d 672, 673
(1st Dep't 1983)).) These interests are unquestionably important. See, e.g.,
Watchtower Bible & Tract Soc'y of N. Y. v. Vill. Of Stratton, 536 U.S. 150, 164
(2002) (calling "the prevention of fraud" an "important interest[]."); Riley,
487 U.S. at 792 ("[T]he interest in protecting charities (and the public) from
fraud is, of course, a sufficiently substantial interest to justify a narrowly
tailored regulation."). States have strong interests in ensuring that charities
do not serve as fronts for fraud or crime. See Doe, 561 U.S. at 217 (Stevens, J.,
concurring in the judgment).
The complaint fails to set forth that requiring charities to disclose their
source of funds through filing unredacted Schedules B plausibly lacks a
substantial relation to these important governmental interests. Indeed, the
U.S. Supreme Court has noted that a state "may constitutionally require
fundraisers to disclose certain financial information to the State" in order to
help detect fraud. Riley, 487 U.S. at 795; see also Joseph H. Munson Co., 467
U.S. at 967 n.16. The Court has also described "recordkeeping, reporting,
and disclosure requirements" as "an essential means of gathering the data
necessary to detect violations" of relevant laws. Buckley v. Valeo, 424 U.S. 1,
67-68 (1976) (per curiam) (emphasis added). No facts alleged in the
complaint plausibly suggest that the attorney general's disclosure
requirement is unusually divorced from the state's important governmental
interests. His is a generic disclosure policy, one the First Amendment has
long considered acceptable. See Riley, 487 U.S. at 795; Joseph H. Munson Co.,
467 U.S. at 967 n.16. As such, "[m]andatory registration and disclosure ...
directly promote [New York's] substantial interest in fighting fraud." Am.
Target Advert., Inc. v. Ciani, 199 F.3d 1241, 1248 (10th Cir. 2000).
The strength of New York's substantial governmental interests must
also '"reflect the seriousness of the actual burden on First Amendment
rights."' Doe, 561 U.S. at 196 (citation omitted); Citizens United, 115 F. Supp.
3d at 463. Plaintiffs identify several alleged First Amendment injuries that

8

SA8

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filing unredacted Schedules B will cause, including loss of the freedom of
association, (FAC ~ 51), and the "chill[ing]" of plaintiffs' speech due to lost
donations, (F AC ~~ 29, 51). See generally Ctr. for Competitive Politics, 784 F.3d
at 1312 (noting that "no case has ever held or implied that a disclosure
requirement in and of itself constitutes a First Amendment injury").
While disclosing the identity of a charity's donors may burden these
rights, see Madigan, 697 F.3d at 482, the allegations in the complaint do not
plausibly establish that the rights are substantially burdened as to all
charities seeking to solicit in New York State, as they must be to present a
viable facial challenge. Doe, 561 U.S. at 191. Indeed, the complaint's main
thrust is that the attorney general's disclosure requirements will excessively
burden plaintiffs, but they plead no facts to suggest that their alleged
experience is common to charities across this state. See id. at 200-01. Absent
facts pleaded to present a plausible case that the attorney general's policy is
inappropriately burdensome "in all of its applications," no facial challenge
can proceed. Wash. State Grange, 552 U.S. at 449.
The Supreme Court's decision in Doe v. Reed, 561U.S.186 (2010), makes
this plain. There, the plaintiffs mounted a facial challenge to a Washington
State law requiring disclosure of the names of individuals who signed
referendum petitions. Id. at 191. The plaintiffs asserted that the disclosure
violated the First Amendment and the Court applied exacting scrutiny. Id.
at 196. The Court rejected the plaintiffs' facial challenge, writing that:
The problem for plaintiffs is that their argument rests almost
entirely on the specific harm they say would attend disclosure of
the information on the [the specific petition plaintiffs had signed],
or on similarly controversial ones. But typical referendum petitions
"concern tax policy, revenue, budget, or other state law issues."
Voters care about such issues, some quite deeply-but there is no
reason to assume that any burdens imposed by disclosure of typical
referendum petitions would be remotely like the burdens plaintiffs
fear in this case.

Id. at 200-01 (citations omitted). Although Doe's posture is different from
this action's-there the Court reviewed the denial of a preliminary
injunction-the legal conclusion is applicable here. The plaintiffs in Doe
offered "scant evidence or argument beyond the burdens they assert
disclosure would impose" on them or "the signers of other similarly

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controversial petitions." Id. at 201. To adapt the same language: plaintiffs in
this action have provided "scant [allegations] or argument beyond the
burdens they assert disclosure would impose" on them or similarly
"controversial" charities seeking to solicit in New York.
Citizens United' s arguments to the contrary are unavailing. They assert
that they are entitled to discovery to "test" the various interests
undergirding the attorney general's policy, the policy's relationship with
those interests, and the balance between the interests and individual rights
burdened. But plaintiffs do not cite-nor has the Court found-any case
authority supporting the proposition that merely pleading the existence of
a disclosure requirement such as the attorney general's entitles the plaintiff
and subjects the state to discovery, especially where the policy has a "plainly
legitimate sweep." See Wash State Grange, 552 U.S. at 449 (citations and
internal quotation marks omitted).
This Court concludes that the complaint fails to plead that the attorney
general's policy of requiring charities to file unredacted versions of
Schedule B before soliciting funds in New York is facially unconstitutional.
There is "a substantial relation between the disclosure requirement and a
sufficiently important governmental interest." Doe, 561 U.S. at 196 (quoting
Citizens United, 558 U.S. at 366-67 (quoting Buckley, 424 U.S. at 64)) (internal
quotation marks omitted). The strength of the state's interest reflects the
"seriousness of the actual burden on First Amendment rights," especially
because plaintiffs have failed to allege that the disclosure substantially
burdens any charity's rights besides their own. Id. at 196, 200-01. Plaintiff is
obligated to allege facts showing that '"no set of circumstances exists under
which [the Schedule B policy] would be valid."' Wash. State Grange, 552 U.S.
at 449 (quoting Salerno, 481 U.S. at 745). The complaint sets forth no such
plausible case and the facial challenge is therefore dismissed without
prejudice.
3.

As-Applied Challenge.

Defendants next move to dismiss the complaint's claim that the
Schedule B disclosure requirement is unconstitutional as applied to Citizens
United. An as-applied challenge is viable if plaintiffs plausibly allege that
there is "a reasonable probability that" their donors "would face threats,
harassment, or reprisals if their names were disclosed." Citizens United, 558

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U.S. at 370. It is "rare," however, that disclosure will result in such "serious
and widespread harassment." Doe, 561 U.S. at 215 (Sotomayor, ].,
concurring) .1
The Supreme Court's seminal decision in NAACP v. Alabama, 357 U.S.
449 (1958), sets the benchmark. See Nat'l Ass'n of Mfrs. v. Taylor, 582 F.3d l,
22 (D.C. Cir. 2009). There, the National Association for the Advancement of
Colored People challenged Alabama's attempt to force the organization to
disclose its members. NAACP, 357 U.S. at 460-61. The NAACP's challenge
succeeded because the organization "made an uncontroverted showing that

Plaintiffs also appear to assert an as-applied challenge by claiming that the disclosure
policy will unduly burden them because their donors in particular "value their
privacy," and "if individuals know that their names could be divulged to the public,
they often will refuse to donate." (FAC 'lI'lI 15-16.) However, the desire for privacy and
loss of donations alone does not render viable an as-applied challenge to a disclosure
regime. See Buckley, 424 U.S. at 71-72; Ctr. for Individual Freedom, 697 F.3d at 498-99. And
even if such a challenge were viable, the complaint fails to properly allege that it is
plausible that the attorney general will disclose plaintiffs' donors' identities to the
public. Although the attorney general has allegedly instituted a new policy to "obtain
and publicize the identities of donors to certain non-profit organizations," (FAC 'JI 33
(emphasis in original)), the underlying source quoted in this allegation makes clear that
the alleged new policy does not plausibly apply to plaintiffs. Press Release, Att'y Gen.
Schneiderman Adopts New Disclosure Requirements for Nonprofits that Engage in
Electioneering (June 5, 2013), available at http://www.ag.ny.gov/press-release/agschneiderman-adopts-new-disclosure-requirements-nonprofits-engage-electioneering.
See Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002); Tavares, 2015 WL
158863, at *3. Furthermore, plaintiffs misrepresent the content of that source in an
attempt to overstate the dangers they face. While the complaint suggests that the
attorney general has sharpened a special pitchfork for plaintiffs, the attorney general
did not "identif[y] Citizens United by name," (FAC 'JI 34), in his press release but only
mentions the Citizens United v. FEC decision. See Press Release dated June 5, 2013, supra;
accord Press Release, Att'y Gen. Schneiderman Announces New Disclosure
Requirements for Nonprofits that Engage in Electioneering (Dec. 12, 2012), available at,
http://www.ag.ny.gov/press-release/ag-schneiderman-announces-new-disclosurerequirements-nonprofits-engage-electioneering. Any remaining allegations to suggest
that public disclosure is possible are ineffectively pleaded "[u]pon information and
belief," (FAC 'JI 32). See, e.g., Barrett v. Forest Labs., Inc., 39 F. Supp. 3d 407, 431-32
(S.D.N.Y. 2014).

1

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on past occasions revelation of the identity of its rank-and-file members has
exposed these members to economic reprisal, loss of employment, threat of
physical coercion, and other manifestations of public hostility." NAACP, 357
U.S. at 462.
Plaintiffs offer a single scant allegation to demonstrate why their donors
face similar persecution. Allegedly, plaintiffs' donors "reasonably fear
public backlash, financial harm, and worse, should their support of
politically contentious and controversial causes become known publicly.
That is so because of the controversial nature of both Plaintiffs themselves
and the issues on which they speak." (FAC <jJ: 17 (citation omitted).) "On
information and belief," plaintiffs allege that their "donors' fears are well
grounded and evidentiary support will be adduced for them." (FAC <jJ: 17.)
These allegations fail to approach either the requisite specificity or
severity. See Nat'l Ass'n of Mfrs., 582 F.3d at 22. Plaintiffs provide no factual
background or support for their conclusory assertions. And their pledge to
"adduce[]" "evidentiary support" in the future to substantiate the alleged
"fears" of their donors is useless in the plausibility-pleading era. See
Twombly, 550 U.S. at 570. The Supreme Court noted some six years ago that
"Citizens United has been disclosing its donors for years and has identified
no instance of harassment or retaliation." Citizens United, 558 U.S. at 370.
The complaint in this action suffers from the same flaw: it fails to allege that
any donor has suffered in the past due to donating, and it fails to allege any
fact that could render future negative consequences plausible.
Plaintiffs mount no response to any of these arguments. The complaint
fails to state a plausible as-applied challenge, and that challenge is
dismissed without prejudice.
C. Due Process

Plaintiffs base their next claim upon the Supreme Court's decision in
Federal Communications Commission v. Fox Televisions Stations, Inc., 132 S. Ct.
2307 (2012). There, television broadcasters challenged an FCC order that
had fined them for airing a "fleeting expletive" and a "brief shot of nudity"
on their stations. Id. at 2318. Previously, the FCC had long held that such
isolated instances of indecent conduct would not result in a fine. Id. But the
FCC changed its policy without telling the broadcasters of the change,

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publicly held that the broadcasters had aired actionably indecent conduct,
and imposed a $1.24 million fine on one broadcaster. Id. at 2314, 2319.
Ultimately, the Supreme Court held that the FCC violated due process by
sanctioning the broadcasters for conduct that they could not have known
was punishable. Id. at 2318.
Plaintiffs attempt to fit their due process claim into the Fox Television
mold. They allege that for nearly 20 years the New York attorney general
permitted charities to file redacted versions of their Schedules B but that he
unilaterally changed that policy without providing notice. (FAC <j[ 25.) They
go on to allege that they "face serious consequences" if they do not comply
with the new policy: loss of their registration plus civil penalties of up to
$100 per day. (FAC <j[ 31 (citing N.Y. Exec. Law§ 177(2).)
Before the Court can address the merits of this claim, it must assuage
any doubts about its own jurisdiction. The Court has concluded that this
claim is not ripe for adjudication and the Court therefore lacks jurisdiction
over it.
A federal court may not constitutionally take jurisdiction over an action
which is not yet ripe. Marchi v. Bd. of Coop. Educ. Servs. of Albany, 173 F.3d
469, 478 (2d Cir. 1999). Ripeness "'is peculiarly a question of timing"' and
'"prevent[s] the courts, through avoidance of premature adjudication, from
entangling themselves in abstract disagreements.'" Nat'l Org. for Marriage,
Inc. v. Walsh, 714 F.3d 682, 687 (2d Cir. 2013) (citations omitted). Ripeness
has both constitutional and prudential dimensions, and courts have a duty
to address them both, even if sua sponte. See, e.g., Thomas v. City of New York,
143 F.3d 31, 34 (2d Cir. 1998). At this initial phase of the litigation, plaintiffs
have the burden of pleading facts that plausibly show the existence of a due
process claim that is ripe for adjudication. Marchi, 173 F.3d at 478; Greenlight
Reinsurance, Ltd. v. Appalachian Underwriters, Inc., 958 F. Supp. 2d 507, 518
(S.D.N.Y. 2013).
Plaintiffs have not alleged that the attorney general has stripped them
of any rights or imposed any penalty as a consequence of their failure to
provide unredacted Schedules B. See Thomas, 143 F.3d at 35 & n.6; Valentine
Props. Assocs., L.P. v. U.S. Dep't of Haus. & Urban Dev., No. 05-cv-2033, 2007
WL 3146698, at *10-11 (S.D.N.Y. Oct. 12, 2007). Even when plaintiffs filed
this amended complaint-almost three years after they initially received the
deficiency notices-plaintiffs have not alleged that any consequence had yet

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befallen them. Cf Fox Television, 132 S. Ct. at 2318-19 (noting that the FCC
had already publicly held the broadcasters in violation of the FCC' s
regulation, resulting in some broadcasters suffering reputational injuries
and another suffering the imposition of a significant fine). They allege
merely only that they "face the loss of their registration ... as well as civil
penalties." (FAC <JI 31 (emphasis added).)
Further, whether the attorney general will strip plaintiffs of their
licenses or impose a fine depends upon "contingent future events that may
not occur as anticipated, or indeed may not occur at all." Thomas, 143 F.3d
at 34. (citations and quotation marks omitted). And contingencies abound.
Will plaintiffs continue to violate the attorney general's policy after this
Court upholds its constitutionality? Will the attorney general impose fines
on plaintiffs stemming from their now two-year refusal to comply? Only
pure speculation can supply the answers to these questions. The statute
authorizing penalties is discretionary and there is nothing in the complaint
that plausibly alleges how the attorney general typically exercises that
discretion. See N.Y. Exec. Law § 177(2) (noting that "the attorney general
may" impose penalties (emphasis added)). As such-absent any allegation
that the attorney general has fined non-compliant charities or stripped them
of their licenses in the past-it is entirely unclear whether plaintiffs' conduct
will ever lead to any actionable consequence. See Thomas, 143 F.3d at 34-35,
35 n.6; Brezler v. Mills, 86 F. Supp. 3d 208, 218 (E.D.N.Y. 2015). Nor will the
parties suffer any undue hardship if plaintiffs' due process claim remains,
for the moment, undecided. Thomas, 143 F.3d at 35.
It is, therefore, "premature" for this Court to decide whether the
attorney general will contravene due process if he ultimately bars plaintiffs
from soliciting funds or imposes a fine. Id. at 34-35. Thus, the complaint fails

to allege that plaintiffs have "suffered any harm to their procedural due
process rights," and the action is neither constitutionally nor prudentially
ripe. Id. at 35 & n.6. The Court sua sponte dismisses this claim for lack of
subject matter jurisdiction.

D. Preemption
We come next to plaintiffs' last federal claim: that federal law preempts
New York's Schedule B policy. A claim of preemption is only viable if "the
challenged state law 'stands as an obstacle to the accomplishment and

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execution of the full purposes and objectives of Congress."' Arizona v. United
States, 132 S. Ct. 2492, 2500 (2012) (quoting Hines v. Davidowitz, 312 U.S. 52,
67 (1941)). Further, courts "should assume that 'the historic police powers
of the States' are not superseded 'unless that was the clear and manifest
purpose of Congress."' Id. (quoting Rice v. Santa Fe Elevator Corp., 331 U.S.
218, 230 (1947)); see also Citizens United, 115 F. Supp. 3d at 472 (citing Steel
Inst. of N. Y. v. City of N. Y., 716 F.3d 31, 36 (2d Cir. 2013)).
Citizens United contends that the Internal Revenue Code establishes
both "a general rule of non-disclosure of tax information" and "an extensive
regulatory regime to govern and protect the release of tax information."
(FAC <_[ 57.) According to plaintiffs, the attorney general's attempt to access
that same information without engaging the IRS's process "circumvent[s],"
Citizens United, 115 F. Supp. 3d at 472, the federal disclosure process, and is
therefore preempted. (FAC <_[<_[ 56-59.)
But this Court has already determined in this action that nothing in the
Internal Revenue Code or its legislative history demonstrates the '"clear and
manifest purpose of Congress,"' Arizona, 132 S. Ct. at 2501 (quoting Rice, 331
U.S. at 230), to prohibit states from requiring tax-exempt organizations to
disclose to the state portions of their federal tax filings. Citizens United, 115
F. Supp. 3d at 472-73. There is no reason to depart from that legal conclusion
here. The Internal Revenue Code states:
"Upon written request by an appropriate State officer, the Secretary
may make available for inspection or disclosure returns and return
information of any organization described in section 501(c) ... for
the purpose of, and only to the extent necessary in, the
administration of State laws regulating the solicitation or
administration of the charitable funds or charitable assets of such
organizations."
26 U.S.C. § 6104(c)(3).
At most, however, this language establishes that "'Congress sought to
regulate the disclosures that the IRS may make."' Citizens United, 115 F.
Supp. 3d at 472. (quoting Ctr. for Competitive Politics, 784 F.3d at 1319).
Neither the statutory text-nor its legislative history-suggest that
Congress meant to "broadly prohibit other government entities from
seeking [tax] information directly from the organization" that originally
filed it. Ctr. for Competitive Politics, 784 F.3d at 1319. States may therefore

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require tax-exempt organizations to disclose Schedules B to state authorities
without circumventing federal law.
Plaintiffs offer no new arguments to rebut this legal conclusion except
the contention-asserted repeatedly without support-that they are
entitled to further "factual development" to aid their claim. (Mem. in Opp.
at 21.) But preemption is a purely legal question concerning Congress'
intent. See Arizona, 132 S. Ct. at 2501. No factual development is needed. This
claim is dismissed with prejudice.

E.

Ultra Vires

Finally, the complaint asserts that plaintiff Citizens United-but not
plaintiff Citizens United Foundation-cannot be regulated as a "charitable
organization," N.Y. Exec. Law§ 172; 13 N.Y.C.R.R. § 90.2(a)(4), because it is
a "social welfare" group. 26 U.S.C. § 501(c)(4). The Court agrees with the
attorney general that this claim is meritless.
New York law delegates to the state attorney general the authority to
regulate "charitable organizations" within New York. N.Y. Exec. Law§ 172.
This delegation allows him "'to fill in the interstices in the legislative
product."' Allstate Ins. Co. v. Rivera, 12 N.Y.3d 602, 608 (2009) (citations
omitted). The attorney general is therefore free to define "charitable
organization" in a manner "that go[ es] beyond the text of that legislation,"
as long as his definition is "not inconsistent with the statutory language or
its underlying purpose," Gen. Elec. Capital Corp. v. N. Y. State Div. of Tax
Appeals, 2 N.Y.3d 249, 254 (2004).
State law defines "charitable organization" in relevant part as "[a]ny
benevolent, philanthropic, patriotic, or eleemosynary person." N.Y. Exec.
Law§ 171-a(l). Citizens United contends these are "very traditional terms
of art" that cannot be expanded to encompass organizations "operated
exclusively for the promotion of social welfare," 26 U.S.C. § 501(c)(4). (Plfs.'
Opp. to Def.'s Mot. to Dismiss at 22, Dkt. No. 63.) Although Citizens
United's narrow interpretation of section 171-a(l) is a possible one it is by
no means the only reasonable one. As such the attorney general may use his
delegated authority to apply section 172 to social welfare groups. Doing so
is not "'inconsistent"' with the broad '"statutory language or its underlying
purpose,"' Allstate Ins. Co., 12 N.Y.3d at 608 (quoting Gen. Elec. Capital Corp.,
2 N.Y.3d at 254).

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Citizens United next urges that the attorney general's own regulations
defining "charitable organization" clearly exempt social welfare
organizations from the charitable solicitation regime. The regulations state
that: "The term charitable organization includes ... without limitation: ...
organizations exempt from Federal income taxation pursuant to [an Internal
Revenue Code section other than § 501(c)(3)] that are organized and/or
operated for charitable purposes." 13 N.Y.C.R.R. § 90.2(a)(4) (emphasis in
original). According to Citizens United, social welfare groups organized
pursuant to section 501(c)(4) are not "operated for charitable purposes" and
thus do not fall within the attorney general's own definition of "charitable
organization," 13 N.Y.C.R.R. § 90.2(a)(4), and cannot be regulated.
Contrary to Citizens United's contentions, social welfare organizations
may well be "organized and/or operated for charitable purposes." 13
N.Y.C.R.R. § 90.2(a)(4). State regulations clearly recognize that "promoting
social welfare" may indeed be "charitable." 13 N.Y.C.R.R. § 90.l(a). Federal
regulations concur: The term "charitable" includes the "promotion of social
welfare." 26 C.F.R. §§ 1.501(c)(3)-l(d)(2), 1.501(c)(4)-l(a)(2).
Further, Citizens United itself is sufficiently "charitable" so as to fall
under the purview of the attorney general's regulations. 13 N.Y.C.R.R.
§ 90.2(a)(4). Charitable purposes include those that are "educational,"
"cultural," and "for a public benefit." 13 N.Y.C.R.R. § 90.l(a)-(b). New York
regulations even state that "promoting social welfare" can be itself a
"charitable purpose." Id. As the complaint alleges, "[t]hrough a combination
of education, advocacy, and grassroots programs, Citizens United seeks to
promote traditional American values of limited government, free
enterprise, strong families, and national sovereignty and security." (FAC
<j[ 3.) The complaint thus makes clear that Citizens United engages in
activities designed for "educational" purposes and for "public benefit" and
falls smack dab within the attorney general's own definition of "charitable
organization."
Citizens United- along with vast numbers of other social welfare
groups-is properly regulated as a "charitable organization." The
complaint's sole state law claim is therefore dismissed with prejudice.

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Ill.

CONCLUSION

Defendant's motion to dismiss the Amended Complaint is granted in
its entirety. The complaint states not a single plausible claim upon which
relief can be granted.
Court I of the First Amended Complaint is dismissed without
prejudice. The due process claim embedded in Count III is dismissed for
lack of subject matter jurisdiction, and the remainder of Count III is
dismissed without prejudice. Counts II and IV-the state law and federal
preemption claims-are dismissed with prejudice. If plaintiffs chose to do
so, they may seek leave to file a Second Amended Complaint fifteen days
after the date of this Opinion & Order.
Dated: New York, New York
August 29, 2016

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CERTIFICATE OF SERVICE
I certify that on January 6, 2017 I filed an electronic copy of the foregoing
on the Court’s ECF service, which caused it to be served on all other parties or
their counsel of record.

/s/ Michael Boos
Michael Boos
Dated: January 6, 2017