Case 16-3310, Document 93, 04/21/2017, 2016686, Page1 of 41

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’ REPLY BRIEF

Todd Geremia Michael Boos
JONES DAY General Counsel
250 Vesey St. CITIZENS UNITED
New York, NY 10281 & CITIZENS UNITED FOUNDATION
Tel: (212) 326-3429 Boos Law Office
Fax: (212) 755-7306 4101 Chain Bridge Rd. Ste 216
Fairfax, VA 22030
Andrew Bentz Tel: (703) 691-7717
JONES DAY Fax: (703) 691-7543
51 Louisiana Avenue, N.W. michaelboos@verizon.net
Washington, D.C. 20001
Tel: (202) 879-3849
Fax: (202) 626-1700
Counsel for Appellants
Case 16-3310, Document 93, 04/21/2017, 2016686, Page2 of 41

TABLE OF CONTENTS

Page
INTRODUCTION ....................................................................................................1

ARGUMENT ............................................................................................................2
I. PLAINTIFFS ADEQUATELY PLED THAT THE ATTORNEY
GENERAL’S REGISTRATION AND DISCLOSURE RULES VIOLATE
THE FIRST AMENDMENT........................................................................2

A. The Complaint Adequately Pled That Requiring Charities
To Register and Disclose Their Donors To The
Government Before Speaking Is An Unconstitutional
Prior Restraint ............................................................................3
1. The Attorney General’s regime is plausibly a prior
restraint ............................................................................3

2. Contrary to the Attorney General’s assertions, the
Organizations have standing............................................6
3. The parade-permit exception does not apply here
and the Attorney General’s discretion is unbridled
in any event ......................................................................7

B. The Organizations Adequately Pled That The Attorney
General’s Policy Is Facially Unconstitutional .........................12

1. Strict scrutiny is the proper standard for evaluating
the Attorney General’s policy........................................13

2. The Attorney General’s policy fails even under
exacting scrutiny ............................................................16

C. The Organizations Adequately Pled An As-Applied
Challenge .................................................................................20

II. THE ORGANIZATIONS PLAUSIBLY CLAIM THEIR DUE PROCESS
RIGHTS WERE VIOLATED WHEN THE ATTORNEY GENERAL
CHANGED HIS POLICY WITH NO NOTICE ............................................22

ii
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TABLE OF CONTENTS
(continued)
Page
III. THE ATTORNEY GENERAL’S DISCLOSURE POLICY IS PREEMPTED.......25

IV. THE ATTORNEY GENERAL’S REQUIREMENT AS APPLIED TO
SOCIAL WELFARE ORGANIZATIONS VIOLATES NEW YORK’S
CONSTITUTION ....................................................................................27

CONCLUSION .......................................................................................................31

CERTIFICATE OF COMPLIANCE
CERTIFICATE OF SERVICE

iii
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TABLE OF AUTHORITIES

Page(s)
CASES
American Target Advertising, Inc. v. Giani,
199 F.3d 1241(10th Cir. 2000) ............................................................................. 9

Americans for Prosperity Found. v. Harris,
182 F. Supp. 3d 1049, 1054 (C.D. Cal. 2016) .............................................passim

Americans for Prosperity Found. v. Harris,
809 F.3d 536 (9th Cir. 2015) (per curiam) .........................................................18

Arista Records LLC v. Doe 3,
604 F.3d 110 (2d Cir. 2010) ...............................................................................12

Arizona v. United States,
132 S. Ct. 2492 (2012) ........................................................................................26

Bantam Books, Inc., v. Sullivan,
372 U.S. 58 (1963) ................................................................................................8

Barenboim v. Starbucks Corp.,
698 F.3d 104 (2d Cir. 2012) ...............................................................................30

Barnhart v. Thomas,
540 U.S. 20 (2003) ..............................................................................................24

Blue Canary Corp. v. City of Milwaukee,
251 F.3d 1121 (7th Cir. 2001) ..............................................................................6

Buckley v. Am. Const’l Law Found., Inc.,
525 U.S. 182 (1999) ............................................................................................19

Buckley v. Valeo,
424 U.S. 1 (1976) ................................................................................................14

iv
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TABLE OF AUTHORITIES
(continued)
Page(s)
Children First Found., Inc. v. Fiala,
790 F.3d 328 (2d Cir.), abridged on other grounds by
Walker v. Texas Div., Sons of Confederate Veterans, Inc.,
135 S. Ct. 2239 (2015) ........................................................................................11

City of Lakewood v. Plain Dealer Publ’g Co.,
486 U.S. 750 (1988) ............................................................................................10

Ctr. for Competitive Politics v. Harris,
784 F.3d 1307 (9th Cir.), cert. denied, 136 S. Ct. 480 (2015) ...........................14

Dayton Area Visually Impaired Persons, Inc. v. Fisher,
70 F.3d 1474 (6th Cir. 1995) ................................................................................9

FCC v. Fox Television Stations, Inc.,
132 S. Ct. 2307 (2012) ........................................................................................25

Fed. Land Bank of St. Paul v. Bismark Lumber Co.,
314 U.S. 95 (1941) ..............................................................................................27

Flora v. United States,
357 U.S. 63 (1958), aff’d on reh’g, 362 U.S. 145 (1960) .................................... 7

Forsyth County v. Nationalist Movement,
505 U.S. 123 (1992) ..........................................................................................5, 8

Graff v. City of Chicago,
9 F.3d 1309 (7th Cir. 1993) (en banc) ................................................................16

Grosjean v. Am. Press Co.,
297 U.S. 233 (1936) ..............................................................................................8

Illinois ex rel. Madigan v. Telemarketing Assocs.,
538 U.S. 600 (2003) ..............................................................................................6

v
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TABLE OF AUTHORITIES
(continued)
Page(s)
In re Davis’ Will,
137 N.Y.S. 427 (Sur. Ct. 1912), aff’d, 141 N.Y.S. 1115 (N.Y. App.
Div. 1913) (per curiam) ......................................................................................27

Joseph v. Athanasopoulos,
648 F.3d 58 (2d Cir. 2011) .................................................................................29

McConnell v. FEC,
540 U.S. 93 (2003), overruled on other grounds by Citizens
United, 558 U.S. 310 (2010) ...............................................................................21

McIntyre v. Ohio Elections Commission,
514 U.S. 334 (1995) ............................................................................................15

NAACP v. Alabama,
357 U.S. 449 (1958) ......................................................................................20, 21

Nebraska Press Ass’n v. Stuart,
427 U.S. 539 (1976) ..............................................................................................4

New York Coalition of Hispanic Chambers of Commerce v. New York
City Dep’t of Health & Mental Hygiene,
970 N.Y.S.2d 200 (2013) ....................................................................................28

People ex rel. Watchtower Bible & Tract Soc’y, Inc. v. Haring,
170 N.E.2d 677 (N.Y. 1960)...............................................................................28

Rescuecom Corp. v. Google Inc.,
562 F.3d 123 (2d Cir. 2009) ...............................................................................24

SPGGC, LLC v. Ayotte,
488 F.3d 525 (1st Cir. 2007) ...............................................................................26

Trustees of Dartmouth College v. Woodward,
17 U.S. 518 (1819) ..............................................................................................28

vi
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TABLE OF AUTHORITIES
(continued)
Page(s)
United States v. National Treasury Employees Union,
513 U.S. 454 (1995) ..........................................................................................4, 5

United States v. X-Citement Video, Inc.,
513 U.S. 64 (1994) ................................................................................................8

Vill. of Schaumburg v. Citizens for a Better Env’t,
444 U.S. 620 (1980) ............................................................................................13

Ward v. Rock Against Racism,
491 U.S. 781 (1989) ..............................................................................................5

Watchtower Bible & Tract Soc’y of New York, Inc. v. Vill. of Stratton,
536 U.S. 150 (2002) .....................................................................................passim

Williams-Yulee v. Florida Bar,
135 S. Ct. 1656 (2015) ..................................................................................13, 14

Wis. Dep’t of Indus., Labor & Human Relations v. Gould Inc.,
475 U.S. 282 (1986) ............................................................................................26

STATUTES

26 U.S.C. § 501 ........................................................................................................29

26 U.S.C. § 6103 ......................................................................................................26

26 U.S.C. § 6104 ......................................................................................................26

N.Y. Exec. Law § 171 ..............................................................................................27

N.Y. Exec. Law § 172 ....................................................................................4, 10, 27

N.Y. Exec. Law § 177 ................................................................................................7

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TABLE OF AUTHORITIES
(continued)
Page(s)
OTHER AUTHORITIES

13 N.Y.C.R.R. § 90.1 ...............................................................................................28

13 N.Y.C.R.R. § 90.2 ...............................................................................................29

13 N.Y.C.R.R. § 91.5 ...............................................................................................24

S. Rep. No. 91-552 (1969), reprinted in 1969 U.S.C.C.A.N. 2027 ........................26

Second Circuit Local R. 27.2 ...................................................................................29

Black’s Law Dictionary (4th Rev. ed. 1968) ...........................................................28

Black’s Law Dictionary (10th ed.) ...........................................................................28

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INTRODUCTION

Citizens United and Citizens United Foundation (“the Organizations”)

showed in their opening brief that they adequately pled that the Attorney General’s

requirement that charities hand over their donor lists before the charities are

allowed to speak violates the First Amendment. In response, the Attorney General

treats this appeal as though the district court had granted summary judgment. But

this case is here on a motion to dismiss. Thus, the Attorney General’s arguments

about what he believes the evidence may show are beside the point.

The Attorney General also gets the law wrong. His lead argument (invented

on appeal) is that the disclosure requirement is not a prior restraint on speech

because it is an annual reporting requirement. As the district court recognized,

however, this policy is plausibly a prior restraint. After all, the law is clear that

prior to engaging in solicitation, charities must disclose who gave them money last

year. The Attorney General’s further arguments on the First Amendment claims

amount to him trying to pass his burden onto the Organizations. But the

Organizations have met their pleading burden, and it is now time to test whether

the Attorney General can meet his burden of justifying his infringement of free

speech.

The district court should not have dismissed this action at the pleading stage.

Its order should be reversed, and this case should be remanded for discovery.
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ARGUMENT

I. PLAINTIFFS ADEQUATELY PLED THAT THE ATTORNEY GENERAL’S
REGISTRATION AND DISCLOSURE RULES VIOLATE THE FIRST
AMENDMENT
The Organizations have shown that they adequately alleged the Attorney

General’s requirement that charities register and disclose their donors’ identities is

plausibly a prior restraint, facially unconstitutional, and unconstitutional as applied

to the Organizations. In response, the Attorney General repeats the same errors as

the district court: applying a heightened pleading standard, confounding First

Amendment law, and doubting the complaint’s allegations. But this case is here on

a motion to dismiss. The Organizations’ allegations are therefore presumed to be

true.

Ignoring that principle, the Attorney General argues about what he believes

the facts will show. He assumes the facts will show that his policy is sufficiently

tailored to an appropriate interest. He assumes discovery will prove his office

actually keeps donor lists hidden from public view. And he assumes that the

Organizations will not be able to show their donors will be harmed if their

identities are revealed. These assumptions are demonstrably wrong; but more

fundamentally, the time for proving these assertions is after discovery.

Each of the Organizations’ First Amendment claims are adequately pled, and

the district court’s contrary judgment should be reversed.

2
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A. The Complaint Adequately Pled That Requiring Charities To
Register and Disclose Their Donors To The Government Before
Speaking Is An Unconstitutional Prior Restraint
The Organizations adequately alleged the Attorney General has imposed an

unconstitutional prior restraint on speech by not allowing them to speak unless the

Organizations first tell the Attorney General who their donors are. In response, the

Attorney General raises three basic arguments, two of which were not raised below

and none of which have merit.

1. The Attorney General’s regime is plausibly a prior restraint
The Attorney General’s principal argument (at 25) is that the donor-

disclosure requirement is not a prior restraint because the disclosure is an ongoing

reporting requirement. In other words, once the government permits a speaker to

speak a little, the government can impose whatever restraints it wants going

forward. Tellingly, the Attorney General did not pursue this argument below. See

generally Mem. of Law in Supp. of Mot. To Dismiss the First Am. Cmplt., ECF

No. 61 (Nov. 20, 2015). Instead, the Attorney General only argued that his

restraint was constitutional under the parade-permit exception (more on that later).

In any event, there is no merit to the Attorney General’s contention that the

disclosure requirement is not plausibly a prior restraint. New York law makes

clear that “[e]very charitable organization … shall prior to any solicitation, file

with the attorney general a prescribed registration form that includes,” pursuant to

3
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the Attorney General’s interpretation, donor lists (that is, “its annual report” that

includes the Schedule B listing of the names, addresses, and contribution amounts

of major donors “for the immediately preceding fiscal year”). NY Exec. Law

§ 172(1)(h)(i). The current rule is that if a charity does not give its donors’

identities to the Attorney General, it cannot speak. The statute and the Attorney

General make clear that the donor list must be given to the Attorney General “prior

to any solicitation.” That is a classic prior restraint. See Nebraska Press Ass’n v.

Stuart, 427 U.S. 539, 559 (1976). And the district court agreed: “it is clear that the

regime is plausibly a prior restraint.” (SA4.)

The Attorney General contends, however, that because the disclosure is

made in an annual requirement, it cannot be a prior restraint; said another way, the

requirement arises while organizations are engaged in speech. But the requirement

undeniably restrains speech that would occur after the due date for the disclosure.

Indeed, courts would little tolerate a rule that permitted writers to release the first

chapter of their books, but before publishing the rest required writers to obtain the

government’s seal.

The Attorney General’s lead case (United States v. National Treasury

Employees Union, 513 U.S. 454 (1995)), fells his new timing theory. There, a

union challenged a law that forbade federal employees from accepting

compensation for speeches or articles. 513 U.S. at 457. Even though the law did

4
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not actually prohibit employees from speaking or writing, the Court explained that

“unlike an adverse action taken in response to actual speech, this ban chills

potential speech before it happens.” Id. at 468. Even though speech was otherwise

occurring, the ban was akin to a prior restraint because it chilled future speech.

That is all the more true of the Attorney General’s disclosure requirement. Unlike

punishing potential fraud or illegal solicitations, the Attorney General’s regulation

prohibits speech unless charities disclose their donor list.

The other cases the Attorney General relies on (at 25) are irrelevant to the

issue in this case, because they involve either government regulation of

“competing uses of public forums” (Forsyth County v. Nationalist Movement, 505

U.S. 123, 130 (1992)) or licenses unrelated to speech. For example, Ward v. Rock

Against Racism was about whether a sound amplification guideline was

unconstitutional. 491 U.S. 781 (1989). In a footnote, the Court concluded that the

amplification rule was not a prior restraint because it fell within the single

exception to the rule that prior restraints are unconstitutional, namely regulations

of competing uses of public forums. Id. at 795 n.5. In those limited circumstances,

courts will uphold prior restraints if the regulation at issue does not “delegate

overly broad licensing discretion to a government official.” Forsyth, 505 U.S. at

130. Here, the Attorney General is not regulating communal resources, but rather

private speech between organizations and individuals who may wish to support the

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organizations’ message. (JA248.) Thus, the parade-permit exception to the prior

restraint rule is inapposite here. See Opening Brief of Appellant 25-27.

The Attorney General’s other case, Blue Canary Corp. v. City of Milwaukee,

251 F.3d 1121 (7th Cir. 2001), upheld a law that required businesses to obtain a

license to sell liquor. Such licensing requirements, however, cannot be plausibly

called a prior restraint — after all they are not restraining speech. But the Attorney

General’s disclosure requirement directly forbids solicitation — that is, speech

(Illinois ex rel. Madigan v. Telemarketing Assocs., 538 U.S. 600, 611 (2003)) —

unless the Attorney General gives his permission. Compare Blue Canary, 251

F.3d at 1123 (“In the England of Shakespeare’s day and indeed for centuries

afterwards, a play could not be exhibited in a theater without a license from the

Lord Chamberlain. That was a classic prior restraint.”).

There are thus no grounds for disagreeing with the district court’s conclusion

that the Attorney General’s regime is plausibly a prior restraint on speech.

2. Contrary to the Attorney General’s assertions, the
Organizations have standing
The Attorney General next turns (at 26) to yet another argument he did not

raise below. He claims the Organizations lack standing to challenge the

registration requirements (which the Attorney General now views as separate from

the disclosure requirement) because the Organizations registered some years ago.

Even if this new divide-and-conquer strategy were colorable (see SA4 (dist. ct. op.)

6
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(“it is clear that the regime is plausibly a prior restraint” (emphasis added)), just

because a plaintiff may comply with an unconstitutional mandate, does not rob the

plaintiff of standing to challenge it. Otherwise, for example, there could never be a

challenge to tax regulations in district court. See Flora v. United States, 357 U.S.

63, (1958), aff’d on reh’g, 362 U.S. 145 (1960) (holding a taxpayer must pay the

challenged tax before suing in district court).

In any event, the Organizations plainly do have standing, because in the

Attorney General’s letters to the Organizations notifying them of their failure to

file Schedules B, he threatened to fine the Organizations. (JA262); see also N.Y.

Exec. Law § 177(2) (authorizing fines). These fines are a direct result of the initial

registration requirements, and thus the Organizations’ injuries stem from those

registration requirements.

3. The parade-permit exception does not apply here and the
Attorney General’s discretion is unbridled in any event
The Attorney General’s final argument on the prior restraint claim (at 29) is

that if his regime is a prior restraint, it is nonetheless constitutional because the

Attorney General’s Office has “cabined his own authority” by identifying what

charities must disclose in order to speak. This is the same error the district court

made. (SA5-7.) The Attorney General is attempting to expand a narrow exception

to prior restraint law in a manner that would eviscerate the protections Anglo-

7
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American law has guaranteed speakers for centuries. See Grosjean v. Am. Press

Co., 297 U.S. 233, 245-46 (1936).

There is one narrow exception to the rule that prior restraints are

unconstitutional. See Bantam Books, Inc., v. Sullivan, 372 U.S. 58, 70 (1963)

(noting all prior restraints are presumed unconstitutional). When the government

is regulating “competing uses of public forums,” some prior restraints are

constitutionally acceptable because otherwise public forums would be overrun.

Forsyth, 505 U.S. at 130. But that exception has never applied to private speech.

See Bantam Books, 372 U.S. at 70. Rightly so. “Persons do not harbor settled

expectations that the contents” of their private speech “are generally subject to

stringent public regulation. In fact, First Amendment constraints presuppose the

opposite view.” United States v. X-Citement Video, Inc., 513 U.S. 64, 71 (1994).

The Attorney General’s contrary argument has startling implications.

According to the Attorney General, he can demand information from individuals

and organizations before allowing them to speak so long as his demand is clear and

he has no ability to deny those who comply. So he can demand a list of

parishioners before permitting a worship service to go forward. And he can

demand a politicians’ emails before allowing her to give a stump speech. In each

of these hypotheticals, the requirements are (to borrow the Attorney General’s own

words (at 29)) “exact” and “objective,” and as long as the speakers comply they are

8
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permitted to speak. But “[i]t is offensive — not only to the values protected by the

First Amendment, but to the very notion of a free society — that in the context of

everyday public discourse a citizen must first inform the government of her desire

to speak to her neighbors and then obtain a permit to do so.” Watchtower Bible &

Tract Soc’y of New York, Inc. v. Vill. of Stratton, 536 U.S. 150, 165-66 (2002).

This is precisely why the unbridled discretion test does not apply to the

regulation of private speech. “Even if the issuance of permits by the [government

official] is a ministerial task that is performed promptly and at no cost to the

applicant, a law requiring a permit to engage in such speech constitutes a dramatic

departure from our national heritage and constitutional tradition.” Id. at 166.

The Attorney General provides only two cases (at 31) on this point, but

neither supports his argument. First the Attorney General relies on American

Target Advertising, Inc. v. Giani, 199 F.3d 1241(10th Cir. 2000). But that case

cuts against the Attorney General because there the Tenth Circuit ruled that

requiring fundraisers to register with the government and pay a bond

“definitionally qualifies as a prior restraint.” Id. at 1250-51. While the court did

apply the “unbridled discretion” test, that does nothing to help the Attorney

General’s argument here since the court struck down the registration requirement.

Id. at 1252. And in Dayton Area Visually Impaired Persons, Inc. v. Fisher, the

court was reviewing the district court’s preliminary injunction order for an abuse

9
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of discretion, not de novo as on a motion to dismiss. 70 F.3d 1474, 1480 (6th Cir.

1995). It also appears that the plaintiffs in that case conceded the discretion test

applied to Ohio’s regulation of professional fundraisers. Id. at 1484. In any event,

neither of these cases involved compelled disclosure of donors’ identities, as the

Attorney General’s policy here does; instead, they involved merely registration.

Compelling organizations to disclose the identity of their members and donors

raises entirely different First Amendment concerns. See Br. of Amicus Curiae Free

Speech Defense and Educ. Fund, et al. 15-18.

Moreover, even assuming arguendo that a prior restraint on private speech

can be constitutional so long as the reviewing authority limits his discretion, the

Attorney General has not done so here. New York’s law does not constrain the

Attorney General one iota, but instead gives the Attorney “unbridled discretion”

(City of Lakewood v. Plain Dealer Publ’g Co., 486 U.S. 750, 755 (1988)) to

prescribe whatever registration forms he wants (N.Y. Exec. Law § 172(1)).

Further, even if the Attorney General’s own regulations could be viewed as

constraining his discretion, the Attorney General readily admits (at 31) that he has

the unilateral “power to alter the rules for charities in the future.” And he has not

hesitated to exercise that power when it suits him. The Attorney General admits

(at 56-57) that in 2013 he adopted a rule requiring public donor disclosures for

groups engaged in political campaign speech, and later rescinded that rule (at 56

10
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n.22). The Attorney General’s statement and actions are not what one normally

associates with a bureaucrat who recognizes his discretion has been cabined.

Further still, whether the Attorney General is exercising discretion in the

granting of licenses or the enforcement of his “objective” disclosure requirements

is a factual question that can only be answered through discovery, not resolved on

the pleadings. See Children First Found., Inc. v. Fiala, 790 F.3d 328, 344-45 (2d

Cir.), abridged on other grounds by Walker v. Texas Div., Sons of Confederate

Veterans, Inc., 135 S. Ct. 2239 (2015). The Attorney General’s argument (at 32)

that he is applying the standards uniformly is a bald assertion that the

Organizations are wrong as a matter of fact. But what matters here are the

allegations. And the Organizations have properly alleged that “not all

organizations who have declined to file full Schedules B have been sent deficiency

notices” and that the Attorney General “has exercised ” “unfettered discretion to

select which organizations will receive [deficiency] notices.” (JA250-51 (emphasis

added).) Thus, even if the parade-permit exception were to apply here, the

Organizations have adequately pled that the Attorney General is exercising

unconstitutional, unbridled authority.

There is no merit to the Attorney General’s assertion (at 33) that these

allegations do not count because the Organizations made them “on information and

belief.” That the allegation is made on “information and belief” is entirely

11
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appropriate because the facts supporting the claim are “peculiarly within the

possession and control of the [Attorney General].” Arista Records LLC v. Doe 3,

604 F.3d 110, 120 (2d Cir. 2010). But even if the Organizations are required to

provide facts at this stage of the proceedings to support their allegation of non-

uniform enforcement they have: Until this Attorney General came into office, the

Organizations had never been asked to submit their donor lists. (JA250-51.) That

supports the complaint’s allegation that the Attorney General is using his new

policy to discriminate against speakers. And the Organizations are entitled to

discovery on that issue.

The district court should have denied the Attorney General’s motion to

dismiss this claim the moment the court concluded “it is clear that the regime is

plausibly a prior restraint.” (SA4.) The First Amendment cannot tolerate a prior

restraint on private speech. See Watchtower Bible, 536 U.S. at 165-66. No

exception applies here and, even if it did, the Organizations have adequately

alleged that the Attorney General has too much discretion for his regime to stand.

B. The Organizations Adequately Pled That The Attorney General’s
Policy Is Facially Unconstitutional
The Organizations opening brief also established that the complaint

adequately alleged the Attorney General’s policy is facially unconstitutional.

(JA253, JA255.) In response, the Attorney General advocates for a watered-down

standard of review and then asserts his policy survives that review. The Attorney

12
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General is wrong on both counts. His policy is subject to strict scrutiny and even if

only exacting scrutiny applies the Attorney General must come forward with facts

after discovery to prove his policy is constitutional. Requiring anything less would

water down exacting scrutiny to a rational-basis standard.

1. Strict scrutiny is the proper standard for evaluating the
Attorney General’s policy
At the outset, the Attorney General makes no attempt to justify his policy

under strict scrutiny, meaning if this Court concludes that strict scrutiny applies, it

must reverse the district court. Instead, the Attorney General argues (at 36-41) that

his policy is not subject to strict scrutiny, but rather exacting scrutiny — the

standard from campaign finance disclosure law. That argument is foreclosed by

Supreme Court precedent. Just last term, the Supreme Court reiterated 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); see also Vill. of Schaumburg v. Citizens for a

Better Env’t, 444 U.S. 620, 631 (1980) (“Solicitation and speech [are] so

intertwined that a prior permit could not be required.”). The Attorney General’s

observation (at 39 n.12) that Williams-Yulee involved “a direct prohibition on

speech” does him no good here because the Attorney General’s disclosure

requirement is also a “direct prohibition on speech”: Charities may not speak

unless they tell the government who their donors are.

13
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The Attorney General’s preferred standard, exacting scrutiny, does not apply

outside campaign finance law. See Op. Br. of Appellants 34-37. The Attorney

General’s failure to produce a single Supreme Court case applying exacting

scrutiny outside the context of campaign finance regulation confirms the limited

application of the exacting scrutiny standard. See Ctr. for Competitive Politics v.

Harris, 784 F.3d 1307, 1312 n.2 (9th Cir.), cert. denied, 136 S. Ct. 480 (2015)

(recognizing that the Supreme Court has never extended exacting scrutiny).

Well aware of this, the Attorney General argues (at 39) that “there is no

logic to confining exacting scrutiny to the campaign-finance context.” To the

contrary, there is no logic to extending exacting scrutiny to charitable solicitation.

Free speech analysis begins with the assumption that the highest level of protection

applies. See Williams-Yulee, 135 S. Ct. at 1665. In limited categories of cases,

where courts have identified sufficient reasons, the standard of review has been

lowered. But the Attorney General does not offer the sort of justifications that are

required to lower the default First Amendment standard.

Exacting scrutiny developed in campaign finance because that realm

presents “unique considerations” (Americans for Prosperity Found. v. Harris, 182

F. Supp. 3d 1049, 1054 (C.D. Cal. 2016) (“AFPF”)), including “provid[ing] the

electorate with information” about the sources of election-related spending, and in

“avoid[ing] the appearance of corruption” in politics. Buckley v. Valeo, 424 U.S. 1,

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66-68 (1976). The disclosures mandated by the Attorney General do not serve

these interests. They do not provide the public with information (at least to the

extent the Attorney General keeps the disclosures secret) and they do not serve any

governmental interest in propping up the public’s confidence in charities. There

certainly is a public interest in preventing charities from committing fraud. But the

government does not have an interest in ensuring charities do not appear to be

corrupt. See AFPF, 182 F. Supp. 3d at 1054.

The Attorney General is at pains (at 40 n.13) to distinguish McIntyre v. Ohio

Elections Commission, where the Supreme Court emphatically rejected the

government’s argument that campaign-finance disclosure cases should apply

outside the campaign finance context. 514 U.S. 334, 353 (1995). The Attorney

General obliquely says that McIntyre “did not hold that avoiding corruption in

elections is the only interest that supports disclosure laws.” Fair enough. There

may be ample justifications for disclosure laws. But that does not undermine

McIntyre’s conclusion that outside the campaign-finance context the government’s

interest must be compelling to pass First Amendment scrutiny.

The Attorney General makes a related error in arguing (at 34-35, 52-53) that

the Organizations have identified the wrong overbreadth standard. According to

him (at 35), his policy is constitutional as long as it has a “plainly legitimate

sweep.” Nonetheless, the Attorney General admits (id.) that if a “substantial

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number” of applications of his policy are unconstitutional, then his policy must fall.

That is fatal in this procedural posture. Forcing charities to disclose their donor

lists can be unconstitutional in some applications. AFPF, 182 F. Supp. 3d 1049;

see Br. of Amicus Curiae AFPF 13-26. Accordingly, whether it is unconstitutional

in a substantial number of cases is a factual question that awaits discovery. Graff v.

City of Chicago, 9 F.3d 1309, 1322 (7th Cir. 1993) (en banc) (“[T]he norm [in First

Amendment cases] is to wait until the summary judgment stage of the litigation to

address the ultimate question of whether the ordinance should stand.”).

2. The Attorney General’s policy fails even under exacting
scrutiny
Having set a lower bar than is constitutionally acceptable, the Attorney

General claims he can clear it. But even under that inapplicable lower standard,

the Attorney General has not shown his policy meets exacting scrutiny, i.e., that his

policy must bear a substantial relation to a sufficiently important governmental

interest). Foremost, he has not done so because he has not even filed an answer.

The government cannot prove its policy is constitutional here without producing

facts through discovery.

Interest. The Attorney General asserts (at 44) that the Organizations have

conceded “that preventing fraud and illegality in the charities context is a

sufficiently important government interest.” But the question is whether this

policy serves that interest. And on that score the Attorney General has not

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established that disclosure of donors’ identities helps ferret out fraud. Indeed, the

Attorney General does not explain why for years this disclosure was not needed to

combat fraud. (JA250.) Nor does he address that New York is one of only three

states that requires disclosure. In any event, the Attorney General must prove his

assertions (at 48-49) that requiring Schedule Bs is “essential” to combating

illegality. It is not enough, now or even after discovery, for the Attorney General

to offer only his say so. To allow him to do so would effectively reduce exacting

scrutiny to rational basis review.

Tailoring. When it comes to the tailoring inquiry, the Attorney General (at

50) argues that the only asserted injury is “the possibility that the Schedule Bs …

might become publicly disclosed.” That, according to the Attorney General, is not

enough to outweigh his interest in knowing who is donating to charity. But that is

not the only injury at issue here. The real injury is that if charities refuse to

comply they cannot solicit funds. Thus, the Attorney General’s interest must be

serious enough (under exacting scrutiny) to justify denying charities the right to

speak if they do not comply with his mandate. The Attorney General has made no

attempt to show that his purported interest outweighs the fundamental free-speech

rights of charitable organizations.

Instead, the Attorney General asserts (at 50) that there is no reason to believe

the Schedule B information will be made public. This is directly contrary to the

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allegations in the complaint. The Organizations’ complaint alleged that the

Attorney General may release the information, and supported the allegation with a

specific claim that “in the past” the Attorney General has made Schedule Bs

“publicly accessible.” (JA251.) Nothing the Attorney General points to

undermines those allegations. He says (at 50-51) that Schedules B “are exempt

from disclosure by the Attorney General under [New York’s Freedom of

Information Law], just as they are exempt from disclosure by the IRS under FOIA.”

But that the Attorney General is not required to release the information in response

to a request from the public says nothing about whether he might release the

information on his own. And though the Internal Revenue Code generally prevents

the IRS from publicly disclosing Schedules B, “it does not prevent state officials

from publicly disclosing return information collected by the state directly from

taxpayers.” Americans for Prosperity Found. v. Harris, 809 F.3d 536, 542 (9th Cir.

2015) (per curiam).

The Attorney General attempts to inject factual disputes into this appeal (at

51 n.19) by citing a self-serving affidavit filed during the preliminary injunction

proceedings in which an Assistant Attorney General asserted that the Schedule B

information is kept confidential. (JA15.) That is a factual matter for the merits,

not to be resolved on a motion to dismiss. In any event, the Attorney General

admits in his brief that Schedule B information has been publicly available in the

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past. In a footnote (at 51 n.20) he recognizes that the American Medical

Association Foundation’s Schedule B information was publicly available on New

York’s charities website in January of this year. See also Br. of Amicus Curiae

Americans for Prosperity Foundation 26 & n.9. There is thus a real prospect that

Schedule B information will become publicly available if charities comply with the

Attorney General’s requirements.

Perhaps recognizing this, the Attorney General changes the subject to argue

(at 52) that “public disclosure of the donor information on Schedule Bs would not

impose any undue First Amendment burden,” because public disclosure is only

forbidden if a speaker faces “threats, harassment, or reprisals.” But as the Supreme

Court explained in Watchtower Bible, a disclosure requirement can be

unconstitutional even if a speaker does not face threats or harassment. 536 U.S. at

166. In that case, the Court gave “[t]hree obvious examples.” Id. First, such

disclosure results in a loss of anonymity. And some choose anonymity merely out

of a “desire to preserve as much of one’s privacy as possible.” Id.; see also

Buckley v. Am. Const’l Law Found., Inc., 525 U.S. 182 (1999). Second, “requiring

a permit as a prior condition on the exercise of the right to speak imposes an

objective burden on some speech of citizens holding religious or patriotic views.”

Watchtower Bible, 536 U.S. at 167. Some may “prefer silence to speech licensed

by a petty official.” Id. And third, “there is a significant amount of spontaneous

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speech that is effectively banned.” Id. Public disclosure is thus an injury of

constitutional magnitude even absent potential backlash.

But, once again engaging the Attorney General on his erroneous terms, even

assuming the Organizations were required to allege that their members have faced

retaliation, they have done so. They specifically alleged in their complaint that

their donors “fear public backlash, financial harm, and worse,” should their

identities be known. (JA248.) Given the notoriety the Organizations have

achieved and the criticisms they have faced (JA252), it is “hardly a novel

perception that compelled disclosure of affiliation” with the Organizations “may

constitute [an] effective … restraint on freedom of association” (NAACP v.

Alabama, 357 U.S. 449, 462 (1958)).

C. The Organizations Adequately Pled An As-Applied Challenge

For similar reasons, the Organizations have adequately pleaded their as-

applied challenge. They have alleged that the Attorney General’s policy is

unconstitutional as applied to the Organizations, because their donors will face

backlash if they are forced to disclose their donors. Specifically, 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.) Supporting that allegation is the fact that the Organizations

have achieved “a special measure of notoriety in recent years,” have been

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“compared to al-Qaeda,” and described as an “enemy of the people.” (JA252.)

There can be little question that donors to controversial organizations fear being

outed. NAACP, 357 U.S. at 462.

The Attorney General wants more specifics, and claims (at 55) that the

Organizations’ allegations are too conclusory. But all the Organizations must

show is a reasonable probability that their donors will face backlash. McConnell v.

FEC, 540 U.S. 93, 198 (2003), overruled on other grounds by Citizens United, 558

U.S. 310 (2010. That they have certainly done, with specifics to explain why. No

more is required and, if the Attorney General had his way, the Organizations would

have to inflict upon themselves the very harm they are trying to avoid: They would

have to publicly identify their donors, who will then face social ostracization and

worse.

Indeed, it is unsurprising that the Attorney General largely ignores AFPF,

182 F. Supp. 3d 1049, which recently sustained an as-applied challenge (after trial)

to a nearly identical disclosure requirement in California. In AFPF, the district

court declared unconstitutional California’s disclosure requirement as applied to

AFPF because at trial “the Court heard ample evidence establishing that AFPF, its

employees, supporters and donors face public threats, harassment, intimidation,

and retaliation once their support for and affiliation with the organization becomes

publicly known.” Id. at 1055; see also Br. of Amicus Curiae AFPF 21.

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That case is practically this one. California’s Attorney General had

promised that all Schedules B would be kept confidential (just as New York’s

Attorney General does here). AFPF, 182 F. Supp. 3d at 1057. But discovery

uncovered a “shocking” number of “careless mistakes.” Id. Indeed, the counsel

for Planned Parenthood, it was discovered, had emailed California’s Attorney

General complaining “that the Registry had publically posted Planned

Parenthood’s confidential Schedule B, which included all the names and addresses

of hundreds of donors.” Br. of Amicus Curiae AFPF 21 n.7 (quoting AFPF, 182 F.

Supp. 3d at 1057). To determine whether the New York Attorney General’s office

commits these same errors — which it appears it does (id. at 26) — the

Organizations must be permitted discovery.

There are thus no grounds for dismissing the Organizations as-applied

challenge at this stage of the litigation. The Organizations have adequately alleged

that there is a real risk the Attorney General will make Schedule B information

publicly available and that their donors face backlash if their support for the

organizations is publicly known.

II. THE ORGANIZATIONS PLAUSIBLY CLAIM THEIR DUE PROCESS RIGHTS
WERE VIOLATED WHEN THE ATTORNEY GENERAL CHANGED HIS POLICY
WITH NO NOTICE
In 2012, the Attorney General unilaterally changed his long-standing policy

that organizations could file redacted versions of Schedules B. (JA250) The

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Organizations plausibly alleged that this change violated their due process rights

because the Attorney General gave them no prior notice.

The district court dismissed this claim, sua sponte, finding the claim was not

ripe. (SA13.) But as the Organizations explained in their opening brief (at 43-46)

that conclusion was erroneous. The Organizations’ claim is ripe because they face

fines if they do not comply with the Attorney General’s new policy.

Apparently, the Attorney General agrees with the Organizations that the

district court’s ripeness analysis is incorrect, because he does nothing to defend the

district court’s holding and instead says (at 57) that “the better ground for dismissal

is on the merits.” Because the district court did not reach the merits, however, this

Court should remand for the district court to consider the merits in the first

instance.

There is also no ground for dismissing the due process claim on the merits.

The Attorney General argues (at 58) that he has not, in fact, changed his policy.

But this misunderstands the procedural posture of this appeal. The Organizations

have alleged that this is a change in how the relevant regulation was interpreted,

that it occurred in 2012 in response to the election of the present Attorney General,

and that this change was not made public until the beginning of this litigation.

Compl. ¶¶26–27. Again, those allegations must be assumed to be true, not

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resolved on their merits now. Rescuecom Corp. v. Google Inc., 562 F.3d 123, 127

(2d Cir. 2009).

The Attorney General contends (at 58) that he has long required charities to

submit their full Schedules B, because the regulation provides that charities must

file “a copy of the complete IRS Form 990, 990-EZ or 990-PF with schedules.” 13

N.Y.C.R.R. § 91.5(c)(3)(i)(a). “That language” the Attorney General asserts (at 58)

“cannot reasonably be read in any other way than to continue requiring the filing of

all schedules accompanying IRS Form 990, including Schedule B.” To the

contrary, that language is most naturally read not to require schedules be included

with Form 990. The placement of “with schedules” after “990-PF” signals that

“with schedules” only applies to form 990-PF. See Barnhart v. Thomas, 540 U.S.

20, 26 (2003) (explaining “the grammatical rule of the last antecedent, according to

which a limiting clause or phrase … ordinarily be read as modifying only the noun

or phrase that it immediately follows”). If the Attorney General had wanted

schedules to be filed with Form 990, he could have said so explicitly.

In any event, as alleged in the complaint, the Attorney General previously

interpreted the regulations differently than he does today. Prior to the new

Attorney General, the Organizations regularly filed redacted Schedules B and the

Attorney General found that sufficient. (JA251, ¶30.) Schedule B includes other

information, such as what section of the tax code the entity is organized under and

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whether total contributions exceeded $5,000, and plaintiffs have filed that portion.

In other words, until 2012, an organization complied with the regulation’s

command to file “schedules” if the organization provided Schedules B but redacted

the donors’ identities.

When an agency “change[s] course” such that long-permitted conduct will

now be pursued as a “statutory violation,” the mere existence of “broad language”

that might literally permit this new course is no answer. FCC v. Fox Television

Stations, Inc., 132 S. Ct. 2307, 2318, 2319–20 (2012). What must be examined —

through discovery — is “this record of agency decisions,” to see whether the

agency’s prior course of enforcement would have given the speaker “fair notice

prior” to the hammer being brought down upon him. Id. at 2320 (emphasis

added). This is especially true here where, as the district court recognized, the

Attorney General has admitted that its practices changed in 2012. (JA146.) Given

that the policy had apparently been to permit the filing of Schedules B without

donor identities, the Organizations are entitled to test through discovery the nature

and motivations for the change in policy — and what the relevant officials

understood the prior policy to be.

III. THE ATTORNEY GENERAL’S DISCLOSURE POLICY IS PREEMPTED

The Attorney General’s policy is also preempted by federal law because the

Attorney General’s policy conflicts with federal tax law, which sets forth a

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comprehensive system by which charities donor lists are disclosed to government

officials. The Attorney General argues (at 62) that nothing in federal tax law

explicitly forbids him from requiring charities to disclose donor lists. But that is

not the test for conflict preemption. Rather, the test is whether the state practice

conflicts with the objectives of the federal law. Wis. Dep’t of Indus., Labor &

Human Relations v. Gould Inc., 475 U.S. 282, 286 (1986).

The Internal Revenue Code requires nonprofit charities to disclose donor

identities to the IRS, but generally forbids public disclosure of that information. 26

U.S.C. §§ 6103(a), 6104(b); see also S. Rep. No. 91-552 (1969), reprinted in 1969

U.S.C.C.A.N. 2027, 2081. Recognizing that some state officials may need donor

information, Congress then established a comprehensive system to provide federal

and state officials that information in very limited circumstances. See 26 U.S.C.

§ 6104. The “federal interest” in maintaining anonymity for charitable donors is

thus “so dominant that the federal system will be assumed to preclude enforcement

of state laws on the same subject.” Arizona v. United States, 132 S. Ct. 2492, 2501

(2012). Were the Organizations to comply with the Attorney General’s demand, it

“would frustrate the purposes of the federal scheme.” SPGGC, LLC v. Ayotte, 488

F.3d 525, 531 (1st Cir. 2007); see also Gould Inc., 475 U.S. at 286 (noting that

“conflict is imminent whenever two separate remedies are brought to bear on the

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same activity”). For these reasons, the Attorney General’s disclosure requirement

is preempted.

IV. THE ATTORNEY GENERAL’S REQUIREMENT AS APPLIED TO SOCIAL
WELFARE ORGANIZATIONS VIOLATES NEW YORK’S CONSTITUTION
The Attorney General has acted ultra vires by attempting to regulate

Citizens United, which is a social welfare organization. New York law does not

permit the Attorney General to regulate “social welfare organizations.” It only

permits him to regulate charitable organizations (N.Y. Exec. Law § 172), which

the law defines as a “benevolent, philanthropic, patriotic, or eleemosynary person.”

N.Y. Exec. Law § 171-a(1).

The Attorney general does not deny that these are well-established terms of

art. See In re Davis’ Will, 137 N.Y.S. 427, 427 (Sur. Ct. 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.”). Nor does he contest that the statute does not qualify the list as

“illustrative,” meaning the types of organizations covered are only the four types

listed. 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.”).

Instead, the Attorney General (at 68) says the definition of “eleemosynary”

is “simply ‘not for profit.’” (quoting Black’s Law Dictionary (10th ed.). That is

not correct. Black’s Law Dictionary (as in print in 1977, when New York’s law

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was adopted) defines the term as “[r]elating to the distribution of alms, bounty or

charity; charitable.” Black’s Law Dictionary 611 (4th Rev. ed. 1968). (The 10th

edition, on which the Attorney General relies also defines “eleemosynary”

primarily as “[o]f, relating to, or assisted by charity.”). And the more explanatory

meaning of the term is organizations that “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, 562-

63 (1819); see also People ex rel. Watchtower Bible & Tract Soc’y, Inc. v. Haring,

170 N.E.2d 677, 681 (N.Y. 1960). Citizens Untied is not distributing free-alms.

Instead, its aims are decidedly political. Thus, it cannot be regulated as a

charitable organization (as New York law defines that term).

The Attorney General (at 65-66) next relies on his own regulations, saying

those “have expressly designated social welfare organizations as charitable

organizations for many years.” It is true that the Attorney General’s regulations

requiring registration purport to reach not only “charitable” organizations, but also

those engaged in “promoting social welfare.” 13 N.Y.C.R.R. § 90.1(a)-(b). But

that is a classic case of lawmaking by regulators in violation of New York’s robust

separation of powers doctrine. See New York Coalition of Hispanic Chambers of

Commerce v. New York City Dep’t of Health & Mental Hygiene, 970 N.Y.S.2d 200

(2013). In any event, in the regulation’s list of examples of a “charitable

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organization,” the Attorney General included “501(c)(3)” organizations but

specifically omits (c)(4)s, showing that social welfare organizations are not

included. 13 N.Y.C.R.R. § 90.2(a)(3).

The Attorney General’s final argument (at 68-69) is that because

“charitable” under federal law includes the promotion of social welfare, a (c)(4)

organization (that is, a social welfare organization under federal law) is by

definition a “charity” for purposes of New York law. But as just discussed, New

York law is clear that “charity” does not include social welfare.

In any event, social welfare organizations, under federal law, are

fundamentally different from charities. For one, social welfare organizations can

undertake political activities. Charities cannot. 26 U.S.C. § 501(c)(3). It is true,

as the Attorney General points out (at 68) that a “social welfare organization,”

under federal law, is permitted to do some of the same activities as charities. But

that does not make a “social welfare organization” a charity. Under that rationale,

a for profit company that engages in some charitable activities, such as sponsoring

a charitable golf tournament, would qualify as a charitable organization.

Finally, if this Court has any doubt as to the meaning of New York’s law, it

should allow the New York Court of Appeals to “determine the meaning of [its]

own la[w] in the first instance.” Joseph v. Athanasopoulos, 648 F.3d 58, 68 (2d

Cir. 2011); see also Second Circuit Local R. 27.2. New York’s highest court has

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not decided the question presented in this case, the question is clearly important,

and whatever answer the state court gives will resolve this issue. See Barenboim v.

Starbucks Corp., 698 F.3d 104, 109 (2d Cir. 2012).

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CONCLUSION

For these reasons, the judgment below should be reversed. As to the state-

law claim, this Court should also reverse, but alternatively certify to the New York

Court of Appeals whether the Attorney General has the authority under the New

York Constitution to regulate Citizens United as a “charitable organization.”

Dated: April 21, 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

Todd Geremia
JONES DAY
250 Vesey St.
New York, NY 10281
Tel: (212) 326-3429
Fax: (212) 755-7306

Andrew Bentz
51 Louisiana Avenue, N.W.
Washington, D.C. 20001
Tel: 202.879.3939
Fax: 202.626.1700

Attorneys for Plaintiffs-Appellants
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Case 16-3310, Document 93, 04/21/2017, 2016686, Page40 of 41

CERTIFICATE OF COMPLIANCE
1. This brief complies with the type-volume limitation of Federal Rule of

Appellate Procedure 28.1(e)(2)(B). It contains 6,935 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: April 21, 2017
Case 16-3310, Document 93, 04/21/2017, 2016686, Page41 of 41

CERTIFICATE OF SERVICE

I certify that on April 21, 2017, the foregoing was electronically filed 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: April 21, 2017