Judge Block’s NJ’s New Dark-Money Law, Citing Concerns About Constitutionality

A federal judge on Wednesday stopped — at least temporarily — New Jersey’s new law requiring disclosure by dark-money issue-advocacy groups from taking effect later this month. His reason: legal arguments thus far indicate the likelihood of the law being declared unconstitutional.

U.S. District Judge Brian Martinotti gave a significant win to Americans for Prosperity, the prominent national conservative organization that was first to challenge the law. It also buoyed a host of more liberal-leaning groups — including the American Civil Liberties Union-NJ, which filed its own lawsuit, and the New Jersey League of Conservation Voters — that have been vehement about the requirement they report big donors when the groups work to influence an election, legislation or regulation.

Still, Martinotti’s opinion does not stop the state’s election watchdog from writing rules to implement the law, should it eventually be allowed to enforce it. It also doesn’t prevent the Legislature from passing a measure to clarify or fix the current statute. The state could use one or both of those approaches to try to sway Martinotti, sitting in Trenton, to change his mind.

Signed last June by Gov. Phil Murphy, the law requires politically active nonprofits like 501(c)(4) and 527 groups to disclose their large contributors — those giving at least $10,000 — when the groups spend at least $3,000 to influence an election, legislation, or regulations. The rules were supposed to take effect Oct. 15.

The judge’s temporary injunction disappointed the major sponsors of the law in both houses: Sen. Troy Singleton (D-Burlington) and Assemblyman Andrew Zwicker (D-Middlesex).

Still in dark about dark money

“We are going to have to go through another electoral process without having any idea who is spending money, in what amount and what their goals are,” Singleton said.

Zwicker, who is one of those up for re-election with the state’s 80 Assembly seats topping this year’s ballot, noted the state Election Law Enforcement Commission has been reporting increases in spending by dark-money groups for years. ELEC estimated grassroots organizations spent close to $50 million on last year’s congressional elections without having to disclose the sources of that spending.

“It’s a shame,” Zwicker said of the delay. “This is a disservice to the people of New Jersey.”

But groups like the AFP, which received almost $57 million in contributions and grants in 2017, according to its Form 990 U.S. tax filing,  does not disclose its donors but is known to be funded by multibillionaire Charles Koch of Koch Industries, praised Martinotti’s opinion.

“Americans should be free to advocate for causes they believe in without retaliation by elected officials,” said AFP-NJ State Director Tony Howley in a statement. “We are proud to stand with a diverse mix of organizations who share a commitment to making it easier for people to engage on the issues they’re passionate about, and grateful to the Court for preserving all Americans’ First Amendment rights while this important issue is litigated.”

“The donor disclosure law puts core constitutional rights at stake, and the court made sure that organizations from across the ideological spectrum can make full use of our First Amendment freedoms as the case continues,” said Jeanne LoCicero, legal director of ACLU-NJ, which filed a similar suit along with the national ACLU in federal court in Newark two months ago. “The Supreme Court has said time and again that compulsory exposure of organizations’ supporters threatens free association, privacy and other key rights, and the federal district court recognized those principles again today.”

Relying on ‘an extraordinary remedy’

While Singleton and Zwicker both noted that Martinotti did not rule on the constitutionality of New Jersey’s law, the judge cited “the likely unconstitutional reach of the Act” in issuing the preliminary injunction, which he called “an extraordinary remedy to be used in limited circumstances.”

AFP had argued the unconstitutionality of the law on two major grounds: requiring disclosure violates the rights of free speech and to advocate anonymously and it will “chill” AFP’s free speech by discouraging individuals who seek anonymity from donating to the group because of fears that exposing them will subject them to violence or other repercussions.

The state had argued that the benefits to the public of knowing who is behind election-related spending constitute a vital government interest that makes the law valid.

But Martinotti disagreed, essentially saying the law is too broad, writing, “Indeed, the Court sees few, if any, limitations in the Act.”

Martinotti also found “constitutionally troubling” language in the law that would require disclosure by groups that provide political information, including fact or opinion, saying that goes beyond election-related disclosure allowed by the U.S. Supreme Court in past opinions.

Good government groups like RepresentUS, which lobbied for the law, said one reason it is needed is because election spending has gotten out of hand due to recent Supreme Court rulings, including in the Citizens United v. FEC case in which the court ruled that the government cannot prevent corporations, labor unions and others from making election-related independent expenditures. But Martinotti used that case in his opinion, saying the state law “ignores the teachings of Citizens United” in requiring disclosure for all communications made between Jan. 1 and Election Day.

In finding the law probably violates free-speech rights, Martinotti wrote that he did not need to address AFP’s second contention that the law will make potential donors fear to give money to the group. Still, he noted those concerns are real, writing that this is “a climate marked by the so-called cancel or call-out culture that has resulted in people losing employment, being ejected or driven out of restaurants while eating their meals; and where the internet removes any geographic barriers to cyber harassment of others.”

During last month’s hearing on AFP’s request for an injunction, Martinotti had asked questions about the genesis of the law. He did not, however, cite any of the political machinations as influencing his opinion.

Murphy sides with injunction

But a spokesman for Murphy, when asked to comment on the injunction, recalled that the governor had initially conditionally vetoed it.

“The governor said months ago the bill was unconstitutional as written and fell short of the worthy goal of strengthening disclosure requirements and enhancing public trust in the political process,” said Mahen Gunaratna, Murphy’s communications director. “Today’s ruling affirms the governor’s decision to conditionally veto the bill back in May.”

Murphy essentially signed the bill under duress.

After languishing for about three years, the bill moved swiftly through the Legislature with the backing of Senate President Steve Sweeney (D-Gloucester) after a dark-money group supporting Murphy reneged on a pledge to voluntarily disclose its donors. That group, New Direction New Jersey, has since done so.  At first, Murphy issued a 20-page conditional veto, essentially rewriting the bill. Then, facing an embarrassing override by the Legislature, Murphy agreed to sign virtually the same bill he had vetoed, but warned that it might be deemed unconstitutional and could face legal challenges.

Singleton termed the comment from Murphy’s spokesman as “not particularly helpful,” adding, “but I guess that’s where we are today.” He said he plans to talk with Sweeney and Zwicker about what steps to take next to try to ensure that the state can shine a light on dark money.

Zwicker, who has introduced a so-called cleanup bill sought by Murphy, said the goal of A-5754 is to keep in place the reporting requirements for dark money groups that try to elect a candidate or influence the outcome of a public question, “but approach issue advocacy differently.” For instance, his bill would significantly narrow the types of spending that would have to be reported by excluding  groups that work to influence legislation or regulations from having to disclose donors and exempting organizations that provide “political information” from having to report.

A spokesman for state Attorney General Gurbir Grewal said his office is reviewing the decision.

The state could appeal Martinotti’s ruling or it could continue to let the case proceed. If lawmakers amend the law or ELEC adopts rules for enforcing the law, the state could introduce those as evidence to try to sway Martinotti to consider the law constitutional. Currently there are no further arguments scheduled in the case.

Both the ACLU-NJ’s suit and one filed by the Illinois Opportunity Project, a 501(c)(4) that states it advocates for “liberty and free enterprise,” have been on hold pending Martinotti’s ruling on the preliminary injunction. It is unclear whether either of those, which make similar arguments to that of AFP, will now move forward.

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