COURT OF APPEALS, STATE OF

COLORADO
101 West ColIax Ave., Suite 800
Denver, CO 80202
COURT USE ONLY
District Court, City and County oI Denver
Hon. A. Bruce Jones, Judge
Case No. 2011CV4164
Plaintiffs/Appellees: COLORADO COMMON
CAUSE and COLORADO ETHICS WATCH
v.
Defendant/Appellant: SCOTT GESSLER, in his
oIIicial capacity as Colorado Secretary oI State
Attorneys Ior Colorado Common Cause:
JenniIer H. Hunt, #29964
Nathan P. Flynn, #39336
Hill & Robbins, PC
1441 18
th
Street, Suite 100
Denver, CO 80202
Telephone: 303-296-8100
Email: jhunthillandrobbins.com
Attorney Ior Colorado Ethics Watch:
Luis Toro, #22093
Margaret Perl, #43106
1630 Welton Street, Suite 415
Denver, CO 80202
Telephone: 303-626-2100
Email: ltorocoloradoIorethics.org
Case Number: 11CA2405
PLAINTIFFS-APPELLEES` ANSWER BRIEF
EFILED Document
CO Court of Appeals
11CA2405
Filing Date: May 14 2012 4:14PM MDT
Transaction ID: 44247871

i
CERTIFICATE OF COMPLIANCE
I hereby certiIy that this brieI complies with all requirements oI C.A.R. 28
and C.A.R. 32, including all Iormatting requirements set Iorth in these rules. The
brieI complies with C.A.R. 28(g), as it contains 8,786 words.
/s/ Jennifer H. Hunt
JenniIer H. Hunt
Attorney Ior the PlaintiII-Appellee
ii
TABLE OF CONTENTS
STATEMENT OF THE ISSUES PRESENTED FOR REVIEW .................................................. 1
STATEMENT OF THE CASE....................................................................................................... 1
SUMMARY OF ARGUMENT.................................................................................................... 12
ARGUMENT................................................................................................................................ 13
I. THE DISTRICT COURT PROPERLY INTERPRETED THE IMPACT OF THE
SAMPSON CASE AND THE LIMITS OF THE SECRETARY`S AUTHORITY.......... 13
A. Standard oI Review............................................................................................... 13
B. The District Court Properly Determined that Sampson Did Not Invalidate
the Constitutional Threshold Ior Regulation as an Issue Committee. .................. 15
1. The Sampson Opinion, by Its Own Terms, Is an As-Applied Holding
Limited to Its Unique Facts....................................................................... 15
2. The Tenth Circuit Did Not Apply a Severability Analysis, as it Would
Have Done iI its Holding Had Broader Application................................. 18
3. Changed Circumstances Support A Limited Application oI Sampson. .... 20
C. The District Court Correctly Found That Rule 4.27 Exceeded the
Secretary`s Authority. ........................................................................................... 21
1. The Secretary`s Authority to Enact Regulations Is Limited. .................... 21
2. Rule 4.27 Is Beyond the Secretary`s Authority to Promulgate Rules to
Administer and EnIorce the Campaign Finance Laws. ............................ 24
II. THE DISTRICT COURT`S DISMISSAL OF THE SECRETARY`S COUNTERCLAIM
WAS PROPER.................................................................................................................. 31
A. Standard oI Review............................................................................................... 31
B. The Counterclaim Was Not Properly Asserted Against CCC and Ethics
Watch. ................................................................................................................... 32
CONCLUSION............................................................................................................................. 37
iii
TABLE OF AUTHORITIES
Cases
Aaams v. Colo. Dept. of Soc. Services, 824 P.2d 83 (Colo. App. 1991)....................................... 23
Ba. of County Commrs v. Colo. Pub. Utils. Commn, 157 P.3d 1083
(Colo. 2007) ........................................................................................................................ 13, 14
Beaara v. Martin, 100 P.3d 584 (Colo. App. 2004) ..................................................................... 32
Boulaer County Ba. of Equali:ation v. M.D.C. Constr. Co., 830 P.2d 975
(1992)........................................................................................................................................ 23
Buckley v. Jaleo, 424 U.S. 1 (1976) ............................................................................................. 16
Cartwright v. State Ba. of Accountancy, 796 P.2d 51 (Colo. App. 1990) .................................... 14
Citi:ens Against Rent Control/Coalition For Fair Housing v. City of
Berkeley, 454 U.S. 290 (1981).................................................................................................. 16
Citi:ens for Responsible Govt State PAC v. Daviason, 236 F.3d 1174
(10th Cir. 2000)......................................................................................................................... 18
Citi:ens Unitea v. FEC, 130 S. Ct. 876 (2010)............................................................................. 33
City of Lakewooa v. Brace, 919 P.2d 231 (Colo. 1996) ............................................................... 31
Collopy v. Wilalife Com., Dept of Natural Resources, 625 P.2d 994 (Colo.
1981) ......................................................................................................................................... 14
Coloraao Auto & Truck Wreckers Assn v. Department of Revenue, 618
P.2d 646 (Colo. 1980)............................................................................................................... 22
Coloraao Citi:ens for Ethics in Govt v. Comm. for Am. Dream, 187 P.3d
1207 (Colo. App. 2008) ............................................................................................................ 14
Coloraao Ethics Watch v. Clear the Bench Coloraao, 2012 COA 42, 38................................. 15
Coloraao Ethics Watch v. Safe Streets Coloraao, Colorado OIIice oI
Administrative Courts Case No. OS 20100010 (Dec. 27, 2010)................................................ 7
Colucci v. Town of Jail, 232 P.3d 218 (Colo. App. 2009), cert. aeniea
(June 21, 2010) ......................................................................................................................... 31
Delta Sales Yara v. Patten, 892 P.2d 297 (Colo. 1995)................................................................ 22
Developmental Pathways v. Ritter, 178 P.3d 524 (Colo. 2008) ................................................... 34
iv
Eli:onao v. State, 570 P.2d 518 (Colo. 1977)............................................................................... 25
Farmers Insurance Exchange v. District Court, 862 P.2d 944 (Colo.1993) ................................ 35
First Natl Bank of Boston v. Belotti, 435 U.S. 765 (1978).......................................................... 16
Frea Schmia Appliance & Television Co. v. Denver, 811 P.2d 31 (Colo.
1991) ......................................................................................................................................... 22
Frienas of the Black Forest Regional Park, Inc. v. Boara of County
Commrs, 80 P.3d 871 (Colo. App. 2003) ................................................................................ 32
Game & Fish Commn v. Feast, 402 P.2d 169 (Colo. 1965)........................................................ 34
Hawes v. Colo. Div. of Ins., 65 P.3d 1008 (Colo. 2003)............................................................... 21
In re Interrogatories Submittea By Governor Bill Ritter, Jr., 227 P.3d 892
(Colo. 2010) ........................................................................................................................ 33, 37
Inaepenaence Inst. v. Coffman, 209 P.3d 1130 (Colo. App. 2008), cert.
aeniea (June 1, 2009), cert. aeniea 130 S. Ct. 625 (2009) ................................................... 5, 21
Martine: v. Colo. Dept of Human Servs., 97 P.3d 152 (Colo. App. 2003) ................................. 22
McDonnell v. Juvenile Court in ana for Secona Juaicial District, 864 P.2d
565 (Colo. 1993) ....................................................................................................................... 22
Meaina v. State, 35 P.3d 443 (Colo. 2001)................................................................................... 32
Native Am. Rights Funa, Inc. v. City of Boulaer, 97 P.3d 283 (Colo. App.
2004) ......................................................................................................................................... 14
People ex rel. Commissioner of Agriculture v. Webster, 570 P.2d 560
(Colo. App. 1977) ..................................................................................................................... 22
Russo v. Ba. Of Trustees, 17 A.3d 801 (N.J. 2011) ...................................................................... 15
Sampson v. Buescher, 625 F.3d 1247 (10th Cir. 2010) ......................................................... passim
Sanger v. Dennis, 148 P.3d 404 (Colo. App. 2006).......................................................... 23, 28, 29
State Dept. of Natural Res. v. Cyphers, 74 P.3d 447 (Colo. App. 2003)...................................... 36
Tivolino Teller House, Inc. v. Fagan, 926 P. 2d 1208 (Colo. 1996) ............................................ 23
Trinity Broaa. of Denver, Inc. v. City of Westminster, 848 P.2d 916 (Colo.
1993) ......................................................................................................................................... 31
v
Wagner v. Grange Ins. Assn, 166 P.3d 304 (Colo. App. 2007) .................................................. 32
Wooaco v. Linaahl, 152 Colo. 49, 380 P.2d 234 (1963)............................................................... 32
Statutes
C.R.S. 1-1-107(2)(d) .................................................................................................................. 37
C.R.S. 1-40-113(1)(b) ................................................................................................ 5, 20, 21, 29
C.R.S. 1-45-108(1)(a)(I) .................................................................................................. 2, 24, 27
C.R.S. 1-45-108(7)(b) .................................................................................................................. 4
C.R.S. 1-45-111.5 ...................................................................................................................... 22
C.R.S. 1-45-708(b)(2) ................................................................................................................ 27
C.R.S. 24-4-101, et seq. ............................................................................................................. 13
C.R.S. 24-4-103(8)(a) .................................................................................................... 14, 23, 25
C.R.S. 24-4-106(7)..................................................................................................................... 13
C.R.S. 31-12-112(6)............................................................................................................... 4, 27
Rules
C.R.C.P. 105 ................................................................................................................................. 36
C.R.C.P. 12(b)(1) .................................................................................................................... 31, 33
C.R.C.P. 12(b)(5) .................................................................................................................... 31, 33
C.R.C.P. 12(b)(6) .................................................................................................................... 32, 33
C.R.C.P. 19 ............................................................................................................................. 32, 35
C.R.C.P. 24 ................................................................................................................................... 35
C.R.C.P. 57 ............................................................................................................................. 35, 36
Constitutional Provisions
Article XXVIII, 1................................................................................................................... 1, 19
Article XXVIII, 14..................................................................................................................... 19
Article XXVIII, 2(10)(a)(II) .................................................................................................. 2, 24
vi
Article XXVIII, 9(1)(b) ....................................................................................................... 22, 34
Article XXVIII, 9(2) .............................................................................................................. 2, 37
Article XXVIII, 10(2) ................................................................................................................... 2
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STATEMENT OF THE ISSUES PRESENTED FOR REVIEW
1. Whether the District Court correctly interpreted the holding in
Sampson v. Buescher, 625 F.3d 1247 (10th Cir. 2010), as an as-applied decision
that did not invalidate the threshold in the Colorado Constitution Ior regulation oI
issue committees, except as applied to the speciIic circumstances presented in that
case.
2. Whether the District Court properly concluded that the enactment oI
Campaign and Political Finance Rule 4.27, 8 CCR 1505-6 ('Rule 4.27) exceeded
the Secretary`s authority to promulgate rules necessary to administer and enIorce
the campaign Iinance laws.
3. Whether the Secretary has the authority to assert a declaratory
judgment counterclaim against private organizations challenging the
constitutionality oI laws his oIIice is charged to administer and enIorce.
STATEMENT OF THE CASE
I. The Campaign Finance Amendment
In 2002, Colorado voters passed Amendment 27, which became Article
XXVIII oI the Colorado Constitution. Article XXVIII creates a comprehensive
campaign and political Iinance system, including disclosure requirements that
apply to various categories oI participants in the elections process, such as issue
committees. Section 1 oI Article XXVIII states that the 'interests oI the public are
2
best served by . . . providing Ior Iull and timely disclosure oI campaign
contributions.
Consistent with this purpose, the Fair Campaign Practices Act ('FCPA)
requires issue committees to report all contributions, the names and addresses oI all
persons who contribute twenty dollars or more, and all expenditures. C.R.S. 1-
45-108(1)(a)(I) (2011). The statement oI registration must include the name oI the
issue committee; the name oI a registered agent; the committee`s address and
telephone number; the identities oI all aIIiliated candidates and committees; and
the 'purpose or nature oI interest oI the committee. Ia. 'Issue committee is
deIined, in part, as any group 'that has accepted or made contributions or
expenditures in excess oI two hundred dollars to support or oppose any ballot issue
or ballot question. Colo. Const. art. XXVIII, 2(10)(a)(II).
Amendment 27 also established a two-track enIorcement system. The
Secretary may impose penalties oI $50 per day Ior missed Iilings, subject to
reduction upon a showing oI good cause. Colo. Const. art. XXVIII, 10(2). All
other violations oI Article XXVIII and the FCPA are enIorced only through a
litigation process pursuant to which 'any person may Iile a complaint with the
Secretary, who reIers the case to an administrative law judge Ior resolution through
a judicial process. Colo. Const. art. XXVIII, 9(2).
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II. The Litigation and Legislative Response
On November 9, 2010, the Tenth Circuit Court oI Appeals issued its
decision in Sampson v. Buescher, 625 F.3d 1247 (10th Cir. 2010). The Sampson
case arose Irom an annexation election held to determine whether a neighborhood
known as Parker North should be annexed into the Town oI Parker. Ia. at 1251. A
group oI neighbors opposed to the annexation 'purchased and distributed No
Annexation signs, mailed to all residents oI Parker North a postcard summarizing
the reasons to oppose annexation, continued to discuss and debate the issue on the
Internet, and on June 16 submitted to the Town Council a document opposing
annexation that was signed by 215 residents. Ia. A supporter oI the annexation
Iiled a complaint with the Colorado Secretary oI State, alleging violations oI
Colorado law relating to issue committee registration and reporting. Ia.
While the complaint was pending beIore the OIIice oI Administrative
Courts, the supporter served a subpoena to produce, demanding that the annexation
opponents produce nine categories oI documents, including names and addresses
oI all 'persons who are or may be members oI the opposition group and 'all
communications . . . concerning the annexation oI Parker North into the Town oI
Parker, Colorado. Ia. at 1252. The annexation opponents objected, but the
administrative law judge only partially quashed the subpoena. Ia. The supporter
also submitted a 'non-negotiable oIIer oI settlement that would have required the
4
opponents to sign a 'Stipulation and Guilty Plea. Ia. The matter proceeded to a
hearing, which ended when the supporter and the opponents entered into a
settlement providing, among other things, that no penalties would be imposed on
the annexation opponents. Ia. In total, the Parker North No Annexation Committee
accepted $813.55 in in-kind contributions and $1,426 in cash contributions, oI
which $1,178.82 was paid out Ior attorney Iees aIter the complaint was Iiled. Ia. at
1260 & n.5.
The day beIore the campaign Iinance case settled, several annexation
opponents Iiled suit in the United States District Court Ior the District oI Colorado,
seeking a declaration that Colorado`s private enIorcement system Ior campaign
Iinance violations is Iacially unconstitutional and that Colorado`s registration and
disclosure requirements are unconstitutional both Iacially and as applied to them.
Ia. The Iederal district court held that Colorado campaign Iinance laws did not
actually apply to the No Annexation committee because registration and reporting
requirements did not apply until the town published a notice oI election, which did
not occur until well aIter the campaign Iinance suit had settled. Ia. at 1252 n.2.
AIter the Iederal district court`s decision, the legislature passed a bill
amending the FCPA to make clear that a municipal annexation issue does not
become a 'ballot issue Ior purposes oI campaign Iinance law until notice oI the
election is published. Ia. (citing C.R.S. 1-45-108(7)(b) and ia. 31-12-112(6)).
5
Also, while the Sampson appeal was pending, the legislature enacted a statute
requiring the Secretary to notiIy proponents oI a ballot issue 'at the time a petition
is approved . . . that the proponents must register an issue committee pursuant to
section 1-45-108 (3.3) iI two hundred or more petition sections are printed or
accepted in connection with circulation oI the petition. C.R.S. 1-40-113(1)(b).
In their appeal to the Tenth Circuit, the Sampson plaintiIIs were represented
by the Institute Ior Justice ('IJ), an organization that has Iiled a brieI as amicus
curiae in this case. See Unopposed Motion oI Institute Ior Justice Ior Leave to File
BrieI as Amicus Curiae (April 9, 2012). This was the second time the IJ
represented clients seeking to overturn Colorado`s voter-approved laws on issue
committee disclosure through a First Amendment challenge. In the Iirst case, the
Colorado Court oI Appeals aIIirmed the Denver District Court`s summary
judgment rejecting a Iacial challenge to those laws. Inaepenaence Inst. v. Coffman,
209 P.3d 1130 (Colo. App. 2008), cert. aeniea (June 1, 2009), cert. aeniea 130 S.
Ct. 625 (2009).
In the Sampson appeal, the Tenth Circuit likewise did not rule that
Colorado`s issue committee disclosure law violates the First Amendment on its
Iace. 625 F.3d at 1254. Rather, it Iound that Colorado`s campaign Iinance
regulatory system was unconstitutional as applied to the Sampson plaintiIIs
because 'the Iinancial burden oI state regulation on PlaintiIIs` Ireedom oI
6
association approaches or exceeds the value oI their Iinancial contributions to their
political eIIort. Ia. at 1261. Thus, the court Iound that 'Colorado law, as applied
to Plaintiffs, has violated their constitutional Ireedom oI association. Ia. at 1249
(emphasis added).
The Secretary did not Iile a petition Ior certiorari to the United States
Supreme Court.
III. The Rulemaking Proceedings
On December 10, 2010, then-Secretary oI State Bernie Buescher issued a
Notice oI Rulemaking Hearing and Proposed Statement oI Basis, Purpose and
SpeciIic Statutory Authority. Administrative Record ('AR) Tabs 1 and 2. The
language oI Proposed Rule 4.27 contained in the December 10 Preliminary DraIt
oI Proposed Rules submitted with the Notice candidly stated that the purpose oI the
Rule was to amend the Colorado Constitution:
4.27 IN ACCORDANCE WITH THE DECISION OF
THE TENTH CIRCUIT COURT OF APPEALS IN
SAMPSON J. BUESCHER, NOS. 08-1389, 08-1415
(10TH CIR. 2010), THE $200 AMOUNT SPECIFIED
IN ARTICLE XXVIII, SECTION 2(10)(A) OF THE
COLORADO CONSTITUTION AND SECTION 1-45-
108, C.R.S., IS INCREASED TO |$2,500|.
AR Tab 3 (brackets in original).
The hearing reIerenced in the Notice oI Rulemaking Hearing occurred on
January 26, 2011. No one testiIied in support oI the proposed rule, and the only
7
written Iilings in support oI the change came Irom the Secretary`s oIIice itselI. AR
Tabs 4, 9, 12; Tr. January 26, 2011 Rulemaking Hearing ('January 26 Tr.) at 5-
52. Appellees Colorado Common Cause ('CCC) and Colorado Ethics Watch
('Ethics Watch) both provided testimony and submitted documents in opposition
to the rule change. AR Tabs 4, 9, 12; January 26 Tr. at 29-52.
Ethics Watch`s presentation included testimony regarding Coloraao Ethics
Watch v. Safe Streets Coloraao, Colorado OIIice oI Administrative Courts Case
No. OS 20100010 (Dec. 27, 2010), and a copy oI the Agency Decision in that case
('Safe Streets Agency Decision). AR Tab 9; see January 26 Tr. at 29-31, 39-41.
Safe Streets Coloraao presented a diIIerent application oI Colorado`s ballot
initiative Iinancial disclosure laws. Respondent SaIe Streets Colorado registered as
an issue committee on August 26, 2010 and Iiled its Iirst disclosure on September
22, 2010, claiming to have started the reporting period on July 29 with no Iunds
and to have raised $5,500 as oI September 1. AR Tab 9 (Safe Streets Agency
Decision at 6, 7). Evidence submitted at the hearing showed that as oI June 1,
2010, SaIe Streets had spent $85 on a UPS Store mailbox rental, $66 Ior image
templates Ior a website, and $200 in Iiling Iees to the Secretary oI State`s oIIice.
AR Tab 9 (Safe Streets Agency Decision at 26-27). The evidence also showed a
great deal oI unreported spending beIore SaIe Streets registered as a committee:
'renting a cargo van, producing a video, purchasing shirts adorned with
8
Respondent`s logo, purchasing boxes, printing labels Ior boxes, circulating
petition, conducting training sessions, printing petition sections and
advertisement. AR Tab 9 (Safe Streets Agency Decision at 29). A website blog
post admitted into evidence in the Safe Streets administrative hearing included a
statement Irom a bail bond agent involved in the campaign that the spending Ior
signature gathering campaign Ior the SaIe Streets ballot initiative had reached
$156,000 by June 20. AR Tab 9 (Safe Streets Agency Decision at 20). Ethics
Watch`s Director testiIied at the rulemaking hearing that the identity oI
contributors was highly relevant to the public debate over whether Proposition 102
was a 'bail bond industry bailout primarily Iunded by that industry. January 26
Tr. at 30.
On March 30, 2011, the Secretary (by then Scott Gessler, the DeIendant
herein) issued a Notice oI Second Rulemaking Hearing to be held on May 3, 2011
(AR Tab 5), a Revised Proposed Statement oI Basis, Purpose and Statutory
Authority (AR Tab 6), and a Revised DraIt oI Proposed Rules (AR Tab 7). The
March 30 revision to the original draIt read as Iollows:
New Rule 4.27 would be adopted as Iollows:
4.27 IN ACCORDANCE WITH THE DECISION OF
THE TENTH CIRCUIT COURT OF APPEALS IN
SAMPSON J. BUESCHER, NOS. 08-1389, 08-1415
(10TH CIR. 2010), THE $200 AMOUNT SPECIFIED
IN ARTICLE XXVIII, SECTION 2(10)(A) OF THE
9
COLORADO CONSTITUTION AND 4 SECTION 1-
45-108, C.R.S., IS INCREASED TO |$2,500| AN
ISSUE COMMITTEE SHALL NOT BE SUBJECT TO
ANY OF THE REQUIREMENTS OF ARTICLE
XXVIII OF THE COLORADO CONSTITUTION OR
ARTICLE 45 OF TITLE 1, C.R.S., UNTIL THE ISSUE
COMMITTEE HAS ACCEPTED $5,000 OR MORE IN
CONTRIBUTIONS OR MADE EXPENDITURES OF
$5,000 OR MORE DURING AN ELECTION CYCLE.
AN ISSUE COMMITTEE THAT ACCEPTS $5,000 OR
MORE IN CONTRIBUTIONS OR MAKES
EXPENDITURES OF $5,000 OR MORE DURING AN
ELECTION CYCLE SHALL REGISTER WITH THE
APPROPRIATE OFFICER WITHIN 10 CALENDAR
DAYS OF ACCEPTING OR MAKING SUCH
CONTRIBUTIONS AND EXPENDITURES.
A. REPORTS OF CONTRIBUTIONS AND
EXPENDITURES FILED BY AN ISSUE COMMITTEE
UNDER THIS RULE SHALL BE PROSPECTIVE
ONLY. CONTRIBUTIONS RECEIVED AND
EXPENDITURES MADE PRIOR TO REACHING THE
$5,000 THRESHOLD ARE NOT REQUIRED TO BE
REPORTED. CONTRIBUTIONS RECEIVED AND
EXPENDITURES MADE AFTER REACHING THE
$5,000 THRESHOLD SHALL BE REPORTED IN
ACCORDANCE WITH THE REPORTING
SCHEDULE SPECIFIED IN SECTION 1-45-108(2)(A),
C.R.S.
B. AN ISSUE COMMITTEE SHALL PROVIDE THE
COMMITTEE`S BALANCE ON THE DATE OF
COMMITTEE REGISTRATION AS A 'BEGINNING
BALANCE ON THE COMMITTEE`S INITIAL
REPORT OF CONTRIBUTIONS AND
EXPENDITURES.
C. FOR PURPOSES OF THIS RULE, AN ELECTION
CYCLE SHALL BE THE 2 YEAR PERIOD OF TIME
10
BEGINNING 31 DAYS AFTER A MAJOR ELECTION
AND ENDING 30 DAYS AFTER THE NEXT MAJOR
ELECTION.
AR Tab 7.
The second hearing was held on May 3, 2011, with testimony and written
submissions Irom a variety oI points oI view, including Irom persons opposed to
campaign Iinance laws in general, supporters oI the change, and CCC and Ethics
Watch again in deIense oI Colorado`s existing campaign Iinance laws. AR Tab 6,
9, 12; Tr. oI May 3, 2011 Hearing. On May 13, 2011, the Secretary issued a Notice
oI Adoption oI new Rule 4.27 which incorporated a Statement oI Basis, Purpose,
and SpeciIic Statutory Authority issued at the same time. AR Tabs 10, 11.
The Secretary`s analysis oI Sampson in the Statement oI Basis, Purpose and
Statutory Authority began and ended with a paragraph late in the opinion:
In particular, while the Court stated, 'We do not attempt
to draw a bright line below which a ballot-issue
committee cannot be required to report contributions and
expenditures the Court nevertheless did say that the
'PlaintiIIs contributions and expenditures in that case
were 'well below the line. According to the Court`s
opinion (at Iootnote 5), the PlaintiIIs` contributions and
expenditures were $2,239.55 and $1,992.37. (Namely
$813.53 in in-kind contributions, plus $1,426 in cash
contributions, Ior a total $2,239.55 in contributions, all oI
which was expended except Ior $247.18 that remained in
the bank account, Ior a total oI $1,992.37 in
expenditures.)
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AR Tab 11 (Statement oI Basis, Purpose and Statutory Authority). No speciIic
justiIication was given Ior the Rule`s complete exemption Irom disclosure Ior the
Iirst $5000 oI contributions and expenditures, which was not present in Secretary
Buescher`s original rule proposal.
PlaintiIIs Iiled this action asking the District Court to Iind Rule 4.27
unlawIul and void on June 9, 2011. Complaint, CD ID 39980239, pp. 1-6. The
Secretary Iiled a motion to dismiss the claims Ior lack oI standing. Motion to
Dismiss, CD ID 41080877, pp. 18-23. While that motion was pending, the
Secretary Iiled his answer and a counterclaim seeking a declaratory judgment
against CCC and Ethics Watch that iI Rule 4.27 is void, then the deIinition oI issue
committee is 'unenIorceable until the General Assembly enacts a statute, or the
Secretary promulgates a rule, that establishes a minimum level oI contributions or
expenditures that triggers the Iormation oI an issue committee. Answer, CD ID
41829353, pp. 59-62. Following denial oI the motion to dismiss, the parties then
brieIed the substantive issues and the District Court heard argument on November
8, 2011. The District Court issued an Order on November 17, 2011 Iinding in Iavor
oI the PlaintiIIs/Appellees, setting aside Rule 4.27 as an unauthorized exercise oI
the Secretary`s power, and dismissing the Secretary`s counterclaim. Order, CD ID
44128752, pp. 153-162.
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SUMMARY OF ARGUMENT
Secretary oI State Gessler`s adoption oI Rule 4.27 is an unprecedented
attempt by a representative oI the executive branch oI government to usurp the rule
oI both the General Assembly and the judiciary. Purportedly in response to a
decision oI the Tenth Circuit Court oI Appeals on an as-applied challenge to
campaign Iinance disclosure provisions oI article XXVIII oI the Colorado
Constitution, the Secretary adopted a rule that nulliIies provisions oI the Colorado
Constitution and statutes and replaces them with weaker disclosure rules. In
adopting Rule 4.27, the Secretary has exceeded his authority to administer and
enIorce campaign Iinance laws by dramatically increasing the constitutional
threshold Ior regulation oI issue committees. The District Court`s decision setting
aside Rule 4.27 as an unauthorized exercise oI the Secretary`s power should be
aIIirmed.
As the administrator oI Colorado`s campaign Iinance laws, the Secretary has
no authority to Iile a declaratory judgment action seeking to have laws he is
charged to administer declared unconstitutional. Rather, the Secretary would be the
proper deIendant in such an action brought by a proper plaintiII Ior such relieI, and
as such is expected to deIend Colorado`s constitution and statutes. Certainly, he
could not obtain relieI Irom having to administer or enIorce Colorado campaign
Iinance laws through a declaration against two private nonproIit groups.
13
ARGUMENT
I. The District Court Properly Interpreted the Impact of the
Case and the Limits of the Secretary`s Authority.
A. Standard of Review
Under the Colorado Administrative Procedure Act, C.R.S. 24-4-101, et
seq. (2011), a challenged agency action must be held unlawIul iI the reviewing
court Iinds:
that the agency action is arbitrary or capricious, a denial
oI statutory right, contrary to constitutional right, power,
privilege, or immunity, in excess oI statutory jurisdiction,
authority, purposes, or limitations, not in accord with the
procedures or procedural limitations oI this article or as
otherwise required by law, an abuse or clearly
unwarranted exercise oI discretion, based upon Iindings
oI Iact that are clearly erroneous on the whole record,
unsupported by substantial evidence when the record is
considered as a whole, or otherwise contrary to law . . .
C.R.S. 24-4-106(7). Upon such a Iinding, the court must 'set aside the agency
action and shall restrain enIorcement oI the order or rule under review . . . and
aIIord such other relieI as may be appropriate. Ia.
In undertaking this review, the court determines questions oI law and
interprets statutory and constitutional provisions. Ia. Although the court does deIer
to the agency`s interpretation oI the statutes and constitutional provisions relevant
to its activities, its interpretation is not binding. Ba. of County Commrs v. Colo.
Pub. Utils. Commn, 157 P.3d 1083, 1088 (Colo. 2007); Coloraao Citi:ens for
14
Ethics in Govt v. Comm. for Am. Dream, 187 P.3d 1207, 1214 (Colo. App. 2008).
This deIerence does not, however, extend to the Secretary`s interpretation or
application oI the First Amendment, which does not involve any agency technical
expertise. See Ba. of County Commrs, 157 P.3d at 1089 (Colo. 2007). Moreover,
the reviewing court is not bound by the agency`s action iI it has resulted Irom a
misconstruction or misapplication oI the law. See Colo. Citi:ens for Ethics in
Govt, 187 F.3d at 1214 (an agency`s decision should be reversed iI the agency
erroneously interpreted the law or exceeded its constitutional or statutory
authority). Any regulation that is inconsistent with or contrary to statute is void.
C.R.S. 24-4-103(8)(a).
Review under the Declaratory Judgment Act is ae novo when, as here,
parties challenge agency action on constitutional grounds. Collopy v. Wilalife
Com., Dept of Natural Resources, 625 P.2d 994, 1004-1005 (Colo. 1981); Native
Am. Rights Funa, Inc. v. City of Boulaer, 97 P.3d 283, 287-288 (Colo. App. 2004).
De novo review also applies to review oI a declaratory judgment action
challenging an agency regulation as beyond the scope oI the agency`s authority.
Cartwright v. State Ba. of Accountancy, 796 P.2d 51, 52-53 (Colo. App. 1990).
The Secretary concedes that the Court`s review oI his interpretation oI case
law is ae novo, the same standard that applies to review oI his interpretation oI the
Colorado Constitution and the FCPA. See Secretary`s Opening BrieI at 18; see also
15
Coloraao Ethics Watch v. Clear the Bench Coloraao, 2012 COA 42, 38 (no
deIerence to agency statutory construction where 'the underlying Iacts are
undisputed and the issue presented is one oI law); Russo v. Ba. Of Trustees, 17
A.3d 801, 809 (N.J. 2011) ('Like all matters oI law, we apply de novo review to an
agency`s interpretation oI a statute or case law).
Appellees agree that the issues were preserved Ior appeal.
B. The District Court Properly Determined that Did Not
Invalidate the Constitutional Threshold for Regulation as an Issue
Committee.
As the Secretary acknowledges, the validity oI Rule 4.27 hinges on the
proper interpretation oI the impact oI the Sampson decision. See Secretary`s
Opening BrieI at 11-12 (citing Secretary`s District Court Answer BrieI, CD ID
40347366, p. 128) (conceding that, iI Sampson is limited to the Iacts oI the case,
Rule 4.27 exceeds his authority). Thus, the primary issue beIore this Court is
whether the District Court properly determined that Sampson is an as-applied
decision.
1. The Opinion, by Its Own Terms, Is an As-Applied
Holding Limited to Its Unique Facts.
The Secretary`s Opening BrieI presents a learned discourse on the
sometimes-elusive distinction between Iacial and as-applied challenges, but does
not establish that the District Court`s decision was in error. While some as-applied
16
challenges indeed create rules oI law oI general applicability, Sampson is not such
a case. The plain language oI the Tenth Circuit decision makes clear that the court
was treating the PlaintiIIs` case strictly as an as-applied challenge and reIusing to
reach their Iacial challenges. 625 F.3d at 1254. More importantly, by its own
terms, the Sampson court`s analysis requires a case-by-case evaluation, balancing
the burdens oI compliance with the state interest in requiring disclosure in a ballot
issue campaign that cannot be distilled to any bright-line threshold.
The Sampson court viewed the public interest in disclosure in ballot issue
elections with skepticism, openly wondering about the public beneIit in what it
called 'aa hominem arguments in evaluating ballot issues. Ia. at 1257. The court,
however, had to acknowledge that the United States Supreme Court has spoken
Iavorably about ballot-issue disclosure requirements in three cases. Ia. at 1257-58
(citing Citi:ens Against Rent Control/Coalition For Fair Housing v. City of
Berkeley, 454 U.S. 290 (1981); First Natl Bank of Boston v. Belotti, 435 U.S. 765
(1978); and Buckley v. Jaleo, 424 U.S. 1 (1976)). In the course oI determining that
these statements were merely aicta, the Sampson court revealed that it viewed the
constitutional rule as a case-by-case balancing test:
OI course, this court takes Supreme Court dictum very
seriously. But the absence oI the precise and careIul
analysis necessary to resolve a particular issue Iully
presented to the Court makes it diIIicult Ior us to assess
the weight that should be granted the public interest in
17
disclosure when balancing it against the burden on the
First Amendment right oI association imposed by a
particular statute in a particular circumstance.
625 F.3d at 1258 (citation omitted). Sampson does not leave room Ior one-size-Iits-
all approaches to First Amendment challenges to ballot issue disclosure laws in the
Tenth Circuit. Rather, the public interest in disclosure must be balanced with the
burden imposed 'by a particular statute in a particular circumstance. Ia. (emphasis
added).
In Sampson, not only were the burdens imposed under the particular and
quite unusual Iacts oI that case more substantial than merely registering with the
state and reporting contributions, but the public interest in disclosure was merely
hypothetical. As the court observed, 'the appellate brieIs opposing PlaintiIIs`
position make no eIIort to explain the public interest in disclosure in this particular
case. Ia. at 1261. Moreover, the court expressed doubt that voters who enacted
Article XXVIII meant it to apply to committees like the No Annexation
Committee. Ia. at 1254. This, oI course, will not always be true, yet the Secretary`s
rule disregards Sampsons recognition that the public interest in disclosure can be
diIIerent in diIIerent circumstances and instead raises the threshold Ior all
committees in all ballot issue elections.
18
2. The Tenth Circuit Did Not Apply a Severability Analysis, as it
Would Have Done if its Holding Had Broader Application.
Another indication that Sampson is intended to be read narrowly is that the
Tenth Circuit did not conduct a severability analysis, as it would be expected to do
iI it believed the $200 threshold was unconstitutional in all applications. A
comparison oI Sampson with Citi:ens for Responsible Govt State PAC v.
Daviason, 236 F.3d 1174 (10th Cir. 2000), is instructive. In the latter case,
plaintiIIs had asserted a Iacial challenge to provisions oI the FCPA. Ia. at 1188.
The Tenth Circuit ruled that the challenged provisions were 'unconstitutional as
applied to the plaintiIIs, but then proceeded to consider whether the provisions
were susceptible to a narrow construction, or whether a broader application was
required. Ia. at 1193-95. AIter concluding that its ruling could not be narrowly
applied, the court applied the statute`s severability clause to determine what
remained oI the statute. Ia. at 1194-96.
In contrast, the Sampson court ruled only that the deIinition oI issue
committee was unconstitutional as applied to the Iacts beIore it and did not proceed
to the severability analysis. The court`s statement that the case beIore it was 'quite
unlike ones involving the expenditure oI tens oI millions oI dollars on ballot issues
presenting complex policy proposals,` ia. at 1261, indicates that the Tenth
Circuit would Iind the $200 reporting threshold, and the requirement that all
19
contributions and expenditures be reported, to be constitutional as applied to such a
committee. AIter all, as the District Court stated in its well-reasoned opinion, 'who
spends the Iirst dollars in an issue campaign could be extremely important to the
electorate. Oraer, CD ID 44128752, p. 160; see also Colo. Const. art. XXVIII,
1 (Iinding that public interest is served by 'Iull and timely disclosure oI campaign
contributions).
In any event, under Colorado law, Sampson would not support invalidation
oI the $200 threshold in all circumstances. See Leavitt v. Jane L., 518 U.S. 137,
139 (1996) (severability is a question oI state law). Article XXVIII has its own
severability clause that speciIically addresses the eIIect oI an as-applied challenge:
a Iinding that Article XXVIII or any provision thereoI is unconstitutional in a
particular application does not 'aIIect other provisions or applications oI the article
which can be given eIIect without the invalid provision or application. Colo.
Const. art. XXVIII, 14. Here, the application is narrower than 'all small issue
committees or even 'all annexation committees. Colorado campaign Iinance law
was declared unconstitutional as applied to a group in a municipal election that was
subjected to a campaign Iinance complaint by an abusive plaintiII raising an
unresolved question oI Colorado campaign Iinance law, that resulted in the group
spending more in attorneys` Iees than it raised and spent on the campaign itselI,
where no party articulated a governmental interest in mandating disclosure, and
20
where the campaign Iinance complaint was levied against the group beIore notice
oI the municipal election had even been published. 625 F.3d at 1261.
3. Changed Circumstances Support A Limited Application of
.
II Sampson were to be Iiled today under the same Iacts, it is hard to say that
the plaintiIIs would prevail, much less that they would win a precedent that could
support raising the constitutional threshold Ior issue committee registration across
the board.
First, the legislature clariIied that disclosure laws do not apply to annexation
elections until a notice oI election had been Iiled. C.R.S. 1-40-113(1)(b). Today,
a campaign Iinance complaint like the one Iiled by annexation proponents in
Sampson would be subject to swiIt dismissal. Yet the Tenth Circuit did not deem
the entire case moot; while the issue oI when committees supporting or opposing
annexation questions become issue committees under Colorado law had been
rendered moot, the question whether the Sampson plaintiIIs had experienced an
unconstitutional application oI Colorado campaign Iinance laws was not. See
Sampson, 625 F.3d at 1252 n.2.
In addition, as a result oI the passage oI House Bill 10-1370 in 2010, the
Secretary is now required to notiIy proponents oI a ballot issue 'at the time a
petition is approved . . . that the proponents must register an issue committee
21
pursuant to section 1-45-108 (3.3) iI two hundred or more petition sections are
printed or accepted in connection with circulation oI the petition. C.R.S. 1-40-
113(1)(b). This new law is clear and easy to Iollow and raises none oI the concerns
expressed in Sampson. Accordingly, it is not even clear that the particular set oI
burdens addressed by the Tenth Circuit in Sampson exist under the revised FCPA
requirements.
C. The District Court Correctly Found That Rule 4.27 Exceeded the
Secretary`s Authority.
The Secretary is using the Sampson case to manuIacture an ambiguity in the
campaign Iinance laws where none exists in order to craIt a rule that Iundamentally
changes state law. As discussed above, the Sampson case leaves open the question
oI whether the $200 threshold is Iacially unconstitutional, at least in the Tenth
Circuit. But see Inaepenaence Inst., 209 P.3d 1130 (rejecting Iacial challenge to
Colorado issue committee regulation). Nonetheless, it is the role oI courts to
resolve that question, not the Secretary. Nor does the Secretary have the power to
promulgate a rule in direct conIlict with unchallenged statutory requirements.
1. The Secretary`s Authority to Enact Regulations Is Limited.
'The constitutional doctrine oI separation oI powers mandates that agencies
act only within the scope oI their delegated authority. Hawes v. Colo. Div. of Ins.,
65 P.3d 1008, 1016 (Colo. 2003). The General Assembly can delegate the power to
22
promulgate rules and regulations to executive agencies to enIorce laws, but it
cannot delegate the power to make the law. See Coloraao Auto & Truck Wreckers
Assn v. Department of Revenue, 618 P.2d 646, 654 (Colo. 1980). The Secretary,
as a member oI the executive branch, has the authority to execute and enIorce the
state`s laws that are within the scope oI his oIIice. See McDonnell v. Juvenile
Court in ana for Secona Juaicial District, 864 P.2d 565, 567 (Colo. 1993).
'EnIorcement in this context is commonly understood to mean 'to compel
observance oI existing law. Delta Sales Yara v. Patten, 892 P.2d 297, 299 (Colo.
1995).
Under Article XXVIII, 9(1)(b) oI the Colorado Constitution, the Secretary
is delegated the authority to promulgate rules 'as may be necessary to administer
and enIorce any provision oI this article. See also C.R.S. 1-45-111.5 (directing
the Secretary to promulgate rules as necessary to enIorce or administer the FCPA).
In doing so, his oIIice 'must comply strictly with its enabling statutes, and it has no
authority to set aside or circumvent legislative mandates. Martine: v. Colo. Dept
of Human Servs., 97 P.3d 152, 157 (Colo. App. 2003); see also Frea Schmia
Appliance & Television Co. v. Denver, 811 P.2d 31, 33 (Colo. 1991) ('an
administrative agency cannot pass upon the constitutionality oI the legislation
under which it acts); People ex rel. Commissioner of Agriculture v. Webster, 570
P.2d 560, 562 (Colo. App. 1977) ('an administrative agency is generally without
23
jurisdiction to decide the constitutionality oI its own enabling legislation) (citing
K. Davis, Administrative Law Treatise at 20.02 and 20.04 (1958)).
The Secretary`s authority to interpret statutory and constitutional provisions
does not alter this analysis. To the extent the Secretary has any discretion in the
interpretation oI his constitutional and statutory mandates, such interpretation must
be consistent with the law, not in conIlict with it. Where a constitutional
amendment or statute contains plain, clear language, rules oI construction should
not be applied to construe its meaning. Tivolino Teller House, Inc. v. Fagan, 926 P.
2d 1208, 1211 (Colo. 1996). 'While the construction oI a statute by the agency
charged with its enIorcement is entitled to deIerence, courts are not bound by that
construction where the result reached by the agency is inconsistent with legislative
intent as maniIested in the statutory text. Boulaer County Ba. of Equali:ation v.
M.D.C. Constr. Co., 830 P.2d 975, 981 (1992) (emphasis supplied). Thus, rules or
regulations that change, modiIy or conIlict with an existing statute are without
Iorce and eIIect. Sanger v. Dennis, 148 P.3d 404, 413 (Colo. App. 2006); Aaams v.
Colo. Dept. of Soc. Services, 824 P.2d 83, 86 (Colo. App. 1991); C.R.S. 24-4-
103(8)(a).
24
2. Rule 4.27 Is Beyond the Secretary`s Authority to Promulgate
Rules to Administer and Enforce the Campaign Finance Laws.
The plain text oI both Art. XXVIII, 2(10)(a)(II) and C.R.S. 1-45-
108(1)(a)(I) is not ambiguous. The $200 threshold simply could not be more clear
$200 does not mean $500 or $5,000. Likewise, the FCPA requires all
contributions and expenditures to be reported, not just those received aIter meeting
the threshold. Yet, Rule 4.27 arbitrarily changes the threshold Irom $200 to $5,000
and states that 'contributions to and expenditures made prior to reaching the
$5,000 threshold are not required to be reported. Thus, Rule 4.27 not only
changes the constitutional deIinition oI 'issue committee, but also creates a
loophole whereby individuals or groups who eventually meet the $5,000 threshold
can keep secret the Iirst $4,999 in contributions or expenditures even aIter they
become subject to reporting requirements.
As a preliminary matter, allowing issue committees to avoid reporting all
contributions to and expenditures made prior to reaching the threshold is a clear
violation oI the plain language oI C.R.S. 1-45-108(1)(a)(I), which requires all
contributions and expenditures to be disclosed. Indeed, the Secretary did not even
attempt to justiIy the creation oI this loophole either in the proceedings below or in
his Opening BrieI on appeal. By reIusing to oIIer any justiIication whatsoever Ior
this provision the rule, the Secretary has implicitly conceded that it violates the
25
disclosure provisions oI the FCPA and is, thereIore, arbitrary, capricious and
contrary to law. Thus, at the very least, paragraph A oI Rule 4.27 is void. C.R.S.
24-4-103(8)(a).
As Ior the remainder oI Rule 4.27, the Secretary argues that the rule simply
Iills a 'gap created by the Sampson ruling. In support oI this argument, the
Secretary cites the case oI Eli:onao v. State, 570 P.2d 518 (Colo. 1977), Ior the
proposition that he was required to create his own issue committee threshold to
provide meaningIul guidance to the public. Eli:onao, however, dealt with a
situation where an agency completely Iailed to adopt rules and regulations on an
issue entirely within the agency`s delegated authority. Rule 4.27 goes Iar beyond
the Secretary`s delegated authority to enIorce and administer the campaign Iinance
laws by reinterpreting both constitutional and statutory provisions.
Indeed, there is a disconnect between the interpretation oI Sampson put
Iorward by the Secretary when he adopted Rule 4.27 and the interpretation put
Iorward in response to PlaintiIIs` legal challenge. When he adopted Rule 4.27, the
Secretary said, without qualiIication, that Sampson requires Colorado to raise the
threshold Ior issue committee registration to some number 'well above` the
$2,239.55 in contributions and $1,992.37 in expenditures oI the PlaintiIIs in the
Sampson case. AR Tab 11 (Statement oI Basis, Purpose and Statutory Authority).
26
The Secretary`s argument that Rule 4.27 is necessary simply to Iill a gap leIt
by Sampson relies on a more narrow reading oI the holding in that case, i.e., that
Sampson 'removed well-deIined registration and Iiling requirements Ior all issue
committees with negligible contributions and expenditures, but it pointedly
declined to determine when the beneIits to the public outweigh limits on the
Ireedom oI association. Opening BrieI at 41. But this narrowing does not save
Rule 4.27 because the Rule applies the higher threshold to all potential issue
committees, not just where the Iinancial burden oI compliance meets or exceeds
the value oI Iinancial contributions.
By its terms, the Rule would excuse committees oI all sizes Irom complying
with the $200 threshold, even large, sophisticated campaigns whose lawyers and
accountants could easily devise ways to abuse the $5000 threshold to make it even
harder to prove when they should have registered and begun to disclose. For
example, iI the Rule had applied to the SaIe Streets issue committee that likely
spent hundreds oI thousands oI dollars to place Proposition 102 on the 2010 ballot,
it would have been signiIicantly more diIIicult to prove when it should have begun
Iiling. See AR Tab 9; Jan. 26, 2011 Tr. at 30-35.
Moreover, while the Secretary describes on pp. 19-20 oI his Opening BrieI
the routine Iiling requirements applicable to all issue committees, the burdens oI
compliance, Iinancial and otherwise, identiIied by the Sampson court did not arise
27
Irom those requirements. The problems arose Irom the Section 9(2) private party
enIorcement system. It was the complaint Iiled against the No Annexation
committee that required them to hire counsel and spend more in attorney Iees than
they raised and spent on the campaign. 625 F.3d at 1260. The burden also included
the time, energy and money involved in reviewing the law themselves and
attending the hearing. Ia. At the time the Sampson plaintiIIs were opposing the
annexation, how Colorado campaign Iinance law applied to annexation elections
was unclear. In Iact, the Tenth Circuit dismissed the Sampson plaintiIIs` appeal oI
the district court`s determination that campaign Iinance disclosure requirements
never actually applied to them as moot because the legislature enacted an
amendment to the FCPA clariIying that campaign Iinance laws do not apply to
committees supporting or opposing an annexation question until the question is
certiIied to the ballot. Ia. at 1252 & n.2 (citing C.R.S. 1-45-708(b)(2) and 31-
12-112(6)).
Finally, the Rule not only loosens restrictions Ior all committees, but also
creates a permanent exemption Ior the Iirst $5,000 raised and spent on a campaign,
which could actually be the spending that provides the most valuable inIormation
to voters. Sampson did not address at all the requirement in C.R.S. 1-45-
108(1)(a)(I) that issue committees report all contributions and expenditures. The
Secretary`s attempt to create a loophole allowing some oI an issue committee`s
28
contributions and expenditures to remain secret is blatant overreaching. Once an
issue committee has met the threshold Ior regulation, the committee must disclose
all contributions and expenditures, not just those that occurred aIter the threshold
had been met. To require otherwise would not only encourage game playing, but
would also Irustrate one oI the overarching purposes oI Article XXVIII. Colo.
Const. art. XXVIII, 1 (the 'interests oI the public are best served by . . .
providing Ior full and timely disclosure oI campaign contributions) (emphasis
added). The Tenth Circuit`s ruling in Sampson does not provide the Secretary with
a legal basis to rewrite the constitutional and statutory provisions he is required to
enIorce.
As noted by the District Court, the Sanger case, 148 P.3d 404, is particularly
instructive here. In Sanger, the plaintiIIs challenged the Secretary oI State`s
promulgation oI a rule that would have required unions to obtain written
permission Irom their 'members beIore using dues or contributions to Iund
political campaigns. The term 'member was not deIined in Article XXVIII, so the
rule attempted to deIine 'member in the context oI that constitutional provision as
'a person who pays dues to a membership organization and who gives written
permission Ior his or her dues to be used Ior political purposes. Ia. at 408. The
trial court and the Court oI Appeals agreed with the plaintiIIs` argument that the
Secretary`s deIinition oI 'member was an unreasonable interpretation oI the
29
constitutional language and inconsistent with both the purposes oI the provision
and the intent oI those who adopted it: '|T|he Secretary`s deIinition` is much
more than an eIIort to deIine the term. It can be read to eIIectively add to, modiIy,
and to conIlict with the constitutional provision by imposing a new condition. Ia.
at 413.
In the present case, the Secretary`s overreaching is even more obvious.
Unlike the situation in Sanger, where the Secretary was attempting to Iill a gap
where a term was undeIined in the Constitution, the Secretary here is attempting to
Iill a gap that does not exist. The deIinition oI 'issue committee is clearly stated
in the Constitution and has not been invalidated by the Tenth Circuit or any other
court. II the citizens oI Colorado who enacted the limit believe the $200
threshold should be changed, a lawsuit can be brought and the judiciary can
determine whether it is Iacially unconstitutional. Or, the constitution and the law
can be changed through either the legislative or the initiative process. Indeed, the
legislature has already acted to reduce conIusion around issue committee
registration requirements by requiring the Secretary to notiIy initiative proponents
that they must register a committee when two hundred or more petition sections are
printed or accepted. C.R.S. 1-40-113(1)(b).
The Secretary argues that he had no choice but to enact Rule 4.27 because
otherwise 'each committee or group must bring a lawsuit to prove that the
30
Iinancial burden approaches or exceeds the value oI the Iinancial contributions to
its political eIIort. Opening BrieI at 41. Even iI this statement was true and the
Secretary provides no legal support Ior the conclusion it does not provide a basis
Ior the Secretary to exceed his constitutional and statutory authority to enIorce and
administer the existing campaign Iinance laws. As the District Court correctly
noted, the Secretary could address the concerns raised by the Tenth Circuit in
Sampson in ways that are within his authority and do not change constitutional and
statutory provisions, such as enacting rules to ease the burdens on small issue
committees. In this regard, the suggestion by amicus curiae that the District
Court`s discussion oI such rules relied on measures that would be unconstitutional
misses the point. The District Court expressly did not endorse any particular rules.
Rather, general reIerence to the Secretary`s authority to enact rules enIorcing and
administering the campaign Iinance laws instead oI rewriting them serves to
illustrate that the kind oI overreaching embodied in Rule 4.27 was not necessary to
protect the citizens oI Colorado Irom any uncertainty created by the Sampson case.
Until a court invalidates the constitutional deIinition oI 'issue committee
(leaving 'issue committee without a deIinition in art. XXVIII), or the General
Assembly changes the disclosure requirements, there is no ambiguity Ior the
Secretary to resolve. He has no authority to usurp the role oI either the people oI
31
the state oI Colorado who passed Article XXVIII or the General Assembly who
enacted the Fair Campaign Practices Act.
II. The District Court`s Dismissal of the Secretary`s Counterclaim Was
Proper.
A. Standard of Review
C.R.C.P. 12(b)(1) authorizes dismissal oI a counterclaim Ior lack oI subject
matter jurisdiction. Under Rule 12(b)(1), the plaintiII has the burden oI proving
jurisdiction. Trinity Broaa. of Denver, Inc. v. City of Westminster, 848 P.2d 916,
925 (Colo. 1993). Because the trial court is authorized to make Iactual Iindings
when presented with a motion to dismiss under this subsection oI the Rule, the
court 'need not treat the Iacts alleged by the non-moving party as true as it would
under C.R.C.P. 12(b)(5). City of Lakewooa v. Brace, 919 P.2d 231, 244 (Colo.
1996). An appellate court reviews jurisdictional issues ae novo where the Iacts are
not in dispute and the issue is a matter oI law. Colucci v. Town of Jail, 232 P.3d
218, 219 (Colo. App. 2009), cert. aeniea (June 21, 2010). Factual disputes are
reviewed under the clearly erroneous standard. Ia.
A counterclaim may also be dismissed under Rule 12(b)(5) Ior Iailure to
state a claim upon which relieI can be granted. 'The purpose oI a C.R.C.P.
12(b)(5) motion to dismiss is to test the Iormal suIIiciency oI the plaintiII`s
complaint. Wagner v. Grange Ins. Assn, 166 P.3d 304, 306-07 (Colo. App.
32
2007). Unlike Rule 12(b)(1), the court is constrained under Rule 12(b)(5) and must
take the allegations as true and draw all inIerences in the plaintiII`s Iavor. Meaina
v. State, 35 P.3d 443, 452 (Colo. 2001). Trial court rulings on Rule 12(b)(5)
motions are reviewed ae novo. Beaara v. Martin, 100 P.3d 584, 588 (Colo. App.
2004).
Finally, a counterclaim may be dismissed pursuant to C.R.C.P. 12(b)(6) Ior
Iailure to join an indispensable party. 'The test Ior determining indispensability
under C.R.C.P. 19 is whether the absent person`s interest in the subject matter oI
the litigation is such that no decree can be entered in the case which will do justice
between the parties actually beIore the court without injuriously aIIecting the right
oI such absent person. Wooaco v. Linaahl, 152 Colo. 49, 380 P.2d 234 (1963).
'Whether a party is indispensable and must be joined is a mixed question oI law
and Iact and must be determined on the Iacts oI each case. Frienas of the Black
Forest Regional Park, Inc. v. Boara of County Commrs, 80 P.3d 871, 881 (Colo.
App. 2003).
B. The Counterclaim Was Not Properly Asserted Against CCC and Ethics
Watch.
The Counterclaim asserted by DeIendant Gessler was unprecedented.
Although the District Court did not state the speciIic basis Ior the dismissal oI the
counterclaim, other than to suggest that its ruling on the PlaintiIIs/Appellees`
33
claims removed the need to decide it, dismissal oI the counterclaim was proper
pursuant to C.R.C.P. 12(b)(1), (5), and (6) because the Court lacked jurisdiction to
hear the claim, it Iailed to state a claim upon which relieI can be granted, and the
Secretary Iailed to join an indispensable party.
The Secretary, charged with the duty oI enIorcing campaign Iinance laws
and the Colorado Constitution, Iiled his counterclaim against PlaintiIIs Ior a
declaratory judgment that the issue committee provisions oI Article XXVIII oI the
Colorado Constitution are 'unenIorceable under Sampson. Because the Sampson
case involved a First Amendment challenge to Colorado`s campaign Iinance laws,
ruling that a provision oI the Colorado Constitution has been rendered
'unenIorceable is no more or less than a declaration that it is Iacially
unconstitutional. See In re Interrogatories Submittea By Governor Bill Ritter, Jr.,
227 P.3d 892, 893-894 (Colo. 2010) (holding certain provisions oI Colorado`s
campaign Iinance law 'unenIorceable under Citi:ens Unitea v. FEC, 130 S. Ct.
876 (2010)).
OI course, iI the Secretary`s counterclaim against CCC and Ethics Watch is
proper, he also could have Iiled it as a plaintiII, singling out CCC and Ethics
Watch as deIendants in an eIIort to obtain a declaratory ruling that the law he is
charged with enIorcing is unconstitutional. While the Secretary would be a proper
defendant in a suit brought by private parties to achieve such a result, the
34
Secretary cannot use his oIIicial position and State resources to ask the Court to
declare unconstitutional part oI the Colorado Constitution he swore to uphold. The
Secretary thus lacks standing to assert the counterclaim.
But even iI the Secretary has the authority to challenge its own constitutional
mandate, there is no legal theory under which CCC or Ethics Watch conceivably
could be considered proper deIendants to such a challenge. In Colorado, the proper
deIendant in a First Amendment challenge to a state constitutional provision is the
agency charged with administering the challenged provision, unless the agency has
not been Iormed, in which case the proper deIendant is the Governor.
Developmental Pathways v. Ritter, 178 P.3d 524, 529-30 & n.5 (Colo. 2008). Here
there is no question that it is the Secretary himselI who would be the proper
deIendant in a constitutional challenge to Colorado campaign Iinance law; indeed,
in Sampson, the deIendant was the Secretary in his oIIicial capacity. See Sampson,
625 F.3d at 1253; see also Colo. Const. art. XXVIII, 9(1)(b).
Neither CCC nor Ethics Watch is 'the embodiment oI the state as the
Governor or the Secretary would be in a proper First Amendment challenge to the
Colorado Constitution. See Developmental Pathways, 178 P.3d at 530; Game &
Fish Commn v. Feast, 402 P.2d 169, 172 (Colo. 1965) (when 'suit is brought
against an agency or department oI the state government, it is in eIIect against the
state itselI). Thus, because neither CCC nor Ethics Watch has the authority to act
35
on behalI oI the State oI Colorado, they cannot provide any relieI to the Secretary.
In other words, there is no remedy Ior the Secretary`s Counterclaim and, thus, the
claim lacks redressability and any order, judgment or ruling on the merits oI the
Counterclaim would amount to an impermissible advisory opinion. See Farmers
Insurance Exchange v. District Court, 862 P.2d 944 (Colo.1993) ('It is not the
Iunction oI the courts, even by way oI declaration, to adjudicate ... in the absence
oI a showing that a judgment, iI entered, would aIIord . present relieI.).
Only the State perhaps through the Governor would be able to aIIord
relieI under the Secretary`s Counterclaim. The Secretary, however, did not seek to
join the Governor or any other party that could aIIord relieI on the Counterclaim
to this action under C.R.C.P. 19 or 57(j). Accordingly, because the claim could
not be redressed, the Court lacked subject matter jurisdiction.
In support oI his unprecedented attempt to obtain relieI Ior an alleged
constitutional violation Irom non-governmental parties, the Secretary raises a
nonsensical argument based on the rule oI civil procedure governing intervention
as a deIendant in an existing lawsuit. That the Secretary can raise legal arguments
in deIense oI his rule is not disputed. But there is nothing in C.R.C.P. 24, or any
other rule or statute, that permits the Secretary to bring an aIIirmative claim
challenging the constitutionality oI a constitutional or statutory provision that he is
responsible Ior enIorcing. There is no authority allowing the Secretary to seek a
36
declaratory judgment Irom a private party regarding the constitutionality oI a
constitutional or statutory provision. The case cited by the Secretary is completely
inapposite, in that it says only that a state agency could seek a declaration oI a
public highway under C.R.C.P. 105 because it had an 'interest in and right to use
the route that was the same as 'those oI any member oI the general public. State
Dept. of Natural Res. v. Cyphers, 74 P.3d 447, 449 (Colo. App. 2003).
The Secretary attempts to justiIy his unprecedented counterclaim by arguing
that it is 'inseparable Irom the CCC`s claims. Opening BrieI at 52. Even iI this
were suIIicient to overcome the clear limitations on his authority to challenge the
constitutionality oI his enabling laws and the Iact that the PlaintiIIs cannot be
deIendants in such a challenge, it is simply not true. PlaintiIIs` complaint was a
simple judicial review oI a rulemaking under section 106 oI the APA and C.R.C.P.
57 alleging that Rule 4.27 violates the state constitution and the FCPA. It did not
raise a Iederal constitutional challenge. Resolution oI the provision`s
constitutionality under the First Amendment oI the U.S. Constitution was not
necessary to determine PlaintiIIs` claims, and is not an appropriate matter Ior either
the District Court or this Court to decide.
As discussed above, the Secretary, acting here in his oIIicial capacity, has no
authority to assert a constitutional challenge to state campaign Iinance laws
administered by his agency. Indeed, the Secretary`s authority to initiate litigation is
37
limited. The Secretary can Iile suit to enIorce the UniIorm Election Code, C.R.S.
1-1-107(2)(d), or to enIorce a decision oI an administrative law judge in a
campaign Iinance case. Colo. Const. art. XXVIII, 9(2). He does not have Iree-
ranging authority to sue private groups to obtain declarations purporting to declare
portions oI the state Constitution unenIorceable.
II any question exists regarding the Iacial validity oI Colorado`s system Ior
regulating issue committees, the proper course oI action would be to submit
interrogatories to the Colorado Supreme Court, as was done in Interrogatories
Propounaea by Governor Bill Ritter, Jr., 227 P.3d 892. SigniIicantly, the Secretary
lacks authority to submit interrogatories to the Colorado Supreme Court that
authority is limited to the Governor and the state legislature. Colo. Const. art. VI,
Section 3 (2011). The Secretary`s argument that his suit is substantially the same
as a submission by the Governor oI interrogatories to the Supreme Court is an
admission that the Secretary is attempting to circumvent this constitutional
limitation by asserting his Counterclaim.
CONCLUSION
The unusual and sympathetic Iacts oI Sampson, which made it appear to be
an appealing vehicle Ior a challenge to Colorado`s issue committee laws, actually
mean that the case has little meaning beyond those unusual Iacts. In its decision,
the Tenth Circuit expressly limited itselI to ruling on the as-applied challenge and,
38
iI anything, strongly suggested that the $200 threshold and other aspects oI
Colorado campaign Iinance laws would be constitutional as applied to other
groups. Sampson cannot be read as declaring the $200 threshold unenIorceable Ior
every issue committee in Colorado.
Even iI Sampson could be read as the Secretary and IJ wish it to be read, that
would not justiIy the use oI the rulemaking process to eIIectively amend the
Colorado Constitution and Fair Campaign Practices Act. II such amendments are
necessary or desirable, they must be made the voters or the state legislature.
The Secretary is required to uphold the Colorado Constitution and state
statutes. Through his counterclaim he improperly sought to have the court declare
void a provision oI law he is charged to administer. In eIIect, aIter his oIIice
successIully deIended Colorado`s campaign Iinance laws Irom a Iacial challenge in
Sampson, the Secretary is now asking the Court to hand the state a larger deIeat
than the one it suIIered in that case. The Secretary has not presented any legal
justiIication Ior the enactment oI a rule that directly conIlicts with the plain
language oI Colorado constitutional and statutory provisions. For all oI the
Ioregoing reasons, the judgment oI the District Court should be aIIirmed in Iull.
Dated this 14
th
day oI May, 2012.
39
RespectIully submitted,
signea original on file at Hill & Robbins,
P.C.
/s/ Jennifer H. Hunt
JenniIer H. Hunt
Nathan P. Flynn
signea original on file at Coloraao Ethics
Watch
/s/ Luis Toro
Luis Toro
Margaret Perl
Attorneys Ior the PlaintiIIs/Appellees
40
CERTIFICATE OF SERVICE
The undersigned hereby certiIies that on the 14
th
day oI May, 2012, service
oI the Ioregoing ANSWER BRIEF was made via LexisNexis File & Serve,
addressed as Iollows:
Maurice G. Knaizer
State Services Department
OIIice oI the Attorney General
1525 Sherman Street, 7th Floor
Denver, CO 80203
maurie.knaizerstate.co.us
Katelyn K. McBride
Institute Ior Justice Minnesota Chapter
527 Marquette Avenue #1600
Minneapolis, MN 55402
kmcbrideij.org
William H. Mellor
Institute Ior Justice
901 North Glebe Road #900
Arlington, VA 22203
wmellorij.org
signea original on file at Hill & Robbins, P.C.
/s/ Holly Rogers