Petitioners Brief — Arizona Free Enterprise Club's Freedom Club PAC v. Bennett

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Nos. 10-238 and 10-239 yeast & eS: zoil

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In The

Supreme Court of the Anited States

JOHN MCCOMISTEL NANCY McCUAIN

and PONY BOULR,

KEN BENNE PTD, in hos official capacity as

Secretary of State of the State of Anvona, and GARY

SCARAMAZZO. ROYANN J PARKER JRE REREY 1

PAIRMAN, LOUIS HOPPMAN and LORT DANTELS.

mn ther offrenal capacities as members of thre

ARIZONA CTPIZENS CLEAN ELECTIONS COMMISSION

On Writ Of Certiorari To The

United States Court Of Appeals

for The Ninth Circuit

——— —

BRIEF FOR PRE PLEPIONERS

CUNT Bottok

NICHOLAS CO DRANLAS*

GOLDWATER INSTITUTE

ScCHUARP NOK DON CENTER

BOR COONS TEPUTIONAL Bobi AEEON

YOO Fast Coronade Road

Vhoenm, AZ SSOO4

telephone (O02) 462 S000

hacsumile: (G02) Dot. TO)

ndraniasepoldwaterinstitute ong

Ras . pa }? oPrcane

C og ri nel or eddedarricks

Ti ’ . ,

Counsel of Record

QUESTIONS PRESENTED FOR REVLEW

At issue in this case as the matching funds

provision of Arizona’s Citizens Clean Elections Act

ARS. $ 16-952, which authorizes the payment of

campaign subsidies to “participating” candidates for

State elective office when competing “traditional”

candidates or opposing independent expenditure

committees raise or spend campaign monev above a

“spending Limit” The questions presented for review

are:

lL Whether Critrzens United o Federal Flection

Comm n, 130 S.Ct. S76 (2010), and Davis :

Federal Election Comm'n, 554 US 72:

(2008), require the Court to strike down Ari-

gona’s matching: funds svstem under the

First and Fourteenth Amendments because

iw penalizes and deters free speech by fore:mne

privately-financed candidates and their sup-

porters to finance the dissemination of hos

tile political speech whenever thev raise or

spend private money. or when independent

expenditures are made. above a “spending

larmat ”

Whether Citizens United and Davis require

the Court to stmke down Anvonas matching

tunds system under the First and Fourteenth

Amendments because it regulates campaign

financing in order to equahve “influence” and

financial resources ATMOS competing: eandi

dates and interest groups, rather than to ad-

vance directly a compelling state interest in

the least restrictive manner

PARTY LISTING

Ahst of all parties to the proceeding in the court

whose judgment is the subject of the petition is as

follows.

Plaintffs-Appellees and Petitioners: John MeComish,;

Nanev Melain, and Tony Boute

Plhontitt-Intervenors-Appellees and Respondents in

Support: Dean Martin, Robert Burns; Rick Murphy,

Arizona Free Enterprise Clubs Freedom Club PAC,

and Anzona Taxpayers Action Committee, as agent of

Taxpavers Action Committee

Detendants-Appellants and Respondents in Opposi

tion: Ken Bennett, in his official capacity as Secretary

of State of the State of Anzona, Gary Scaramazzo, in

his offieral capacity as a member (Commissioner) of

the Amvzona Citizens Clean Elections Commussion

(hereinafter “CCEC™), Rovann J) Parker, in) her

oMeimal capacity as a member (Commissioner) of the

CCEC, Jeffrey L. Fairman, in his official capacity as a

member (Commissioner) of the CCEC; Lows Hot?

man, in his offieral capacity as a member (Commis:

sioner! of the CCEC; and Lon S > Damels, in her

official capacity as a member (Commissioner! of the

CCEC

Detendant-Intervenor-Appellant: and Respondent in

Opposition: Clean Elections Institute, Ine.

The term “Respondents” used hereinatter refers

solely to Respondents in Opposition

RULE 29.6 STATEMENT

Pursuant to Rule 29.6 of the Rules of the Court,

this merits brief has not been filed by or on behalf of

a nongovernmental corporation. The Goldwater

Institute, which is a nongovernmental corporation

that as neither publicly traded nor owned in any

percentage by a publicly traded company, furnishes

legal representation but is not a party to this proceed-

Ing

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW ......... i

I, le eesedtinkinusiendasby il

RULE 29.6 STATEMENT. ..............scccccccsscsscccsccceees ill

IID vc nscisisccsscceccsscccsecccessecssessecsvocnes l

5 EI RENEE SEER wet oA SN et ai tee PE 1

CONSTITUTIONAL PROVISIONS, STATUTES

AND REGULATIONS INVOLVED.................... l

I a ccecentons 24

STATEMENT OF THE CASE............................6 24

I. PRIOR PROCEEDINGS ...................0.......... 24

ll. THE MECHANICS OF MATCHING

Se ccchlascisnidicemnmbicuiniiiditsecmainchetsdinpmiopubongaphioss 27

Ill. THE SPEECH BURDEN OF MATCHING

PU lic tiictncesnsceksakeliacseibadinusieaniccniaveuaiiass 30

IV. THE PURPOSE OF MATCHING FUNDS... 37

V. THE DISCONNECT BETWEEN MATCH-

ING FUNDS AND ANTICORRUPTION

I vices sscnteienicniadsveminssstessoncumeuniostes 39

SUMMARY OF ARGUMENT .....00.00... eee 41

STANDARD OF REVIEW... ceeeeeees 45

IE srecnahieiins a riciciistiiuinisitiivanisilacesnciiiaseicnnicnniiaiit 46

1. STRICT SCRUTINY APPLIES TO ARI-

ZONAS MATCHING FUNDS SYSTEM

BECAUSE IT DETERS AND PENALIZES

THE EXERCISE OF FIRST AMEND-

ED CRIED seeniinarncisssrsaedespenerssscnesnisenssde 46

II.

TABLE OF CONTENTS - Continued

Page

A. Strict scrutiny applies to Arizona's

matching funds provision under the

doctrine of stare decisis because, like

the Millionaire’s Amendment, it im-

poses a special and potentially signifi-

cant burden on the exercise of core free

speech rights

TOP Pee eee eee eee eee ee eee eee eee eee eee eee

B. Strict scrutiny apples to Arizona's

matching funds system because it

links the exercise of First Amendment

rights to the dissemination of hostile

speech, thereby deterring and punish-

ing rightful conduct ................ccceeeeeeeee

C. Strict scrutiny applies because Arizona’s

matching funds system imposes a content-

based speech regulation that discrimi-

nates against disfavored speakers........

ARIZONAS MATCHING FUNDS SYS-

TEM FAILS STRICT SCRUTINY BE-

CAUSE IT CANNOT EVEN WITHSTAND

INTERMEDIATE SCRUTINY

A. Arizona’s matching funds system im-

permissibly burdens the exercise of

First Amendment rights chiefly to

equalize electoral opportunities, re-

sources and influence

B. Arizona’s matching funds system im-

poses a disproportionate burden on

speech

OR P eo eee ee eee eee ee eee ee eee eee eee eee eee ee eee ee

TABLE OF CONTENTS —- Continued

Page

l. Matching funds do not turther anti-

corruption purposes in) Anzenas

already highly regulated campaign

I IID oo srisicsnassintonsnctionnenncinins GS

’. Through rampant gaming, Arnzona's

matching funds previsions enable

large, undisclosed campaign contr

RAE RIE» EA NED i a

3. Encouraging participation in Arizona's

version of public financing does not

shield against actual or apparent quid

pro gue corrapiien stemmung from

large campaign contributions 0.0.00 75

lil. ARIZONAS MATCHING FUNDS SYS-

TEM CANNOT WITHSTAND STRICT

SCRUTINY BECAUSE IT DOES NOP

DIRECTLY SERVE ANTICORRUPTION

PURPOSES IN THE LEAST RESTRIC-

TIVE MANNER. So

A. Arivena’s matching funds system does

not directiv prevent actual or apparent

Quid Pro QUO COTYUPLUION,..... eee ST

B. Arizvena’s matching funds system is not

the least restrictive means of remedy-

ing any asserted problem of actual or

apparent quid pro gue corruption ..... 83

bi i RG, tS eR eon mann ok at $7

TABLE OF AUTHORITIES

Page

CASES

Arreona vo Rumsev, 467 |

Austin wv. Michigan State Chamber of Com

merce, 494 ts Gz (1090) .............. | ol

S. LOS (19s) a, 1!

Babbitt - United Farm Workers Natl Union.

449 US. DSY C1979) 83

Cf,

Bd. of County Comm'rs vo Umbehr, 318 U

kG) Eee N8

, ‘ - 7 °

Board of Airport Camomirs oc. Jews for desis,

Inc., 482 US. 569 (1987)... ee AS

Buckley v. Valeo, 424 US. 1 976)... eee PMISSTIN

. , ,. ** i . .

Federal Election Cormonn,

6 (20101 bileateceedvett ree scanceoncMOeneEIne

Citizens Unite

.» ~ ~» ,.

Liv S. Cts

Coax v. Loutsiana, 579 U.S. 558 (1965)...................... 62

Davis v. Federal Election Comin, 354 US

Re RT visiecavsciesivbnices passin

‘

Dev v. Holahan, 384 F.8d 1856 (Sth Cir

NED oa oldie oset cas chs acaidnecs cacen 27, 48, 49, 61

ar iy" gore Co. v. Image Tech. Servs., 504

US Lc 1992) augers Garie cesssukecsenacececeeel 45

a7 6” &

Federal Election Comm'n vo Wisconsin Right to

Life, 551 U.S. 449 (2007).................44, 80, 81, 82, 89

First Nat? Bank of Boston v. Belloti:, 435 U.S

| Rene 7 es BA

Florida Star v. BJF. AML US. 324 (1989). GO, 84

G.E. v. Joiner, S22 U.S. 196 (1G87)............ccseccescccccves OF

Nuit

TABLE OF AUTHORITIES — Continued

Page

Green Party of Conn. vo. Garfield, 616 F.3d 218

tind Cir, YOO).

Groswean ve American Press Co., 297 US 238

(I9Se).

Li NSiate Ra of Kile ‘ f20ONS a Socialist Workers

Party, 440 US 178 (1979).

Marbury v. Madison, 5 US. 187 (1803).

Melntvre oo Ohwo Electrons Comm in, 514 US

R384 (19S) os

Mianu Herald Pudiishing vo Tornillo, AIS US

241 (1974)... ) 93, O8, 59,61

Pacific Gas & Elec. Co. v2 Public Utritties

Comom'n. 478 US. 1 19se) | pHISSTIN

Randall 2° Norred/. S48 U Ss 230)

> eT eee ye Oe

Reno vr ACLU, d21 US. 844 (199s)

Riulev vo. Natl Fed

Carolina, 487 US. TSli 1988).

Rutan vo Repudbarcan Periv of lilinois, AMT US

A nha a acre PEAT ewe nM gee ME wg 3

Seott vo. Roberts, 612 Fo Sd 1279 cl tth Cir, PATA. dd,

Shah ‘a l’ rite a Ss! te tics, S7S F.2 d eh 0 Oth & ir

cer’. dented, 498 LS. 869 (19S)

Turner Broadcasting Sys. inc v. Federai

Communications Comen'n, S12 US. 622

set as ar ene a ea 89,

TABLE OF AUTHORITIES — Continued

Page

United States vo OBrien, 391 US. 867 (1968) GL

United States &. Plavbov Entertainment Group

Pro AVM UES. SOS LAO) S084

United States vt. United Foods. Inc, 533 US

405 (DOO)? | 52

Vinson o Thomas. VSS FS8d 1145 (Orth Cir

2002) .... ; 87

Ward 7 Rocl . Agains? Racism. 40] U Ss sl

(T989)........ . ) Os

West Virgune Ba. of Fdue. vo Barnette, 319

US 6241943) o1

Wooley & Meynard, 430 US. 705 1977) 52

CONSTITUTIONAL PROVISIONS, STATUTES, AND RULES

ae I MII Bh icc cnsrcces cscncospona.coan’ passim

US Const. amend AIV passim

2U.8S.C N Vala-load pMENSTIN

28 U.S.C. § 1254.1) | l

42 USC. § 1983 i

ARS. ¥ 16-905 3969

RS $$ 16-915 )

ARS. § 16-940... 3 37.61. 65

ARS. $$ 16-940 through 961 foe vari aati

TABLE OF AUTHORITIES

» >

am Om

fi Sa

4S. SS

St.

ARS §

ARS.

ARS §

ARS 8

ARS. 8S

AKS. S

CCEC Administrative Rules RY-VO- 109

CCEC Administrative Rules RY-2O-113

Conn. Gen Stat

D Anz LR Cw

Fla Stat

Lo-41

lO M42

LOS

LG 945

16-946

16-948

LG 950

le 9]

lo-9ov

Lo od

Lo-YOS

16-959

1O-901

S$ 1068 Boh LOO)

714 (0009)

Continued

"SS. 60,

TABLE OF AUTHORITIES - Continued

Pane

Order AUTHORITIES

2010 Candidate Listing with FPanding Amounts,

http. www azecleanelections gov LOO LOTO does

Candidate Listing sflb ashx SO

Arizona Office of the Secretary of State, 2009

10 Contribution Limits, http) www avsos

gov election 2010 Info Campaign Contribution,

Limits 2010 htm

3a oo

Michael Miller, Garuing Arscona: Public Money

and Shifting Candidaie Sirategies, PS: Polit-

ical Scrence & Politics (2008), 41:527-532 86,55

Jason Bradley Nav and Jack MeDamel Sawver,

The Constitutionadity of “Rescue Fund Trig:

Reform Act, 2 First Amend Lo Rew 267

- . . ge ‘ . , . .

. . * , . . ‘

gers in North Carolinas Judicial Camparan

(Spring 2OO4) yy

Press Release, CCEC Gives SDPO Millron to

Arizona’s General Fund, http wwwiarclean

elections gov LOO 20 TO does Commission Gives

to General Fund 2010 stlb ashx 85

Tear BrorBook, A UN rORM System oF CLPATION

46 Sth ed YOOkR: ‘

OPINIONS BELOW

The merits decision of the court of appeals is

reported at 605 FSd 720 and an amendment to foot

note Loft the decision is reported at OLL Fad S10. See

also 10-239 MeComish Cert) Pet) Appendix (°10-239

PA™) at 2-45. The deersion of the district court is not

oMmMeally reported, but ais avanlable at 2010 WI

LLY2LQ18 and LOW US) Dist. LENIS 4982 See also

LO-2890 PA4T-SO

JURISDICTION

Plaunafls Appellees’ Petition for Wri of Certioran

was filed within 90 days of the court of appeals’

yudgment. 1-238 PAL Mav 21, 2010. The Petition

Was granted on November 29. 2010 and consohdated

with the parallel proceeding under case number 10-

238 filed by PhuntitlIntervenors Appellees. This

merits bref will be fled within 45 davs of November

LY, ZOOL. The Court's purisdiction is invoked under 28

U S.C. § 1254 (1)

CONSTITUTIONAL PROVISIONS,

STATUTES AND REGULATIONS INVOLVED

This case involves the Furst and Fourteenth

Amendments to the United States Constitution, 42

USC. § 183. as well as ARS. $$ 16-940 through

961 Kull statements of each of those constitutional

and statuterv provisions are reproduced at 10239

PAIG4 St) The provisions of ARS § 16-905 relating

to contributions, together with a restatement of the

matching funds provisions of ARS. § 16-952 and a

full statement of the matching tunds unplementation

provisions of CCEC Administrative Rules R220 109

and R2-20-113, are provided below

ARS § 16-905 provides in relevant part

Contnbution limitations, civil penalty, complaint

A Foran election other than for a statewide office,

a contmbutor shall net give and an exploratory com,

muttes, a candidate or a candidate's campaign com:

niuttee shall net accept contributions of more than

lL For an election tor a legislative office, four

hundred eaghtv-enght doliars trom an individual

2 For an election ether than for a lemslative

office, three hundred ninety dollars from an mdivad

ual

3. For an election for a lemslative office, tour

hundred eighty-eight dollars from a single political

committee, excluding: a political party, not certified

under subsection G of this secon to make contribu-

trons at the higher hmuits preseribed by paragraph 5

of this subsection and subsecuion B. paragraph 3 ot

this section

4. Fer an election other than for a lesnslative

office, three hundred ninety dollars trom a single

pohtical committee. excluding a political party, not

certified under subsection G of this section to make

contnbutions at the higher limits) preseribed by

subsection B, paragraph 3 of this seetion

S ‘Two thousand dollars trem a single politreal

committee, excluding a political party, certified pur

suant to subsection G of this section

B. For an election for a statewide office. a contmb

utor shall not give and an exploratory committee, a

candidate or a candidate’s committee shall not accept

contributions of more than

1 One thousand ten dollars trom an individual!

2. One theusand ten dollars trom a. single

political committee, excluding a political party, not

certified under subsection G ot this section to make

contmbutions at the higher lhoats preserbed by

subsection A, paragraph 5 of this section and para

graph 3 of this subsection

3. Five thousand ten dollars trem a single

political committee excluding political parties cert

fied pursuant to subsection G of this section,

‘

(

all political committees, excluding pohtieal parties,

A candidate shall not accept contributions from

combined totaling more than:

lL For an election for a legislative office, sixteen

thousand one hundred fittv dollars

2. For an office other than a legislative office or

a statewide office, ten thousand twenty dollars

3S For a statewide office, one hundred thousand

one bundred ten dollars

DD A nominee of a political party shall not accept

contributions from all political parties or political

vergamizatvions combined totaling more than ten thou

sand twenty dollars for an election for an office other

than a statewide office, and one hundred thousand

one hundred ten dollars for an election for a

statewide ofice

EF An individual shall not) make contributions

totaling more than five thousand six hundred ten

dollars in a calendar vear to state and local candi-

dates and polittcal commuttees contributing to state

or local candidates. Contributions to political parties

and contributions to mdependent expenditure com

mittees are exempt from the limitations of this sub-

section

Fo A candidate's campaign committee or an ind:vid-

ual’s exploratory committee shall not make a loan

and shall not teansfer or contribute money to any

other campaign or exploratery committee that ais

designated pursuant to this chapter or 2 Unrated

States Code section 431 except as follows

1 An exploratery committee may transfer

momes to a subsequent candidate’s campaign com-

mittee of the individual designating the exploratory

committee, sulyect to the limits of subsectien B of this

section

ae a

2 A candidates campaign committee may

transter or contribute momes to another campaign

committee designated by the same candidate as

tollows:

(ad Subject to the contribution limits of this

section, transter or contribute monies from one com-

mittee to another af both committees have been

designated for an election in the same vear.

(ib) Without appheation of the contribution

limits of this section, transfer or contribute momes

from one committee to another designated for an

election in a subsequent vear.

G. Only political committees that received momes

from five hundred or more individuals in amounts

of ten dollars or more in the one year period immed-

ately before appheation to the secretary of state for

qualification as a political committee pursuant to this

section may make contributions to candidates under

subsection A, paragraph 5 of this section and sub-

section B, paragraph 3 of this section . .

Ii The secretary of state biennially shall adjust (o

the nearest ten dollars the amounts in subsections A

through FE of this section by the percentage change in

the consumer price index and publish the new

amounts for distribution to election officials, candh-

dates and campaign committees.

A.R.S. § 16-952. A)-(C) provides:

Equal funding of candidates

A. Whenever during a primary election period a

report is filed, or other information comes to the

attention of the commission, indicating that a non-

participating candidate who is not unopposed in that

primary has made expenditures during the election

cycle to date exceeding the original primary election

spending limit, including any previous adjustments,

the commission shall immediately pay from the fund

to the campaign account of any participating can-

didate in the same party primary as the nonpartici-

pating candidate an amount equal to any excess of

the reported amount over the primary election spend-

ing limit as previously adjusted, less six per cent for a

nonparticipating candidate’s fund-raising expenses

and less the amount of early contributions raised for

that participating candidate for that office as pre-

scribed by section 16-945. The primary election

spending limit for all such participating candidates

shall be adjusted by increasing it by the amount that

the commission is obhgated to pay to a participating

candidate.

B. Whenever during a general election period a

report has been filed, or other information comes to

the attention of the commission, indicating that the

amount a nonparticipating candidate who is not

unopposed has received in contributions during the

election cycle to date less the amount of expenditures

the nonparticipating candidate made through the end

of the primary election period exceeds the original

general election spending limit, including any previ-

ous adjustments, the commission shall immediately

pay from the fund to the campaign account of any

participating candidate qualified for the ballot and

seeking the same office as the nonparticipating

candidate an amount equal to any excess of the

reported difference over the general election spending

limit, as previously adjusted, less six per cent for a

nonparticipating candidate’s fund-raising expenses.

The general election spending limit for all such

participating candidates shall be adjusted by increas-

ing it by the amount that the commission is obligated

to pay to a participating candidate.

C. For the purposes of subsections A and B of this

section, the following expenditures reported pursuant

to this article shall be treated as follows:

1. Independent expenditures against a partici-

pating candidate shall be treated as expenditures of

each opposing candidate, for the purpose of subsec-

tion A of this section, or contributions to each oppos-

ing candidate, for the purpose of subsection B of this

section.

2. Independent expenditures in favor of one or

more nonparticipating opponents of a participating

candidate shall be treated as expenditures of those

nonparticipating candidates, for the purpose of sub-

section A of this section, or contributions to those

nonparticipating candidates, for the purpose of sub-

section B of this section.

3. Independent expenditures in favor of a partic-

ipating candidate shall be treated, for every opposing

participating candidate, as though the independent

expenditures were an expenditure of a nonparticipat-

ing opponent, for the purpose of subsection A of this

section, or a contribution to a nonparticipating oppo-

nent, for the purpose of subsection B of this section.

4. Expenditures made during the primary

election period by or on behalf of an independent

candidate or a nonparticipating candidate who is

unopposed in a party primary shall be deducted from

the total amount of monies raised for purposes of

determining the amount of equalizing funds, up to

the amount of primary funds received by the partici-

pating candidate. Equalizing funds pursuant to

subsection B of this section shall then be calculated

and paid at the start of the general election period.

5. Expenditures made before the general elec-

tion period that consist of a contract, promise or

agreement to make an expenditure during the gen-

eral election period resulting in an extension of credit

shall be treated as though made during the general

election period, and equalizing funds pursuant to

subsection B of this section shall be paid at the start

of the general election period.

6. Expenditures for or against a participating

candidate promoting or opposing more than one

candidate who is not running for the same office shall

be allocated by the commission among candidates for

different offices based on the relative size or length

]

and relative prominence of the reference to cand:-

dates for different offices.

R2-20-109. Reporting Requirements

A. Reporting of transactions; software provided or

approved by the Secretary of State. AH campaign

finance reports shall be filed in electronic format in

accordance with A-R-S. § 16-958S( FE) The Commission

shall coordinate with the Secretary of State to make

electronic-filing computer software available to can-

didates. Campaign finance reports shall be available

on the Secretary of State's web site. All candidates

shall file campaign finance reports that include all

receipts and disbursements for their current cam-

paign account using the campaign finance computer

software provided or approved by the Seeretary of

State as follows:

1 Expenditures for consulting. advising. or

other such services to a candidate shall include a

detailed description of what is included in the service.

including an allocation of services to a particular

election. The Commussion may treat such expend:-

tures as though made during the general election

period, and equalizing funds pursuant to A.RS. § 16-

952 shall be paid at the start of the general election

period.

2. Original and supplemental campaign finance

reports filed pursuant to A-R.S. $$ 16-941 and 16-958

shall include the same information regarding receipts

and disbursements as required by A RS. § 16-915.

3. A candidate may authorize an agent to pur-

chase goods or services on behalf of such candidate,

provided that:

a. The eandidate shall report an expenditure as

of the date that the agent promises, agrees, contracts

or otherwise incurs an obligation to pay tor the goods

Or Services:

b. The candidate shall have sufficient funds in

the candidate's campaign account to pay for the

amount of such expenditure and all other outstanding

obligations of the candidate's campaign committee:

and

ce. Within seven calendar days of the date upon

which the amount of the expenditure is Known, the

candidate shall pay such amount trom the candidate's

campaign account to the agent who purchases the

goods or services

d. A joint expenditure is made when two or

more candidates asree lo share the cost of geods or

services. Candidates may make a joint expenditure

on behalf of one or more other campaigns, but must

be authorized in advance by the other candidates

involved in the expenditure, and must be renmbursed

within seven days.

4. In the event that a candidate purehases

goods or services from a subcontractor or other ven

dor through an agent pursuant to subsection (A\3),

the candidate's campaign tinance report shall melude

the same detail as required in ARS. § 16-948 (C) tor

each such subcontractor or other vendor Such detail

is also required when petty cash funds are used for

such expenditures

5 For the purposes of the Act and Commission

rules, a candidate or campaign shall be deemed to

have made an expenditure as of the date upon which

the candidate or campaign promises, agrees, con-

tracts or otherwise incurs an obligation to pay tor

goods or services

B. Partropating candidate reporting requirements

In addition to the campaign finance reports tled

pursuant to ARS. $ 16-9138, partiapating candidates

shall file the following campaign finance reports and

dispose of excess momies as follows

1 Prer to tihng the appleation ter funding

pursuant to ARS. §$ 16-950, participating candidates

shall fle a campaign finance report with the names of

persons who have made quahtying contributions to

the candidate

2 End of quahtving period. At the end of the

quahfving period, a partianpating candidate shall tie

a recap campaign finance report consisting of a recap

of all early contmbutions received, including personal

monies and the expenditures of such momes

a. The recap campaign finance report for the

quahtyving period shall be filed with the Secretary of

State no later than five days after the last day of the

qualitving period and shall include all) campaign

activity through the last day of the quahtving period

bof the recap campaign finance report shows

any amount unspent by a participating candidate, the

candidate, within five davs after filing the recap

campaign finance report, shall send the Commiussier

a check trom the candidate's campaign account that

will remit all unspent early contributions to the fund,

pursuant toA RS. § 16-9458) Any unspent personal

momes shall be returned to the candidate or the

candidate's family member within five days

3. Primary election and general election recap

campaign tinance reports Each participating candi-

date shall file a campaign finance report consisting of

a recap of all expenditures made in connection wath

an election, all contmbutions received in the election

evele in which such election occurs, and all payments

made from such candidate's campaign tund to the

Clean Elections Fund. It the recap campaign finance

report shows any amount unspent bv a partieipating

candidate, the candidate, within ive days after alng

the recap campaign finance report, shall send the

Comnussion a check from the candidates campaign

account that will return all unspent monies to the

Fund

a. The recap campaign finance report ter the

primary election shall be filed within five days after

the primary election dav and shail reflect all activity

through the primary election dav

bo The recap campaign tinance report for the

general election shall be considered tiled upon the

filing of the post-general campaign finance report

fied in accordance with ARS § LOAla Bas)

C Amending Reports. If a candidate determines

that a previously tiled campaign finance report con

tains inaccurate information, then the candidate

shall amend the campaign finance repert te provide

aecurate information

1 Except when ao new election period has

started, a participating candidate who received Clean

Elections funding based upon an maccurate campaign

finance report shall remit to the Commission the

by the amended cam-

exeess funds as determined

paign finance report within five days after tiling the

amended campaign finance report.

.’

2 ot the participating candidate dees not have

suffigent funds in his er her account to return the

required monies, the balance owed shall be withheld

trom future equahzing funds due to the partiapating

candidate ino the election pemod during which the

excess funds were awarded

D. Independent expenditures

1 Any individual, group of individuals, corpora

tion, poliheal party or membership organization that

makes independent expenditures cumulatively ex-

ceeding the amount prescribed in ARS §$ 16-9411)

in-an election evele that expressly advocate the elec

tion or defeat of a specific candidate, as detined in R2-

20-10 11), shall thie campaign finance reports with

——

the Secretary of State in accordance with ARS & lo

MSS

‘>

Any individual, group et individuals, corpora

tron, political party or membership organieation that

makes independent expenditures for bterature eran

advertisement relating to anv one candidate or office

within LO davs betore the dav ef anv election to which

the expenditures relate shall send to the Commission,

(a) by overmight delivery; and cb) by facsimile or

e-mail, no later than one dav after it ts mailed, broad

east or published, as appheable, a COPY of the cam-

pauzn literature or advertisement together wath a

statement declaring the cost of producing: and dis-

tributing such campaign literature or advertisement

The copy of the literature or advertisement sent Co

the Commussion pursuant to this Section shall be a

reproduction that ais clearlv readable, viewable or

audible. as appheable

3. Anv individual, group of individuals, cor

poration, political party or membership organization

that fails to fle a campaign finance report pursu

ant to this subsection cD) shall be subject to a civil

penaltv as described in ARS. § le 942)B) as apph-

cable

EK. The following will be considered to be a “contm

bution durng the election evele to date” or “expend:

tures made through the end of the primary

election period” for purposes of reporting under ARS

S$ 16-940 BD) and 1e-94s. A)

1 A contribution to a candidate to retire debt

from a pmor election evele i deposited into the cur:

rent campaign account,

2 Any contribubons received and placed in a

future, current, or prior, campaign acceunt during the

current election evecle,

3. Surplus funds transferred into the current

Campanrn aecount,

1 Contmbutuions received or expenditures made

besnnming Jl davs after the date of the pnor general

election

KF Timing of reporting expenditures

g t §

1 Except as set ferth in subsection () 2) below,

a candidate shall repert a contract, promise or

agreement to make an expenditure resulting im an

extension of credit as an expenditure, in an amount

equal to the full future payment obligation, as of the

date the contract, promuse or agreement is made

* In the alternative to reporting in accerdanes

with subsection UPL) above, a candidate may report

a contract, promise or agreement to make an expend

ture resulting in an extension of credit as follows

a kor a month-to-month or other such periodic

contract or agreement that us terminable bw a cand.

date at will and without any termination penalty or

payment, the candidate may report an expenditure,

In aN amount equal to each future periodic payment

as of the date upon which the candidate's right to

terminate the contract or agreement and avoid such

future periodic payment clapses

b For a contract, promise oF agreement to

provide goods or services during the general election

period that is contingent upon a candidate advancing

to the general election period, the candidate may

report an expenditure, im an amount equal to the

general election period payment obligation, as of the

date upon which such contingeney is satistied

¢ For a contract, promise or agreement to pay

rent, utility charges or salames povable to individuals

emploved by a candidate's campaign committee as

staff, the candidate may report an expenditure, inan

amount equal to each periodic payment, as of the date

that is the sooner of (:) the date upen which payment

is made, or ai) the date upon which payment is due.

G. Transportation expenses

1 Except as otherwise provided in this subsee

tion (G), the costs of transportation relating to the

election of a statewide or legisiative office candidate

shall not be considered a direct campaign expense

and shall not be reported by the candidate as expend-

itures or as in-kind contributions

2 Ita candidate travels for campaign purposes

Ina privately owned automobiie, the candidate may

use campaign funds to rermburse the owner of the

automobile at a rate not to exceed the state mileage

reimbursement rate (which is 44.5¢ per mile in 2007),

in Which event the retmbursement shall be consid

ered a direct campatgn expense and shall be reported

as an expenditure. [If a candidate chooses to use

campaign funds to reimburse, the candidate shall

keep an itinerary of the trip, including name and type

of eventsis! attended, miles traveled and the rate at

which the reimbursement was made.

3. Use of curplines

a. Ifa candidate travels tor campaign purposes

Ina privately owned airplane, the candidate shall use

campaign funds to remburse the owner of the air

plane at a rate of $150 per hour of flving time. in

which event the reimbursement shall be considered a

direct campaign expense and shall be reported as an

expenditure If the owner of the airplane is unwilling

or unable to accept reimbursement, the candidate

shall remit to the fund an amount equal to $150 per

hour of flying time

bs If a candidate travels tor campaign purposes

in a state-owned airplane, the candidate shall use

campaign funds to renmburse the state for the portion

allocable to the campaign in accordance with subsec-

tion 38a, above The portion of the tmp attmbutable

to state business shall not be rermbursed. If payment

to the State is not possible, the payment shall be

remitted to the Clean Flections Fund

4. If a candidate rents a vehicle or purchases a

ticket or fare on a commercial carrer for campaign

purposes, the actual costs of such rental cincluding

fuel costs), ticket or fare shall be considered a direct

campaign expense and shall be reported as an ex.

penditure

R2-20-113. Calculation of Equalizing Funds

A. During the primary election period, the Commis-

ston shall pay any participating candidate in the

same party primary of a nonparticipating candidate,

the amount of the nonparticipating candidate's ex-

penditures in excess of the amount over the primary

election spending hnut, not to exceed three times the

original primary election spending hmit, as follows:

lL The nonparticipating candidates’ expendi.

tures, made before any coordinated or joint expend:

ture between the participating candidate and the

nonparticipating candidate, which are detined as:

a Any purchase, payment, distribution, loan,

advance, deposit or gift of money or anything of value

made by a person for the purpose of influencing an

election in this state;

b. A promise or agreement to make an expendi-

ture resulting in an extension of credit: and

ce. The value of any in-kind contribution re-

ceived.

2 If an independent expenditure is) made

against one or more participating candidates for a

single office, each participating candidate wall be

elinble to receive equalizing funds, if applicable, for

the amount of the independent expenditure. The

participating candidates who were the subject of the

expenditure wall be the only candidates eligible to

receive the equalizing funds, if applicable, for the cost

of that independent expenditure. If so required by

this subsection, the Commussion may tssue equalizing

funds based on an independent expenditure in an

amount greater than the amount of such independent

expenditure.

3. If an independent expenditure is made in

favor of one or more nonparticipating candidates, all

participating candidates in the party primary of the

candidate favored by the independent expenditure

will be eligible to receive equalizing funds, uf applic-

able, for the amount of the independent expenditure.

If so required by this subsection, the Commission

may issue equalizing funds based on an independent

expenditure in an amount greater than the amount of

such independent expenditure.

4. If an independent expenditure is made in

favor of a single participating candidate, all of the

other participating candidates in that party primary

will be eligible to receive equalizing funds, if apphre-

able, for the cost of that independent expenditure. If

so required by this subsection, the Commission may

issue equahzing funds based on an independent

expenditure in an amount greater than the amount of

such independent expenditure.

20)

B. During the general election period, a partici-

pating candidate who has not engaged in a joint or

coordinated expenditure with the opposing nonpartic-

ipating candidate during the general election period,

will receive equalizing funds when the opposing

nonparticipating candidate has received in contribu-

tions to date, less the amount of expenditures the

nonparticipating candida.e made through the end of

the primary election period, an amount that exceeds

the general election spending limit. The Commission

shall pay any participating candidate seeking the

same office an amount equal to any excess over the

general election spending limit, not to exceed three

times the original general election spending limit, as

follows:

lL. The nonparticipating candidate's contribu-

tions include:

a. Surplus funds transferred from previous

campaign accounts and deposited into the current

campaign account;

b. Individual contributions;

¢. $25 or less contributions;

d. In-kind contributions;

e. Political committee contributions:

f. Personal monies:

Candidate or family loans;

h. Other loans: and

i. Contributions to retire campaign debt, irre-

spective of whether placed in a prior, current or

future campaign account. Contributions to retire debt

from the immediately preceding election cycle and

received within 51 days following the general election

shall be disregarded for purposes of calculating

equalizing funds in the subsequent election cycle.

2. In accordance with A.R.S. § 16-952, the

nonparticipating candidate’s contributions shal] not

include offsets to contributions, including a refund of

a contribution to an individual contnbutor or to a

political committee contributor.

3. In accordance with A.R.S. § 16-952(C)\4),

when a participating candidate is opposed in the

general election by an independent candidate or

nonparticipating candidate who was not opposed in

the party primary, expenditures made during the

primary election period by the nonparticipating

candidate or independent candidate will not be in-

cluded in the calculation of equalizing funds.

4. If an independent expenditure is made

against one or more participating candidates for a

single office, each participating candidate will be

eligible to receive equalizing funds, if applicable, for

the amount of the independent expenditure. The

participating candidates who were the subject of the

expenditure will be the only candidates eligible to

receive the equalizing funds, if applicable, for the cost

of that independent expenditure. If so required by

this subsection, the Commission may issue equalizing

funds based on an independent expenditure in an

amount greater than the amount of such independent

expenditure.

5. If an independent expenditure is made in

favor of one or more nonparticipating candidates, all

participating candidates in the election(s) for the

same office(s) will be eligible to receive equalizing

funds, if applicable, for the amount of the independ-

ent expenditure. If so required by this subsection, the

Commission may issue equalizing funds based on an

independent expenditure in an amount greater than

the amount of such independent expenditure.

6. If an independent expenditure is made in

favor of a single participating candidate, all of the

other participating candidates in the election for that

office will be eligible to receive the equalizing funds,

if applicable, for the cost of that independent expendi-

ture. If so required by this subsection, the Commis-

sion may issue equalizing funds based on an

independent expenditure in an amount greater than

the amount of such independent expenditure.

C. Independent expenditures made against a non-

participating candidate during the primary or general

election periods will not be considered 1n the caicula-

tion of equalizing funds for a participating candidate.

D. In accordance with A.R.S. § 16-952(C)\(6), during

the primary and general election periods, expendi-

tures promoting or opposing candidates for more than

one office shall be allocated by the Commission

among candidates for different offices based on the

relative size or length and relative prominence of the

reference to candidates for ditferent offices. Equaliz-

ing funds shall be issued to each participating candi-

date. if appheable, ino an amount equal to the

proportion of the expenditure that is targeted at the

office sought by such participating candidate. If so

required by this rule, the Commission may tissue

equalizing funds based on an expenditure in an

amount greater than the amount of such expenditure,

E. The Commission shall cease to disburse equaliz-

ing funds for an election period after the Wednesday

following the primary or general election day.

F. The Cemmuission may decline to issue equalizing

funds on the basis of expenditures that the Commuis-

sion determines to be of de minimis value, and shall

decline to issue equalizing funds during the primary

or general election pemod after the partiopating

candidate and the nonparticipating candidate trigger-

ing the match made a joint campaign expenditure

during that primary or general! election period. on

account of expenditures by or contmbutions to the

non-participating candidate with whom the partict-

pating candidate made the joint expenditure during

the period.

INTRODUCTION

Public financing in Arizona's matching funds

system forces a voke around the neck of tradiuonaily

funded candidates The system conscripts their labor

and campaign resources to trigger subsidies for

participating candidates. When traditional cand

dates raise or spend campaign money above a “spend-

ing limit.” the financial reporting requirements of

Arizena’s system hterally force them to press a button

on their computer that will tmgger the payment of

subsidies to the very participating candidates thev

oppose. The State of Anzona thereby compels indi-

viduals to help disseminate private political speech,

which they abhor, as a consequence and condition of

speaking freely about politics. Such compulsion

strikes at the heart of the First and Fourteenth

Amendments.

STATEMENT OF THE CASE

lL. PRIOR PROCEEDINGS.

A. The district court apphed strict scrutiny and

ruled three times that Arizona's matching funds

provision, ARS. $ 16-952, violates the First) and

Fourteenth Amendments under Davis v. Federal Elec.

tion Comm'n, 554 US. 724 (2008), which struck dewn

2 U.S.C. §$ 44la-lia) leven referenced as the

“Milhonaire’s Amendment”). 10-239 PAG7-72. 101-1, }

124-29. In its first ruling. the district court observed

[T]he Supreme Court has held Un a passage

quoted approvingly in Davis) that, while one

does not “have the right to be free from

vigorous debate. one does have the might to

be free from government restrictions that

abrndge its own mghts in order to ‘enhance

the relative voice’ of us oppenents”

Though the Arizona [Clean Elections) Act's

mechanism for funding ditfers [from that of

the Millonmre’s Amendment], the effect

which forces a candidate to choose to “abide

by a limit en personal expenditures” or else

‘ndure a burden placed on that right, as sub

stantially the same

10-2389 PAL28-29 (citations omitted! The distriet

court's second ruling echoed and elucidated the same

point 10-239 PA1OG-O7 coitations omitted) And

based on this reasoning. the distmet court ultimately

granted summary judgment to Petitioners and per

manently emeomned enforcement of ARS. § 16-952

10-2389 PASG

B. The Ninth Cireunt’s motions pane! staved

enforcement of the district court's permanent injune

tion. 10-239 PAS4-85. Cireuit dudge Bea dissented,

emphasizing that Anzena’s matching tunds svstem

clearly violated the principles enterced in Doors and

Citizens United v. Federai Election Commin. 130

S.Ct. S76 (2010). 10-2389 PASS-89. As explained by

Cireuit dudge Carlos Bea

In Deors, uf Davis spent more than $350,000

of his own money in his compeien. ‘the con-

tribution hmitations placed on hew much

others could contribute to his opponents were

lifted, but not for contributions made bv

others to Davis. Quite naturally, this was

found to be a disincentive to Davis spending

money oon his own campaign, lest the

expenaiture serve to mve his epponents an

advantage not epen to him. Such a disincen

tive Was found to rmpose a “substantial bur

agen” on Davis’ campaign speech which had

to be justified under the “stmet scrutiny”

test... Simuilarly (to Dacrs)], here any evx-

penditures by Plaintiffs in the primary are

matched by funds from the State of Arizona

given to the Plaintiffs’ opponents Plarntrtts

know that if they buy a television advertise

ment, ata bargain rate now for dune broad-

casting, or hire a consultant whe might go to

the other side, Ghat expenditure will result in

“matching funds” going to the candidates

they are trying to beat in the July primaries

Stratemcally, it makes no more sense for

JaintufYs to spend monev now than for a

poker plaver to make a bet rf he Knows the

house ts going to match his bet for his eppe

Hent

10-239 PASS-S7T (enatens omitted) As turther ob

served by dudge Bea. contrary to the principles

apphed in Cificens Onited, “participating candidates

are ‘preferred’ by the State of Arizona.” just as the

Milhonaire’s Amendment preferred opponents of selt-

financed candidates 10-2389 PAS?

C Despite Cireuntt dudge Bea's dissent. the

Ninth Cireunt ultimately reversed the distrmet court's

permanent imunction en Arizona’s matching funds

trigger provision. 10-289 PASY The Ninth Cireurt

Pe Seed

~~?

equated the speech burden of Arizona's matching funds

system to that of a financial disclosure requirement,

and apphed intermediate scrutiny, Compare 10-239

PAS4-35 tort 10-289 PAL05-06, 128-29 Daces’ anal-

ogy between the Milhenaire’s Amendment and the

matching funds svstem struck down ino Dav:

Holakan, 384 F.3d 1356 (Sth Cir 1994), was relegated

by the Ninth Circuit to a footnote. where it was

dismissed. Compare Daris, 554 US. at 788. wrth 10

I8O PALS no

LD. On dune §, 2010, the Court entered an orde:

blocking the Ninth Cireuit’s deersion frem taking

effect 10-289 PASL. The order sitaved the mandate

rom the decision and hitted the wllate stay on the

district court's permanent imunction on ARS. § 16-

M52. It thereby ensured that matching funds w ould

not be distributed in Arizona during the pendency of

this case

Il. THE MECHANICS OF MATCHING FUNDS.

A. The CCEC ordinarily pays matching funds to

parhicipating candidates based on “tmgger reports,”

Which are filed online by traditional candidates and in-

dependent expenditure committees both periodically

and after reaching inflaton-adjusted fundraising

and spending thresholds. 10-289 PASL2-13; dAZT2-73;

ARS. $$ 16-9410B) 2), (DO, 95204), cB), O58 A), (BR),

DD), CE), 959, 9610G), CH), CCEC Admin. Rules, R2-20

OQ Ad CD). Violations of trigger reporting requirements

ean result in cml penalties, Class 1 nusdemeanor

charges, and removal from elected office. ARS. $$ 16

9417, 942) B) 10), 948

Bo When tradivenal and participating candi

dates compete during a primary election, matching

funds to participating candidates are triggered by

traditional candidate expenditures and independent

expenditures (Le., uncoordinated campaign spending

by groups not afihated with the candidate's cam-

pagn) in suppert of traditional candidates (or in

opposition te participating candidates) once the

sum of traditional candidate expenditures and 1n-

dependent expenditures exceeds the “primary election

spending limit” ARS §$ 16-952(4), (0), CCRC Ad

mun. Rules, R2-20-113. For example. if the prmarvy

election spending limat is $10,000, then no matching

funds wall be triggered until the sum of expenditures

by traditional candidates and by allied independent

expenditure committees exceeds SLO,000 However,

once the sum exceeds $10,000, then matching funds

are triggered to each participating candidate on a

dollar-for dollar basis less a statutory deduction of 6°

and an amount equal to the private “early contribu:

tions” participating candidates are allowed to collect

under ARS. $8 16-945, 846, 950

C. During the general election, matching funds

are similarly triggered by traditional candidate

contributions and independent expenditures once

the sum of traditional candidate contributions, inde

pendent expenditures and the unspent amount of

traditional candidate primary election contmbutions

exceeds the “general election spending limit” A RS

$ 16-952) 8B), «Ch CCEC Adnmun. Rules, R2-20-118. For

example, auf “general electien) spending bmit" ts

$10,000, then no matching tunds wall be tmggered

until the sum of contributions to traditional candi

dates Uncluding contributions unspent during the

primary election) and expenditures by independent

expenditure committees ino support of traditional

candidates (or in opposition to participating cand-

dates) exceeds $10,000) And once the sum exceeds

$10,000, then matching funds are, again, tniggered to

each participating candidate en a dollar-ter-dollar

basis less a statutory deduction of 6&

D = The statutory 6% deduction from the amount

of the triggering campaign financing is substantially

less than the typical out-of-pocket cost of tundrarsing

by traditional candidates. 10-239 PASLIL-14; JA295,

639-41; District Court Record’ (“Record”) 8382(7 12-25,

S-1-24. 91-24, 10:1-235. The 6% deduction in the

amount matched also does not incorporate anv meas:

ure of the opportunity cost of fundraising by tradt-

tional candidates. Jd By fanhng to adjust matching

funds to reflect actual fundraising costs incurred by

tradivional candidates, Arizona's system ensures that

participating opponents will almost always have more

financial and personal resources than traditional

candidates to conduct their campaign Jd

Numerous distmet court fibogs eryanaliv included in the

Exeerpts of Reeord before the court of appeals have since been

assigned ditferent ECF docket numbers To avord any possible

contusion, reference to the “Reeord” is made to the current FCF

docket

FE. Independent expenditures im favor of trad

tional candidates or against participating candidates

trigger matching funds toe participating candidates,

but independent expenditures in favor of partucipat-

ing candidates or against traditional candidates

trigger nothing to traditional candidates ARS. § 16

YS2A-(C) Because participating candidates have

control over the matching funds thev receive and

traditional candidates do not have contre! over inde-

pendent expenditures. the one-sided triggering of

matching funds trom independent expenditures

typreally gaves participating candidates a greater

competitive benefit: from those expenditures than

traditional candidates received tn the first place. 10

239 PAIN3-94, 248, 818-15, 327-28; JAQST-SY, 1024-

~S5: Record 317(3:6-21)

lll. THE SPEECH BURDEN OF MATCHING

FUNDS

A. [tas undisputed Petitioners and allied inde-

pendent expenditure committees, through raising or

spending campaign money, coliectively triggered tens

of thousands of dollars in matching funds to opposing

participating candidates. JA925S-27( 9936, 44, 45. 49,

64), 932-35(995, 19, 21, 27, 31)

B The most significant speech burden imposed

by matching funds arises from its “mulupher effect.”

Petitioner MeComush. for example, faced three partic-

ipating opponents in the ZOOS Anmzona primary

Consequently, every dollar he spent above his “spend

ing limit” triggered nearly three dollars to be spent

aoO7

against his candidacy. 10-289 PA247-49, 327-28. In

fact, Petitioner McComish watched his three parties

pating opponents collectively receive $140,227.98 in

public financing. which included at least $82,081.98

in matching funds triggered by campaign spending

made by MecComish and independent expenditure

committees above the appheable $19,382.00 “spend.

ing limat.” 10-239 PASZS. Reeling from the deluge of

hostile speech triggered by his campaign spending,

MeComush decided not to spend money on an “auto

dialer” campaign marketing program for tear of

triggering matching funds to his opponents. 10-239

PA247-49, 325-26, 328-29. Spending $2,500 on the

auto-dialer program would have triggered matching

funds in the aggregate amount of nearly $7,500 to

MeComish’s participating opponents. 10-239 PA248

Additionally, when multiple traditional cand

dates compete against one or more participating

candidates, the speech swamping effect of matching

funds against traditional candidates and therr sup-

porters is even greater. Legislative candidate Ene

Ulis described the threat he faced in the 2010 prima-

rv election cvele as follows:

[Blecause | face three participating candi-

dates, 1 am faced with the threat that tor

every dollar 1 spend above the spending lim-

it. self-financed or not, nearly three dollars

will be paid to my opposing participating

candidates in matching funds to. spend

against me. Moreover, because there are two

other traditional candidates running, who

are likely to spend above the spending limit,

| also face the threat that my three opposing

participating candidates will receive nearly

another three dollars for every dollar each of

my opposing traditional candidates spend. As

a result, if my traditional opponents spend

as much as I intend to spend, namely at least

$10,000 above the spending limit for a total

of at least $30,000 as a class, it appears

likely that each participating opponent of

mine will receive at least nearly $30,000 in

matching funds and that my participating

opponents as a class wil! receive $90,000 in

matching funds) The speech financed by

matching funds threatens to swamp the

privately-financed speech of all traditional

candidates.

JA1014-15. Candidate Ulis’ testumony was echoed by

candidates Michael Blaire and Dusti Morris. who

faced the same or similar dynamics in their districts

during the 2010 election eveie. JA1010-12, 1023-20.

A similar multipher effect swamps the speech of

independent expenditure committees that support

traditional candidates or oppose participating cand)-

dates. For exampie, the Arizona Realtors Associavion

made an independent expenditure in the amount of

$6,500 ostensibly to support Petitioner McComish,

which triggered $18,330 in the aggregate to his three

competing participating opponents. 10-239 PA327-28.

C. Petitioners testified about a number of

specific instances in which their exercise of First

Amendment rights was burdened by the threat of

triggering matching funds. Petitioner Nancy McLain

testified that she decided not to self-finance her

campaign during Arizona’s 2004 election cycle after

she and her husband discussed how Arizona's match-

ing funds trigger would give a like amount to oppos-

Ing participating candidates. 10-239 PA191-92, 195.

Petitioner McLain further testified that the threat of

Arizona’s matching funds trigger chilled her cam-

paign spending and forced her to decide not to raise

any more contributions. 10-239 PA195-97, 250; Rec-

ord 317(4:14-28, 5-6:1-4, 7:14-28, §:1-12).

Petitioner Tony Bouie testified that he “made a

decision to minimize and delay campaign expendi-

tures after seeing the full impact of” triggering

matching funds to his opponents and “decided to wait

until the last possible minute ... to spend money” on

his campaign. 10-239 PA243-47, 300-303, 311, 317-18

Boure’s fear of Arizona’s matching funds was so

profound that, for the 2010 election cvcle, he chose to

run for an office in which he would not face competi-

tion from a participating candidate. 10-239 PA296-97.

The threat of matching funds similarly burdened

the campaign finance decisions of former gubernato-

rial candidate John Munger, legislative candidate

Jack Harper, and attorney general candidate Tom

Horne. JA984, 9S6-SS, 990, 992-94. 1007-08: Record

430-4(2:20-28, 3-4, 5:1-9). Gubernatorial candidate

John Munger was deterred from spending tens of

thousands of dollars of his own money to finance his

campaign by the threat of triggering potentially

hundreds of thousands of dollars of matching funds to

his parUicipating opponents. JA1019-21.

LD). Petitioners’ testimony has been corroborated

by Respondent witnesses. During her deposition, Re-

spondent Commissioner Daniels was asked, “For

those individuals who are aware of the impact of

matching funds and for those individuals who are

engaged in decisions about fund-raising or expendi-

tures in support of their campaign, wouldn't you

agree that there would always be a chilling effect

of some magnitude on their fund-raising and expen-

diture decisions?” Eventually. she replied, “The

majority of the time, is it a chilling effect with match-

ing funds, ves.” 10-239 PA237-38; JA642-43; Record

332(12:10-17, 13:3-4). Daniels also admitted to being

familiar with the strategies of ten candidates and

that “at least 80 percent” would be chilled by match-

ing funds. 10-239 PA237-38; JA644-45; Record

332(16:8-25, 17:1-8). She concluded that there is

“nothing inherently incredible” about Plaintiffs’

testimony that they had “been chilled by matching

funds in the course of their candidacies.” JA646-47;

Record 332(18:9-14).

Respondent witness Representative David Lujan

similarly corroborated Petitioners’ testimony, testify-

ing that before Clean Elections became law it was

common to see $100,000 being spent in a legislative

campaign, but now it is more common to see around

$40,000 being spent because of the influence of match-

ing funds. JA613, 616-19; Record 323(16:13-25, 17:1-

25, 18:1-2, 16-25, 19:1-17, 20:20-25, 21:1-14). He also

explained that “under clean elections they [independ-

ent expenditure committees] are less likely to make

an independent expenditure if they see that the value

of that independent expenditure is going to be weak-

ened because it’s matched by the clean elections

system.” 10-239 PA239; JA621.

Respondents expert witness Dr. Donald Green

corroborated Petitioners’ testimony by admitting that

Arizona’s matching funds system “dampens” the

“arms race” of campaign spending. JA766-68.

E. Third party political action committees

echoed the testimony of the parties. Victory 2008 and

Anzonans for a Healthy Economy (“AFHE”), for

example, brought a separate lawsuit to block the

issuance of matching funds during Arizona’s 2008

election cycle, claiming that the CCEC led them to

believe that matching funds would not be available in

their district and that they would not have made

independent expenditures had they known matching

funds were available. 10-239 PA240-43;, JA548-62.

When responding to the question, “In making the

dectsion as to whether or not to make an expenditure,

can you tell us generally ... what role the matching

funds provisions under Clean Elections plays?”

AFHE’s representative replied, “It played a huge role.

And Arizonans for a Healthy Economy conducted

efforts in numerous districts. And we actually had

more districts that we would like to be in. But be-

cause of the matching funds issue, there were deci-

sions made to not advocate in specific districts

because — because of the matching-funds issue. That

was one step. The second step was other districts that

we didn’t want to go into — we didn’t want to advocate

in until very late because of the matching-funds

issue.” 10-239 PA242-43; JA560-61.

F. Gaming Arizona: Public Money and Shifting

Candidate Strategies, an article in a peer-reviewed

academic journal, also corroborated the parties’

testimony. 10-239 PA235-37; JA357-81. Confirming

how the threat of matching funds induces delay in

expenditures, Gaming Arizona reported that between

2002 and 2006 the proportion of matching fund

contribution distributions in the final week of the

campaign cycle never dropped below one-third of the

total expenditures. JA378. Gaming Arizona further

reported, “The desire for cost efficiency is present in

all campaigns, but the effects of matching funds shift

the spending calculus well beyond simple husbandry.”

JA364. Finally, Gaming Arizona observed: “According

to every informant interviewed, traditionally funded

candidates try to maximize competitive effect of the

money that they do spend by releasing funds at the

last minute.” JA366.

G. By prohibiting conspiracies to postpone

campaign donations for the purpose of postponing

related trigger reporting, A.R.S. § 16-958(C) antici-

pates efforts by traditional candidates to avoid trig-

gering matching funds unti! just before the general

election.

H. The parties’ testimony is further corrobo-

rated by measurements of campaign spending in

Arizona since 1998, which show 1) per capita growth

of independent expenditure spending in Arizona

lagged per capita growth of PAC spending nationaliy

by at least 33° between 1998 and 2006. and ii) aver-

age per capita expenditures in Arizona by traditional

legislative candidates of major parties declined 6% in

real terms between 1998 and 2006. 10-239 PADS5-86,

290.

I. Finally, the dampening effect of matching

funds on campaign spending is corroborated by

statements by proponents of Arizona's system that it

is designed to hmit campaign spending and reduce

the cost of running for office. JAS, 106-07, 110, 213.

IV. THE PURPOSE OF MATCHING FUNDS.

A. The Clean Elections Act explicitly describes

ts purpose as protecting the “votces” and “influence”

of ‘Arizona citizens” trom “a small number of wealthy

special interests” and reducing the “influence” of

“special interest money.” A.R-S. § 16-940: A), (B+

B. Arizona's matching funds provision is titled

“Equal funding of candidates.” the CCEC’s adminis-

trative rules refer to triggered mat ching funds as

“equalizing funds.” and hundreds of related adminis:

trative records identify matching funds as ena

tion” payments. A-.R-S. § 16-952: CCEC Adviin. Rules.

R2-20-113: JASs5

C. Respondent CCEC has repeatedly stated

that the purpose of the Clean Elections Act is to “level

the playing field.” JASOS, 457, : #40, S54-35, Record

145-4(19:23-25, 20:1-10, 25, 26), 326-31). For exam-

ple. a legal brief filed by the ce EC repeatedly de-

clares that “ujt can not be disputed that the purpose

of the Citizens Clean Elections Act is to sciiaiinid the

plaving field and mve participating candidates equal

opportunity to get their message out.” JAS. The

“CEC's insistence on this interpretation of the Act

has led to at least one determination by an admuinis-

trative law judge that the purpose of Amzena’s match-

ing funds system 1s to bes the plaving fleld and

equalize spending JAD¢

LD. After the Court biocked the issuance of

matching funds for Amzona’s 2010 election evele.,

Respondent Commissioners discussed how the deci-

sion was “unfair” to candidates because it prevented

the Clean Elections Act from “leveling the plaving

field.” which it was “designed to do.” 10-2399 PAILS6-

Gs @

FE According to Respondent Clean Elections In-

stitute, the purpose of matching funds is “[tlo combat

the imequalites that exist with disproportionate

funding. When a non-participating candidate out-

spends his Clean Elections participating opponent.”

JAQST. Proponents of Clean Elections have repeatedh

emphasized the electoral opportuni. influence and

resource leveling purpose and effect of Amzona’s

matching funds svstem. JAMS, 106, 109, 2IS-29. 24s.

263-64, SU9-54.

Vv. THE DISCONNECT BETWEEN MATCHING

FUNDS AND ANTICORRUPTION PURPOSES.

A. CCEC Executive Director Todd Lang ad-

mitted matching funds do not address an actual

corruption problem im Arizena, stating “IT don’t Giunk

we have anv corrupt legislators right now, 1] hope

This (Arnizona’s matching funds system] is about ap-

pearances and encouraging participation and re-

inforcing good feelings about our — vou know, our

system of government.” JA449

B. Arizena was ranked in 2005 as having te

most stringent contribution limits and the Sth most

stringent overall campaign finance disclosure system

in the nation. 10-2389 PAZO4-66;, Reeord 325-9 10)

Arizona’s campaign financing regulations remain

among the most stringent in the nation JAGTY-7T02,;

Record 325-10(2-13). Adyusted for inflation, the con

tribution limits for individual contributions to legnsia-

tive and statewide candidates in the 2010 election

evele were $410 and Ss. respecuive ly. See ARCS

S$ 16-905,AK1). O410B\ 1D: Arizona OMice of the

Secretary of State, 2009-10 Contmbution Limits,

http: www.azsos.gov election 2010 Into Campaign Co

ntribution_Limiuts_2010 htm

C. According to expert witness Dro Osborn,

Arizona’s contribution hmuits are sufficiently low and

its disclosure requiremenis sufficiently extensive to

prevent private campaign contributions from having

any significant influence on candidates. 10-239

PALQS, 255-75, JAGG2-64. 474. Record 143-6.6-7),

4 i)

144-418-212), 144-5 1-3. 7). 145-1086 13-29, 871-20)

Pubhe financing in general, and Arvena’s matehing

funds tmgger in particular, do nething that could

further prevent actual or apparent corruption from

private campaign financing. Jd

D. Dr. Osborn further testified that matching

funds do not prevent actual or apparent corruption

because: a) the Clean Elections Act allows participat

ing candidates to raise private contributions trom

individuals, lobbvists and bundlers; b) the matching

funds system is gamed to generate the functional

equivalent of uniimited and undisclosed contmbutions

to participating candidates frem private donors: ¢) the

voting behavior of participating candidates is not

materially different than traditional candidates, d)

the CCEC lacks olyective standards when awarding

matching funds based on unreported campaign

expenditures or contributiens: and e) the CCEC

actively lobbies the lemslature it both funds and

regulates through a highly paid contract lobbyist. 10

239 PA25S5-75

SUMMARY OF ARGUMENT

i. The essence of Amzona’s matching funds

system is revealed by Secretary ot Homeland Security

Janet Napolitano’s reminiscence about her successtul

Arizona gubernatorial race against Matt Salmon

At the next debate. | pulled Matt aside

and thanked him, because under the Clean

Flections match, his event ratsed $790,000

for my campaign. 1 am quite certain that |

am the only Democratic Governor in the

country for whom George Bush has held a

fundraiser

JASMS: Record 327.10): sce Qiso JADA 1. YSH-90 Matt

Salmon probably did not laugh

’ Political opponents of pariicipating cand

dates. like Matt Salmon, are pumshed when their

rightful campaign financing triggers hostile speech

against them. Especially in the competitive content ot

electoral politics, the threat of such pumshment

constitutes a substanaal deterrent te any ratonal

person who would otherwise want to raise and spend

private money in support of a traditional eandidacy or

to oppose a participating candidate. This deterrent

Mposes more than a severe burden on. strategie

decisions. Anyone who takes ideas seriously will be

chilled by the prospect of being instrumental in

funding the dissemination of ideas one opposes or

abhors as a condition of raising or spending money bo

engage in campaign speech

’

3. Arizona's “Clean Elections” system thus im-

pales political opponents of partiapating candidates

on the horns of a dilemma bv compelling their cam

payrn fundraising and expenditures to trigger subysi

dies to the verv candidates they oppose Arizona's

matching funds svstem severely burdens whether,

how and when traditional candidates and independ-

ent expenditure committees raise or spend money on

campaign speech; and it typically causes them to

diminish and delav their campaign fundraising and

expenditures

a. dust hke the Milhonaire’s Amendment, which

was struck down in Darrs, 554 US. 724. Arizona's

matching funds system imposes substantial negative

consequences on individuals and groups for choosing

to exercise their First Amendment rights, which nec-

essaniy creates a substantial “drag” on tree speech

Even when political opponents of participating candi

dates disregard the drag imposed on their free speech

by Arizona's system, its punitive effect is downright

devastating. Even more so than the Muilhonatre’s

Amendment, Arizona's svstem is the functional equiv-

alent of the compelled speech remme struck down in

Pacific Gas & Elec. Co. v. Publre Utilities Corum ’n,

479 US. LCI9S8).

b. Like the regulatory regme in Peerfic Gas

& Blieo Co, which foreed a public utilitw to help dis

seminate consumer advocacy messages, Armzona’s

system forees traditional candidates to help = dis

seminate hostile speech by their political opponents

The onlv wav traditional candidates can avoid the

punishment of matching funds is either to avoid

competing against participating candidates or to

run as a participating candidate And independent

expenditure committees are always burdened by

matching funds when they spend money on messages

that support traditional candidates, who are in com-

petition with participating candidates, or when they

oppose participating candidates. This couples con

tent-based regulation with svstemic discrimination

against traditional candidates in violation of the prin-

ciples apphed in Citizens United, 130 S. Ct. S76, winch

prohibit the government from favoring some speakers

over others. The First and Fourteenth Amendments

thus require Respondents to prove that Arizona's

matching funds trigger can withstand strict scrutiny.

¢ Arvona’s matching funds provision is not

closely drawn, much less narrowly tailored, to anti-

corruption purposes. The burden it imposes on both

self-financed candidates and independent expendh-

ture committees proves that the provision does not

directly serve anticorruption purposes. Instead, the

chief interest of matching funds ts to level electoral

opportunities, resources and influence. Davis and

Crfrsens Uniled, however, make it abundantly clear

that such egalitarian goals do net justitv burdening

the exercise of core First Amendment mghts under

any level of heightened scrutiny.

do Of course, advocates of Arizona’s) system

argue matching funds indirectly serve anticorruption

purposes by promoting participation in pubhe financ-

ing. But Arizona's stringent campaign finance regu-

lations are already adequate to prevent private

campaign financing from causing actual or apparent

corruption. Matching tunds, even if they encourage par-

tiapation in publi financing, do nothing to further

prevent actual or apparent quid pro Quo corruption

from private campaign financing. In fact. Arizona's

matching funds system ts so poorly tailored that it

enables the evasion of contribution limits and disclo-

sure requirements by supporters of participating

candidates. Moreover, by lobbving the same candi-

dates it funds and regulates, the CCEC itself risks

creating the very appearance of guid pro quo corrup-

tion that contribution limits seek to prevent. Thus, to

the very extent existing contmbution limits and

disclosure requirements are posited to prevent actual

or apparent guid pro quo corruption, Arizona’s match-

ing funds system is counterproductive. Therefore, the

speech burden imposed by matching funds is “dispro-

porhionate” to advancing anticorruption interests

Randall vo Sorre!], 548 ULS. 230 2006)

©. Participation in pubhe financing ts not, itself,

a compelling state interest; it is only a prophylactic

means of advancing anticorruption purposes. If

matching funds can be said to serve a compelling

State interest because they promote participation in

public financing, then so could outright censorship of

traditional candidates. There would be no limit to the

abndgement of free speech that could be justified as

serving a compelling state interest with such an

argument. Federal Election Comm'n cv Wisconsin

Right to Life, 551 U.S. 449 (2007), thus prohibits

Arivona’s matching funds system from piling “prophy-

laxis upon prophylaxis.” Because Arizona's matching

funds system does not directly serve anticorruption

purposes, it cannot survive strict scrutiny

f Replacing matching funds with lump sum

public financing would achieve any anticorruption

purpose ascribed to public financing in a far less

burdensome manner.

4. Taken together, Arizona's matching funds

system imposes a substantial burden on the exercise

of First Amendment rights; it is chiefly interested in

equalizing resources, influence and electoral opportu-

nities; and ts neither closely drawn nor narrowly

tmlored to furthering anticorruption interests. The

system, therefore, cannot possibly withstand inter-

mediate scrutiny, much less strict scrutiny. Accord-

ingly, the Ninth Cirewt committed reversible error

when it vacated the district court’s permanent injune-

tion on A.R.S.) §$ 16-952. The Ninth Circuit’s decision

should be reversed, and the district court’s permanent

injunction should be affirmed because the Constitu-

tion obliges the Court to strike down unconstitutional

laws. Marbury v. Madtson, 5 U.S. 137, 179-80 (1803)

STANDARD OF REVIEW

On appeal from summary judgment, the Court

conducts its review de novo and may affirm the

district court on anv basis afforded by the record. See

generally Eastern Kodak Co. v. Image Tech. Servs.,

904 U.S. 451, 466 (1992); Board of Airport Comm'rs v

Jews for Jesus, Inc, 482 US. 569, 573 (1987).

ARGUMENT

I. = STRICT SCRUTINY APPLIES TO ARIZONA'S

MATCHING FUNDS SYSTEM BECAUSE IT

DETERS AND PENALIZES THE EXERCISE

OF FIRST AMENDMENT RIGHTS.

The Ninth Circuit's analogy between Arizona's

matching funds system and the disclaimer and dis-

closure requirements upheld in Citizens United is

profoundly mistaken. Reasonable disclaimer and

disclosure requirements ordinarily affeet all candi-

dates and political groups equally; and they are

meant to provide objective financial information and

to prevent identity fraud by political actors. Citizens

United, 130 S.Ct. at 914-16. In contrast, Arizona's

matching funds system imposes a special burden on

traditional candidates and their supporters, which ts

designed to help disseminate hostile speech — just like

the Milhonaire’s Amendment in Davis. If anything, bv

causing the exercise of First Amendment rights to

subsidize hostile speech, Arizona’s matching funds

provision is more akin to a disclosure requirement

of the sort that prompts “threats, harassment or

reprisals from either Government officials or private

parties, which Ciftrzens United certainly did not

approve. /d.. 130 S.Ct. at 914 (citations and internal

quotations removed). Moreover, unlike reasonable

disclaimer and disclosure requirements, which are

viewpoint neutral, Arizona’s matching funds trigger is

a content-based speech regulation that disfavors

certain speakers. As discussed below, these differ-

ences are material and necessitate applying strict

scrutiny to Arizona’s matching funds system under

the First and Fourteenth Amendments.

A. Strict scrutiny applies to Arizona’s match-

ing funds provision under the doctrine of

stare decisis because, like the Million-

aire’s Amendment, it imposes a special

and potentially significant burden on the

exercise of core free speech rights.

Under the doctrine of stare decisis, the rationale

underpinning an opinion of the Court binds analo-

gous cases unless a “special justification” warrants

departing from that rationale. Arizona v. Rumsey, 467

ULS. 208, 212 (1984). In the present case, stare decisis

compels the conclusion that Arizona's matching funds

system is subject to strict scrutiny because, like the

Millionaire's Amendment struck down in Davis, it

imposes a special and potentially significant burden

on the exercise of core free speech rights.

In Davis, the Court applied strict scrutiny and

struck down a federal campaign finance regulation

that triggered elevated contribution lmits for one

candidate when an opposing self-financed candidate

contributed or spent his own money above a certain

threshold. The Court applied strict scrutiny because

the regulation imposed an “unprecedented penalty on

any candidate who robustly exercises that First

Amendment right.” 554 U.S. at 739. Specifically,

Davis ruled that the Millionaire's Amendment sub-

stantially burdened free speech rights by forcing a

candidate to choose “between the First Amendment

right to engage in unfettered political speech” and

shouldering “a special and potentially significant

burden.” /d. In so ruling, Davis underscored that the

Millionaire’s Amendment caused “the vigorous exer-

cise of the right to use personal funds to finance

campaign speech” to produce “fundraising advantages

for opponents in the competitive context of electoral

politics,” which the Court analogized to laws that

infringe on free speech rights by forcing speakers “to

help disseminate hostile views.” /d. (citing Pacific

Gas & Elec. Co., 475 U.S. at 14).

Although Davts applied strict scrutiny under the

First Amendment to a “discriminatory” contribution

limit trigger, the rationale for its holding applies

equally to Arizona's matching funds trigger. Davis

reached its holding in direct reliance upon Day v.

Holahan, 34 F.3d 1356 (8th Cir. 1994), which struck

down Minnesota’s matching funds system. 554 U.S.

at 739. The Court used the signal “See” to introduce

Day as “clearly” supporting the proposition for which

it was cited. Id.; see THE BLUEBOOK: A UNIFORM SYSTEM

Or CITATION 46 (18th ed. 2006). And in citing Day, the

Court specifically pinpointed the Eighth Circuit's

holding at 34 F.3d at 1359-60, which states:

The knowledge that a candidate who one

does not want to be elected will have her

spending limits increased and will receive a

public subsidy equal to half the amount of

the independent expenditure. as a direct re-

sult of that independent expenditure, chilis

the free exercise of that protected speech.

This “self-censorship” that has occurred even

before the state implements the statute’s

mandates is no less a burden on speech that

is susceptible to constitutional challenge

than is direct government censorship.

Davis even reiterated Day’s holding on matching

funds parenthetically, noting “a Minnesota law that

increased a candidate’s expenditure limits and eligi-

bility for public funds based on independent expendi-

tures against her candidacy burdened the speech of

those making the independent expenditures.” Jd., 554

US. at 739.

Davis’ reference to Day was not gratuitous. Davis

plainly and naturally regarded the contribution limit

and matching funds provisions at issue as imposing

analogous speech burdens, which require the same

level of scrutiny — as did every court of appeals that

reached the issue prior to the Ninth Circuit’s ruling

below. See 10-239 Cert. Pet. pp. 32-34. If anything,

matching funds impose a far more ceriain and

substantial burden on the exercise of First Amend-

ment rights than did the Millionaire’s Amendment.

Of necessity, not mere possibility, Arizona’s system

threatens to bestow “fundraising advantages” for par-

ticipating candidates consisting of matching taxpayer

subsidies when traditional candidates and independ-

ent expenditure committees vigorously exercise their

First Amendment rights to spend their own money

to finance campaign speech. See A.R.S. § 16-952(A)-

(C). Moreover, neither the Millionaire's Amendment

nor matching funds provisions symmetrically relax

government-imposed restrictions on free speech for

all candidates competing in the same race. Instead,

like the Millionaire’s Amendment, matching funds

force self-financed traditional candidates and inde-

pendent expenditure committees to shoulder a spe-

cial, potentially significant burden if they choose to

engage in unfettered campaign fundraising and

expenditures. Arizona’s matching funds system must

therefore be regarded as imposing a _ substantial

burden on free speech that triggers strict scrutiny for

the same reasons as did the Millionaire’s Amend-

ment. Green Party of Conn. v. Garfield, 616 F.3d 213,

243-44 (2nd Cir. 2010) (enjoining Conn. Gen. Stat.

§§ 9-713, 9-714 (2009)); Scott v. Roberts, 612 F.3d

1279, 1290-91, 1293-94 (11th Cir. 2010) (preliminarily

enjoining Fla. Stat. § 106.355 (2009)). No “special

justification” exists to depart from the rationale in

Davis because, as discussed below, Davis logically

applied settled First Amendment jurisprudence.

B. Strict scrutiny applies to Arizona’s match-

ing funds system because it links the

exercise of First Amendment rights to

the dissemination of hostile speech, there-

by deterring and punishing rightful con-

duct.

In refusing to apply strict scrutiny to Arizona’s

matching funds system, the Ninth Circuit completely

ignored Davis’ reliance upon Pacific Gas & Elec. Co.,

475 US. at 14, which held that the First Amendment

tji

is violated by regulations that force citizens “to help

disseminate hostile views” when thev speak. Pacific

Gas & Eiec. Co. apphed strict scrutiny to an effort to

require a public ulility to include consumer advocacy

material in its mailings. The Court held that linking

the dissemination of hostile newpoints to the exercise

of First Amendment mghts deterred and penahied

free speech because the speaker “nught well feel

compelled to reply or limit its own speech” Pacific

Gas & Elec. Co.. 475 U.S. at 10-12, 11 n.7. 14 (citing

* > . > -“* ~ ** ~ d

Miami Herald Pudiishing v. Torniiio. 418 U.S. 241.

Nop 7 Q- Te | af ™ .\\ ~ -

256-57, 257 n.22, 258 (1974 The Court furthe

emphasized that such laws should be struck down

under the First Amendment based purely on this

punitive and deterrent effect. independently from anv

other consideration, such as the cost or scarcity of

publication space. J¢. Finally. Pacific Gas & Elec. Co.

held that requiring a speaker “to assist in disseminat-

ing” opposing views “necessamly burdens the expres-

sion of the disfavored speaker.” Jd. at 15.

b 4 nr a ~ - 4 = oF sete -—eo .*

L nder é ac *, ae (ras “A Liex XY A . citizens do Nhe .

have a right to speak free from rebuttal. but thev

certainly do have the right to speak freeiv without

being required to assist in the rebuttal of their own

speech. This principle of speaker autenomy has its

roots in the Court’s recognition that “Uilf there ts anv

fixed star in our constitutional constellation, it ts that

no official. high or petty. can presembe what shall be

orthodox in politics. nationalism. religon. or other

matters of oprmion or force citizens to confess by word

or act their faith therein.” Wes? Virginia Ba. of Educ

Pal

. @

v. Barnette, 319 U.S. 624, 642 (1943). As further

explained bv the Court in Woolev oo Maynard, “The

right to speak and the right to refrain trom speaking

are con ee components of the broader con-

cept of ‘individual freedom of mind’” 430 US. 705,

714 (1977) (quoung Board of Education co Barnette,

S19 U.S. 624. B37 (1943)) The principle of speaker

autonomy thus preserves the dignity to which a free

citizen Is entitled in our system of — liberty

It also recogmizes that “mandating speech that a

speaker would not otherwise make necessarily alters

the content of the speech.” Aviev oo Natl Fed of the

>). , S . me > - <o7 _-

Bina ro N Ort “ ( QML, Sor L S

Of course, the government does not always

require “citazens to confess by word or act their faith”

in What they do not beheve. Instead. as evidenced by

the regime in Pacific Ges & Elec. Co.. governments

offen use more indirect methods to achieve the same

outcome. Such efforts are ie lagi rebuffed by the

recognition that “[wihat the First Amendment pre-

cludes the government from commanding directiv. 1

also precludes the government from accomphshing

indirectly.” Rutan v. Repudlican Party of ilinois, 497

S$ (1990). In response CoO the c SAUVAY of

regulatory efforts, the Court has properly apphed t

principle of speaker autonomy to a variety of contex

® > a . aS om . le: ss se) °

in which citizens have been directly or deewes

compelled to help disseminate hostile speech. See.

eS. United States v. United Foods, Ine.. 333 U.S.

405, 410-11 (2001) (stmking down a federal law that

used mandatory fees paid by mushroom growers to

i i)

subsidize private speech to which they were opposed.

where speech was the central purpose of the regula-

Lory reyiilte!

By torcing citizens to choose between silence or

promoting people and ideas they oppose. a regulatory

regime that links the exercise of First Amendment

nghts to the dissemination of hostile ideas “inescap-

chs ‘dampens oa vigor and limits the variety of

public debate” Tornilio, 418 U.S. at 237 (quoting

New York Times Co. v. Sullivan, 376 U.S. 254, 279

(1964). Such remmes stmke at the heart of free

speech because. by imposing negative consequences

on the exercise of First Amendment mghis, thev

clearly create the “potential” for “self-censorship” that

is “abhorrent to the First Amendment.” Ct Babdits :

United Farm Workers Nail Union, 442 U.S. 289. 318

1979) Forcing candidates and their supporters to

choose between silence and assisting in the dissem-

navion of hostile speech also runs afoul of the doctrine

. ‘* — 9

of unconstitutional conditions. See generally Bal of

’ . ’ . — . vi? ;. ~— % pn > » ~ ~t

County Comm'rs v. Umbdchr, 318 US. 668

. 074-75

(1996) (holding under the modern docirine of uncon-

stitutional conditions “construtional violations may

arise from the deterrent. or ‘chilling effect of gov-

ernmental regulations that fall short of a direct

prohibition against the exercise of First Amendment

rights”) (citing Laird v. Tatwm, 408 U.S. 1, 11 (1972

The Court quite properly apphes strict serutiny to

regulatory regimes that violate these principles based

en the longst, EO recogmMtion

The evils to be prevented [bv the First

Amendment] were not the censorship of the

press merely, but any action of the govern

nent by means of whieh it might prevent

se free and general discussion of pubhe

Natters as seems absolutely essenual to pre-

mee the people for an intelligent exercise of

their mghts as citizens

¥ _o . ‘ **.* . Dee ‘ a) rd 7” ‘yoy -v« &

Grosjean v. American Press Co., 297 U.S. 233, 249-50

(1986) (citation emitted)

Strict scrutiny apphes to Anzena’s matching

funds system because ut burdens the exercise of First

Amendment mghts in essentially the same wav as the

regulatory scheme struck dewn in Pacrtic Gas & Elec

Like the regulaterv remme in Pacific Gas & Flex

Arizonas matching funds svstem compels trad:-

tional candidates and their supporters to help dis

seminate hostile speech through their exercise of

First Amendment rights. Traditional candidates and

their supporters are required to assist in the dissemi.

nation of the hostile views because itis their vers

own campaign financing acuvities that cause the

distribution of matching funds to their political

opponents. In fact, when traditional candidates and

alhed independent expenditure committees raise or

spend campaign money close to or above a certain

threshold, Arizona's law Interally requires them to file

trigger reports that lead directly to the disbursement

of checks to their poliucal opponents. 10-289 PAS12-

13; JA272-73; ALR.S. $$ grin 2), (DD), 952, A), (B),

958, A), UB), (D), (EY. 959, 9611G), (HA)

ae |

Although Arizona's matching funds svstem con-

scripts labor, and the regulatery svstem ino Pecisfic

Gas & Elec. Coo commandeered property, both svs-

tems presume to force citizens to help disseminate

hostile views as a consequence and condition of

exercising ther First Amendment mghts. dust as the

law in Pacific Gas & Elec. Co forced a public uthty

to give consumer advocates a tree mde in its mailings.

Arnvzonas matching funds regime throws a voke

around the necks of traditional candidates and their

supporters, requiring them to advance the campaigns

of their pohtical opponents alongside their) own

Anzona’s matching funds svstem thus deters and

penalizes the exercise of First Amendment rights just

like the regulation at issue in Pecrtic Gas & Elec Co

See Jason Bradley Kav and Jack MeDamel Sawver,

The Constiiutionaliyv of “Rescue Fund Triggers” on

North Carolima’s dudiwial Carin gn Reform Act. 2

'irst Amend L Rev 267, 283-85 (Spring 2004)

It is an understatement to sav that traditional

candidates and independent expenditure committees

“might well feel compelled” to limit their fundraising

and expenditures to avond triggering t matching funds

Cf. Pacific Gas & Elec. Co., 475 ULS. at ll n.7. An

interview of a traditional candidate, which was

reported in Gaming Anzona, provides a better ac-

count of the feeling provoked by matching funds:

“Ev ery dotlar I Sper nd over the threshold starts teed

ing the alligator trving to eat me” JAS64. Riser

witness Dr Marcus Osborn renewed all of the ev-

dence in the record and similarly found:

a1)

First Gime candidates, veteran candidates,

sopiysticated independent expenditure com-

mittees and even a member of the CCEC all

confirmed in their interviews or testimony

that the matching funds component of the

Clean Election[s) Act created a drag or

“chilling effect” on their campaign fund-

raising and expenditures that tended to re

strict and delay campaign fundraising and

spending

10-239 PAZS1. This chilling effect arises because the

“matching funds component imposels] a signiftcant

‘cost. or competilive disadvantage, on traditional can-

didates with respect to raising and spending money

that would not exist in a world without matching

funds.” 10-239 PA2S3. Not surprisingly, itis undis-

puted that campaign consultants ordinarily counsel

their chents to minimize matching funds’ competi.

tive cost by delaving or refraining from campaign

fundraising and spending 10-239 PA252-54, 328-29,

JAVLZT-28.FLOV), 1003-04 Correspondingly, CCEC en-

forcement proceedings are replete with allegations

that traditional candidates deliberately delaved or

avoided filing reports that could have tnmggered

matching funds. JASSO-S2. 887. And measurements

of campaign spending in Arnona since 1998 show:

1) per capita growth of independent expenditure

spending in Arizona lagged per capmta growth of PAC

spending nationally by at ieast SO between 199s

and 2006, and 2) average per capita expenditures in

Anzona bv traditional legislative candidates of major

parties declined 6% in real terms between 1998 and

2006. 10-289 PARSS-S6, 290,

Strict scrutiny must be apphed to Arizona’s

matching funds system because applying a lower

level of scrutinv is utterly inconsistent with core

constitutional principles. The negative consequences

visited on traditional candidates and their supporters

by matching funds’ “multipher effect” are clearly

more onerous than the burdens the government 1s

generally prohibited from imposing on the choices

of individuals and groups when they exercise their

First Amendment rights. Compare 10-289 PA247-49,

11-14, 325-26, 328-29; JA295, 1010-12, 1014-15,

1023-25 with Rutan, 497 US. at 76 & 76 n8 (ob-

serving, despite the choice to seek pubhe employ.

ment. “the First Amendment . protects state

emplovees not only from patronage dismissals but

also from ‘even an act of retaliation as tmvial as

faving to hold a birthday party for a pubhe employee

when intended to punish her for exercising her

free speech rights’”) (otation omitted; emphasis

added). In the conteat of competitive electoral politics,

in which one candidate's gain is another's loss, the

threat of matching funds is similar to the threat of a

fine for raising or spending campaign money bevond a

“spending limit” Cf Melntvre co Ohto Elections

Comm'n, 514 US. 334, 335-36 (1995) (striking down a

law that imposed a $100 fine for anenyvmousiy dis-

tnbuting campaign literature)

ladeed, the punitive linkage between the exercise

of First Amendment nghts and the issuance of pubhie

financing to political opponents is what distinguishes

Arizona’s matching funds svstem from the pubhe

financing system upheld in Buckley ov. Valeo, 424 US

1 (1976). By disregarding Davis’ reliance on Pacific

Gas & Elec Co., the Ninth Circuit thus mistakenly

equated Anzona’s punitive matching funds system

with non-punitive pubhe financing regimes. To vindi

cate free speech, that mistake must be corrected by

applying strict scrutiny

C. Strict scrutiny applies because Arizona's

matching funds system imposes a con-

tent-based speech regulation that dis-

criminates against disfavored speakers.

In Citreens United, 130 S Ct. at 899, the Court

firmly declared that the First Amendment stands

against campaign finance regulations that discrimi.

nate against disfavored speakers Ja. (observing

“speech restmetions based on the identity of the

speaker are all too often simply a means to control

content”) Moreover, laws that link the exercise

of First Amendment rights by specific speakers to

the dissemination of hostile speech imply there is

something intrinsically suspect or unfair about the

speaker's communication that requires the govern.

ment to intercede and provide a platform to an oppos-

ing speaker or opposing point of view, Pac Gas &

Riec. Co., 475 US. at 12-15 (ening Tornidlo, 418 US.

at 256); cf Tornilo, 418 US. at 258 (holding govern-

ment control over editomal process imphes power to

make determinations of fairness). This regulatory

judgment is not speaker or viewpoint neutral; it

discriminates against disfavored speakers and en-

gages in impermissible content-based speech regu-

lation. Jd. Aecordingly, strict scrutiny must be apphed

to Arizona's matching funds svstem. See generally

Turner Broadcasting Svs., Inc. v. Federal Communi.

cations Comm'n, 312 U.S. 622, 641-42 (1994) (observ-

ing “[l]aws that compel speakers to utter or distmbute

speech bearing a particular message are subject to

the same mgorous [strict] scrutiny [as content-based

speech regulation]”) (citations omitted).

The content-based nature of Arizona’s discrimi-

natory system is most clearly revealed by the one-

sided triggering of matching funds from independent

expenditures. Independent expenditure committees

will never trigger matching funds when they spend

money on a message that opposes anv traditional

candidate. ARIS. §$ 16-952.c). Thus, in order to en-

force Arizona’s matching funds trigger provisions, the

CCEC must assess whether the content of campaign

speech by an independent expenditure committee

Opposes a traditional candidate. This overtly content-

based assessment is obviousiy “concerned with the

communicative impact of the regulated speech.”

Turner Broadcasting Svs., Inc., 612 U.S. at 658.

The speaker discrimination entailed by Arizona's

matching tunds system is also manifest. Traditional

candidates, and not participating candidates, face the

threat of matching funds. A.R.S. § 16-952. A), (B). This

is despite the fact that a portion of the financing

raised and spent by participating candidates can omgi-

nate from private campaign financing and matching

funds triggered by independent expenditures. A.R.S.

$$ 16-945, 952(C 13). Even if traditional and partic-

ipating candidates were somehow distinct classes for

purposes of First Amendment analysis, it 1s 1m-

portant to underscore that, even within their re-

spective class, campaign speech is not treated the

same way. The system requires the campaign financ-

ing of traditional candidates to enable rebuttal speech

by competing participating candidates. It does not,

however, require the campaign financing of partici-

pating candidates to enable rebuttal speech by com-

peting participating candidates. Because Arizona's

system treats similar speech differently, both inside

and outside of candidate classes, an inference 1s war-

ranted that traditional candidates are being targeted

and punished as distavored speakers. C/. Florida Star

v. B.d.F, 491 US. 524, 540 (1989) (holding selective

treatment of similar speech underscores that the

law's purpose in enacting the law was to target and

punish a disfavored speaker); id. at 542 (Scalia, J.,

concurring).

The targeting of traditional candidates and in-

dependent expenditure committees for special speech

burdens is not viewpoint neutral. Matching funds

target expenditures that convey a viewpoint that

would tend to enhance a traditional candidate's

electoral prospects relative to a competing participat-

ing candidate. This arises in the context of a regula-

tory system that decries the “influence of special

interest money” and promises “Clean Elections”

through “clean campaign funding.” A.R.S. §¥ 16-

940(A), 951. The system's concern with the communi-

cative impact of the speech it regulates is further

evidenced by its prediction, “Campaigns will become

more issue oriented and less negative.” A.R.S. § 16-

940(A). The CCEC has even surveved the relative

“credibility” of participating and traditional candi-

dates as a performance measurement. JA315.

By virtue of its titling, purpose, administration

and effect, Arizona’s matching funds system “is value

laden, content-based speech suppression.” Cf. Austin

v. Michigan State Chamber of Commerce, 494 U.S.

652. 696 (1990) (Kennedy, J., dissenting). Like the

“equal time” regulation in Jorni/o and the consumer

advocacy mandate in Pacific Gas & Elec. Co., Arizona's

system unavoidably conveys the message that the

government will not allow speech benefitting tradi-

tional candidates to stand on its own because it is

“dirty.” Strict scrutiny applies to Arizona’s matching

funds system under the First and Fourteenth

Amendments because it targets disfavored speakers

for content-based speech regulation. Day, 34 F.3d at

1360 (citing Burson v. Freeman, 112 S.Ct. 1846, 1850

(1992)).

II. ARIZONA'S MATCHING FUNDS SYSTEM

FAILS STRICT SCRUTINY BECAUSE IT

CANNOT EVEN WITHSTAND INTERME-

DIATE SCRUTINY.

Arizona’s matching funds system cannot possibly

withstand Buckley's intermediate test of “exacting

scrutiny,” much less strict scrutiny, because it 1s

needless, counterproductive and chiefly advances im-

permissible purposes. Buck/ey's test is more rigorous

than the heightened scrutiny triggered by content-

neutral speech regulations and regulations affecting

non-speech conduct that is closely related to speech.

Buckley, after all, rejected applying the tests of

United States v. OBrien, 391 U.S. 367 (1968), and

Cox v. Loutstana, 579 U.S. 559 (1965), to contribution

limits as insufficiently rigorous. Buckley, 424 U.S. at

16-18. Thus, a speech regulation that would fai! the

test applied in O’Brien and Cox, or their progeny,

should also fail Buckley's intermediate scrutiny test.

Therefore, Arizona’s matching funds system should be

struck down unless Respondents prove: 1) it furthers

an important governmental interest, 2) the govern-

mental interest it serves is unrelated to suppressing

free expression, and 3) it does not burden substantially

more speech than is essential to further the govern-

ment’s interests. Turner Broadcasting Sys. Inc., 512

U.S. at 662, 665 (holding government bears the

burden of proof under O’Brien scrutiny and the law

will satisfy intermediate scrutiny only if “‘it furthers

an important or substantial governmental interest;

if the governmental interest is unrelated to the

suppression of free expression; and ... that the

means chosen do not ‘burden substantially more

speech than is necessary to further the government's

legitimate interests’”) (quoting O’Brien, 391 U.S. at

377; Ward v. Rock Against Racism, 491 U.S. 781, 799

(1989)).

Respondents cannot carry their burden of proof.

Arizona’s system is not “unrelated” to the suppression

of free expression because it burdens campaign

fundraising and spending chiefly to equalize electoral

opportunities among candidates. For this reason

alone, the system fails intermediate scrutiny. Arizona’s

matching funds system also fails intermediate scrutiny

because it does not further any important govern-

ment interest, is not “closely drawn” to meet its

objectives, and, therefore, “disproportionately” bur-

dens First Amendment rights. Cf Randall, 548 U.S.

at 253, 255, 261-62.

A. Arizona’s matching funds system imper-

missibly burdens the exercise of First

Amendment rights chiefly to equalize

electoral opportunities, resources and

influence.

The principal justification for matching funds

offered by the Ninth Circuit is that it ensures partici-

pants in public financing will be “viable candidates in

their elections” and that the State will be able to

allocate “funding among races of varying levels of

competitiveness without having to make qualitative

evaluations of which candidates are more ‘deserving

of funding.” 10-239 PA38. Saying that Arizona's

matching funds system aims to ensure candidates

will be “viable” in their elections and receive funding

in proportion to “competitiveness” is just another way

of saying that the regulation aims to equalize elec-

toral opportunities, resources and influence. Scott,

612 F.3d at 1293 (observing “[a]t bottom, the Florida

public campaign financing system appears primarily

to advantage candidates with little money or who

exercise restraint in fundraising ... the system levels

the electoral playing field, and that purpose is consti-

tutionally problematic”). Whatever rhetoric is used —

“leveling the playing field,” ensuring participating

candidates are “viable,” reducing special interest

“influence” — a campaign finance regulation that is

chiefly interested in leveling electoral opportunities

cannot withstand intermediate scrutiny, much less

strict scrutiny, when it burdens core political speech.

Davis, 554 U.S. at 740 n.7 (“the chief interest prof-

fered in support of the asymmetrical contribution

scheme — leveling electoral opportunities — cannot

justify the infringement of First Amendment inter-

ests”).

As observed in Citizens United, “Buckley rejected

the premise that the government has an interest ‘in

equaling the relative ability of individuals and groups

to influence the outcome of elections.’” 130 S. Ct. at

904 (quoting Buckley, 424 U.S. at 48-49). Empower-

ing the government to intervene in the marketplace

of ideas in this way is irreconcilable with the First

(vy

Amendment's fundamental “nustrust of governmental

power.” J/g at 89s. For this reasen, a state's effort to

control some voices in order to “enhance the relative

voices” of less influential speakers “contradiets basic

tenets of First Amendment purisprudence.” First Nat?!

Bank of Boston v. Bellott:, 4385 US. 765, 791 n 3o

(1978S) Unternal quotations and citations omitted)

The purpose of equahzing electoral opportunities,

resources or influence is simply eager Ee to bere

goals of the First Amendment. Dacis, 494 US 742

(quoting Austin, 494 US) at 705 Chennedy, d., fe

senting’); see also Citizens United, 180 8 Ct at 904

OS. Consequently, a eanaletion that burdens tree

speech chietly for the purpose of equalizing electoral

opportunities cannot withstand any level of height

ened scrutiny, Davis, ter example. struck down re:

porting and disclosure requirements for self flnanced

candidates because thev cletly served the electoral

equalizing purposes of the Miulhonaire’s Amendment.

even though they only triggered intermediate seru-

tiny, 554 US. at 744. These principles compel the

conclusion that Anvzena’s matching funds system

cannot possibly survive intermediate scrutiny

The Clean Elections Act declares on its face that

it seeks to protect “the voices and influence of the

vast majority of Arizona citizens” and to encourage

qualitied candidates to run for office “who lack per-

sonal wealth or access to special-interest tundings.”

A.R.S. §$ 16-940. A). It desembes matching funds as

“equalizing funds” and “leiqual tanding of candidates.”

ARS. $ 16-982; CCEC Admin. Rules, R2-20-118

Matching funds, in turn, correspondingly target in

dependent expenditure committees and self financed

candidates, Whose campaign spending poses no trreat

of guid pro que corrupuioen under Cificens Cnied, 130

S.Ct at 913. and Davis, 54 US. at TAO-4T ARS

§ 16-952, A.C). And Arivona’s matching tunds provi

sion does not go dermant uf the State runs out of

monev with which to subsidize politieal campanrmns

Instead, ARS. §$ 16-954.F) ensures that the provi-

sions serve to lft contmbation and spending Lmuts m

order to allow participating candidates to accept and

spend prroafe campaign donations. The geal of equal-

imng electoral opportunities thereby overrides the

goal of eliminating private campaign financing when

the two conflict. This feature alone compels the con-

clusion that the ciref interest of Arivona’s matching

funds system is to equalize electoral opportunities,

resources and influence. That conclusion is contirmed

by the volumimous admissions of Respondents and

proponents of the Clean Elections Act. 10-269 PALS6-

S7, JAMS, 106, 107, 109, 110, 218, Qls-29) 2a. 240,

DAS, DAT, LOS-GA, GUS, AST, SUY-DAL SSO

As declared emphatically bv a leading propenent

of Clean Elections: “Clean Elections is NOT about

public funding It's about spending limits, getting rid

of special interests, and leveling the plaving fleld”

JA2QLIS (emphasis in orginal) Por that very reason,

Arizona’s matching funds system must be struck

down under the First and Fourteenth Amendments,

regardless of the level of heightened scrutiny appled

oO.

BR. Arizona’s matching funds system imposes

a disproportionate burden on speech.

Even af “leveling the plaving field” were an

ines overnment objective for campaign finance

regulations, Armzona’s matching funds system goes

well bevond merely enabling participating: candidates

to run competitive campaigns The average amount

spent by participating candidates grossly exceeds the

average amount spent by competing tCradiuonal can-

didates — participating candidates spend, on average,

as much as 186° more than traditional candidates

10-289 PALYO-N2 Moreover, in contests between

mayor party candidates, the one sided award of

matching funds for independent expenditures bene

fits participating candidates most when fev need al

feast major party participating candidates spend

50% more than modestly tinanced mayor party tradi

tional candidates. 10-239 PALY2 The one-sided

award of matching funds for independent expend.

tures gives participating candidates a huge advan-

tage over traditional candidates, whose campaigns

typically are not advanced as effectively by unceord:

nated expenditures. LO 239 PALYS M4, BAS. Sle 1),

G2T-WS; TALST SY, LOLA 2S. Moreover, the fundraising

cost savings and “multipher etYeet™ of matching funds

ensure that participating candidates as a class wall be

able to swamp the campaign tundraising and expend:

itures of most traditional candidates, which strongly

discourages traditional candidates trom apes, or

spending campaign money LO-289 PADAT-49, SLL-da,

325-26, 328-29; JAIVS, 639-42, 1010-12, 1014-15,

In short, Amvona’s matching funds system yives a

lopsided competitive advantage to partierpating can

didates when thev tace all but the most extremely

well-finaneced traditional candidates TQ-239 PAD.

47, 249-50, GIS. The associated speech burden is

quite literally disproportionate to what is reasonably

necessarv to encourage participation in public tinane-

ing, much less Co compete successtully against trad.

tional candidates The dispreportionality of matching

funds is further underscored by the fact that encour

aging participation in pubhe financing does not

advanee anticorruption purposes mu Amzona’s highly

regulated campaign finance svstem

1. Matching funds do not further an-

ticorruption purposes in Arizona's

already highly regulated campaign

finance system.

According to the Ninth Cireurt, the prevention of

actual or apparent quid pro que cerruption Chrough

encouraging participation in pubhe financing ts the

government interest furthered by Arivonas matching

funds system 10-239 PASS. Phe court: of appeals

reasoned, “The more candidates that run with pubhe

funding. the smaller the eacnairentgh among Arizon

elected officials of being susceptible to guid pro gae

corruption” LO-289 PAST Bat within a system th rat

already prohibits large campaign contributions and

IMpPoses extensive disclosure requirements, matching

funds simply cannot further advance anticorruption

PUTPOses wt even bv promoting participation in

public financing

As observed an Nandali, S48 US) at 250-51,

Anzona already has among the lowest centribution

lumits in the nation In tact. Arivona was ranked in

2005 as having the most stringent contmbution hnuts

and the Sth most stringent everall campaign finance

disclosure svstem in the mation LO-239 PAYoO4d-08,

Record 3825-9. 10) Adjusted for inflation, the contmbu-

tion lamuts fer individual contributions to legislative

and statewide candidates in the 2010 election evele

were $410 and $840, respectively See ARS S$ Ie.

MOH AKL) M4 BD Amzona Ofice of the Secretary of

State, 2008-10 Contribution Limits, http www arvsos

gov election 2OLO Inta Campaum Contribution Limits

WO htm Arvena’s campaign financing regulations

remain among the most stringent in the nation

JAGTY- TOL, Record J25-100-2-13) In this content. it is

implausible to clanm that anuecorruption purposes are

advanced by participation in pubhe fnaaneme, much

less bv matching tunds

Bluntiv stated, when low contribution limits are

combined with disclosure requirements requiring the

reporting of all campargn contmbutions and expends:

tures. rts avery high risk proposition for tradiional

candidates to spend illegally large contribations in

support of their campaigns Elected ofecials who are

susceptible to quid pro ghe corruption are not likely

to accept bribes in order to spend those bribes on

their carmparge. They mav very well trade legislative

favors for meat but ther motivation wall be the all

cash purchase of a summer home on Lake Tahoe, not

financing their next campaign There is no reason to

believe publicly-tinanced candidates are less suscep

tuble than traditional candidates to the lure of a givin

bag of cash. Buckley never held that pubhe financing

serves anticorruption purposes in a remulaterv con

text in which large contributions are already prohib

ited by law and in which private campangn financmes

is already comprehensively disclosed and regulated

Pabhe financing, after all, is not a mage wand It

does not transform participating politicians into

angels Far trem it’ Studies of Arvena’s stringently

regulated campaign finance environment have shown

there as no significant difference in interest group

influence or levers islative Voli paiterns between

traditional and participating candidates based on

sources Or amounts of campaign nanny 10-259

PAZSS-S9, JAAD) Record LAS 6.6 7). Labeda TS-20),

144-5(1-3, 7), 145-10 01:3-25, 12-14), $25-8(2-21). Like

wise, in L9YYL. a bipartisan task force revected publi

financing as a remedy for the outright bmberv that

was imwvolved in AzgScam, instead, it recommended

closing loopholes in Arvena’s regulatorv: regime to

Parteipating candidates are routinely accused of, and

avasionally prosecuted for accepting illegal in-kind centriba

tions, Vielating contriduten limits, and oomimitting porrmary

among other shenamgans JALYS 88) BIS ON Sst Record

SLING, 19-20), GIS. A SLI) TIS SAO ded

ensure that all campaign contributions and expend

tures were fully disclosed JALIO-21L, Record 352)2-0)

Since then, there have been no actual or apparent

Quad pre guo corruption scandals in Arizona arising

rom private campaign contributions

According to expert witness Dr Osborn, Arizona's

contribution limits are sufflaently low and its disclo

sure requirements suthicrently extensive to prevent

private contributions from having any significant in-

fuence on candidates 10-239 PALOY, 255.75, TAde?-

B64. 474, Record 143-000-700) 44 aS 21) 144-0 1-807),

145-1 GE 13-25, 87 1-20) Pubhe financing in general,

and Arizona’s matehing funds in particular, do noth

ing that could further prevent actual or apparent

corruption in Arizona's electoral svstem Jad) There is

no reason to beheve Arizona’s matching funds system

furthers any anticorruption purpose, even assuming

that at plavs a role in increasing participation in pub-

he fnanemng If anvthing, Arizvena’s matching funds

system is counterproductive to advancing anticorrup:

tron purposes to the very extent that low contribution

hints and extensive campaign finance disclosure

requorements serve ant rorrup Tee PUrprases

2. Through rampant gaming, Arizona's

matching funds provisions enable lange,

undisclosed campaign contributions.

in assessing whether campaign finance regula

thons advance government interests, the Court has

"«

, ;

considered how gamesmanship could undermine or

cireumvent their effectiveness Buekleyv, 424 US at

9, 61, 62 & G2 n 71 Such considerations reveal that

matching funds fail intermediate scrutiny: because

they are not closely drawn to furthering anticerrup-

hon purposes

Anzona’s matching funds svstem generally treats

traditional and participating candidates as af they

were competing even when they are not) This feature

has led t to peoepgg gaming of the svstem. lO-239

PAITO-75 » S31 3, Record 145. 1,.25-29, 31-43, 88431

22). 145-8 7:19 05. 81-23), $27(4-6, 18, 19), 329-507

Seale fer example, can deliberately run as

candidates in the same race as one or more preferred

participating candidates in order to trigger matching

funds to participating candidates 10-239 PAZ1TO 22

271-72, 814-15, 319. Self-financed traditional cand-

date, Sam George, for example, triggered nearly

$1,000,000 in matching funds to Democratic partion

pating candidates, Paul Newman and Sandra Kennedy,

to support a coordinated “Solar Team” campaign tor

three seats on the Arizona Corporation Commrssien

during the ZOOS election TO-239 PATO, Bod) Yov-Od,

211-12, 214-15, 218-22, 272; JAV2ZS-29% 9133); Record

33-225-26), 145 B11 24-25, 12-13 1-14), 145-6. 11: 22-

25, 12, 13 1-4. lo 20-24), D45-ScC14 17-24. 18-24)

Significantly, Solar Team-member Sam George

Was a consultant to the proponents of the Clean

Elections ballot measure, and the Solar Team website

stated that Sam George “helped write and pass” th

Clean Elections Act) Record 145-3018), 145 602 14-25,

“-

S:1-2H, 1222-2, 13-14) Acwnie might suspect Arizona's

matching funds svstem was desizned to be gamed

If so. the secret is eut Respondent Commissioner

Damels testified that she repeatedly heard plans

for a similar conspracy among Repubhean cand

dates running fer Corporation Commission Record

332(19:19-25, 20-30: 1-2)

Additionally, even without running for office.

individuals and special interests can contmbuate to

traditional candidates dehberately to trigger match

ing fungs to their favored participating candidate 10-

239 PADT1L72. Corporation Commissiener Paul

Newman testified that this is what the energy tndus-

trv appeared to do during the 2YOOS election cvele

when he heard that Repubheans were running a

“team” of traditional and participating candidates for

Corporation Commission 10-209 PADOO-02, 205-08

This scam muluiphes the value of monevs given or

spent to support a traditional candidate

Finally, individuals and special interests can

engage in “reverse targeting” to trigger matching

funds to preferred participating candidates 10-239

PAIT4.75, 331-33, 3386, TAGS? “Reverse Gargeting” ts

a common campaign tactic that desembes an adver

Uisement that appears to support a candidate, but

which is actually ineffective or dehiberately designed

to undermine that candidate because ot the likely

adverse reaction of the audience to the message tt

conveys /gd Actual or apparent examples of “reverse

targeting” dumng the 2008 election evele included

a blast email in which a gay mahts organization

seemunesly advocated the election of a secially con-

servative candidate, as well as signs that appeared to

suppert various candidates with messages such as

the

“thev promised to raise taxes help them keep

promuse, “help them to support legals.” and “sup-

port open borders.” LO-249 PAD74-75, 314 1s, seine

S386, JASSL-SS. S40. S63, O49-52, Record 829-02

S29-71.10-13, VF-21, 27-28), S8AIG:8-21, 51-47.1-9

SM O24, GOO-13), 8S2-LeL-3), S3L-3(2-6), GS82-4cb-3

Anvzona’s matching funds svstem encourages “reverse

targeting” because a participating candidates sup.

porters may wish to circumvent contribution limits

and disclosure requirements by triggermmg matching

funds to ther preferred participating candidate

through an oeffective or harmful advertisement

made to appear as wing it supported a competing

candidate 10-239 PADT4-75, TAGS?

Anzona’s matching funds svstem thus enables

political actors to leverage publi campaign financing

to generate the functional equivalent of unlimited

and undisclosed private campanurmn contmbutions 10

239 PAZ (0-75, JAMBS- 73, Record S212 18-17, 13:1

But unhke an honest effort to deregulate campaign

financing, Arizena’s system is premised on decepuivels

using the publie’s monev to reach the same result

Whether Sam George-stvle gaming ts intended er not,

the Phoenix New Times’ depretion of Clean Elections

as Mr Clean covered in grime is apt: See dATOL. By in

centiviging gaming tactics that undermine the integ

ritv of the electoral system, matching funds throw

sand in the gears of regulations that are more closely

connected to furthering anticorruption purposes. 10-

2389 PALOY-12. Beenuse ito is counterproductive, Arn

tona’s matching tunds system cannot be regarded as

“closely drawn” to serving anticorruption purposes

A closer look at Amzona’s version of public financing

also calls into question the assumption that encour-

aging participation in that svstem is “closely drawn”

to furthering anticorruption purposes

3. Encouraging participation in Arizona's

version of public financing does not

shield against actual or apparent

quid pro quo corruption stemming

from large campaign contributions.

The Ninth Coreuit Was mistaken in asserting that

“Qn exchange for public funding. participating cand.-

dates relingursh their right Co raise campaign contr:

butions from private donors.” 10-239 PASs. In order

to quality for publi financing, participating cand.

dates are required to raise hundreds or even thou

sands of individual $5 campargen contributions ARS

S$ 16-946, 950. Participating candidates are also

allowed to raise thousands or even tens of thousands

of dollars in private seed money, which are called

“early contmbutions” ARS. §$ 16-945 Individual

“volunteers” are permitted to bundle the entire num-

ber of quahtving contributions a candidate may need

to access Clean Elections Record 330.16 16-23), S30

15), 330-38.2:10-25). In tact, the private campayn

contmibutions participating candidates are allowed to

receive are routinely bundled by individuals and

organizations to make it easier to qualify fer public

financing - advertisements by the CCEC even en-

courage volunteers to collect $5 contmbutiens for

candidates 10-239 PA267-69; JAS6-S7T, G81. S83:

Record 145-210 PEPE), 145-4.26), 3382.61:7-25, 62:1-

29, 631-25) Participating candidates are fully aware

that their access to tens of thousands or even millions

of dollars of public financing is provided by private

individuals, organizations and lobbyists who are able

to bundle these pmvate contributions: hence the real

value of these private contributions, when bundled.

tar exceeds their face value. 10-239 PAP6S-69 At the

same time, because their aceess to sources and

amounts of private campaign financing is) more

restricted than traditional candidates, and the time

in Which they have to qualify for public fin; incIng ts

short, participating candidates are actually more

beholden to bundlers than are traditional candidates

Additionally, through its highly paid contract

lobbyist, the CCEC has lobed to block legislative

action that threatened its emstence, including

amendments to the Act that were feared would make

it more lkelv that voters _— repeal Clean Elee-

hons. 10-239 PA259-64, 270; JA929-31.99190, 191,

195), 935-36. 984); econ’ 3 129. 31-34), 329-4¢1-13)

The CCEC lobbies lawmakers despite the fact that

has the regulatery power to oust elected officials

from office and also wields broad discretion over the

issuance and amount of matching funds. 10-239

PA260-63.

For example, when confronted with unreported

expenditures or contributions, the CCEC awards

matching funds without any guiding step-by-step

written standards. 10-239 PA262-63; JAG02-10, 626-

33, 652-59; Record 329(19:15-23, 20:1-2), 380. 11:4-11,

13:1-23, 18:4-16) To assess the cost of unreported

expenditures or contributions, the CCEC relies upon

statements given by interested candidates and ven-

dors without any concern about or procedures for

controlling bias. Reeord 329 12:4-9), 3380(18:17-25,

19:1-4, 25:9-15). Moreover, in assessing whether an

unreported expenditure constitutes express advocacy

or “reverse targeting,” the CCEC does not investigate

or determine whether voters in the affected district

would actually react favorably or untavorably to the

message conveved. Record 330(23:2-11). Tens of

thousands of dollars in matching funds have been

awarded or demed based on essentially subjective

judgment calis. Compare Record 330(20:21-24, 21:3-

17) with JA300-01, 322-24.

Given such broad discretion, the CCEC ts in a

position where it could easily indulge favoritism and

abuse its powers. In fact, there ts a long history of

accusations against the CCEC for bias and favoritism

in its regulatory and funding decisions. JA303,

305-07, 352-53, 888, 890-91; Record 326-3(5-6, 9-10),

327(14-15, 19-21). The most significant scandal in-

volved allegations that the CCEC deliberately targeted

gubernatorial candidate Matt Salmon with frivolous

enforcement proceedings. JA291-92, 330-31, 890-91;

Record 327(13).

Against this backdrop, Dr. Osborn opined that

the CCEC’s lobbying of lawmakers it both funds and

regulates risks creating an appearance of quid pro

quo corruption, if that appearance is posited to arise

from financial influence over candidates. 10-239

PA259-64. Dr. Osborn is not alone.* The fact that the

CCEC hired a contract lobbyist caused the Phoenix

New Times to remark:

[T]hat means the very commission that was

supposed to reduce the role of powerful lob-

byists has now hired a powerful lobbyist of

its own — to lobby the very lawmakers de-

pendent on the commission for financing.

They call this reform?

Record 325-4(22).

Arizona’s very unusual version of public financ-

ing clearly does not share the prophylactic anticor-

ruption characteristics of the svstem upheld in

Buckley. Instead, it replicates and augments all of the

purportedly corrupting aspects of unregulated private

campaign financing. Given these dynamics, there is

no reason to conclude that participation in Arizona’s

system of public financing shields against the influ-

ence of large contributions, or their functional equiva-

lent, more effectively than the rigorous regulatory

* The cold record cannot hide Executive Director Lang's

obvious discomfort with the questions that are naturally raised

by the CCEC’s practice of lobbying the very legislators 1t funds

and regulates. See JA450-56.

system Arizona already apphes to private campaign

financing. Respondent Commissioner Daniels agreed

in her deposition testimony:

Q. The bottom line is that the Clean Elec

tions system and its method of qualttving

candidates for access to pubhe financing

is not more likely to reduce corruption or

the appearance of corruption than the tradh-

tional way of fund-raising”

AJ Ive publicly stated that. so that’s not

anything | wouldn't agree with Ll have pub

hely stated that 1 don’t think that Clean

Elections or traditional elections takes the

dirty politics out of it. lois what itis when

it’s dirty, and when it’s not, then it’s what u's

supposed to be

Q. And so if one of the purposes of the

Clean Elections Act is to reduce the degree of

corruption or the appearance of corruption

that exists under a traditional fund-raising

system, It's not going to achieve that pur

pose?

A Ido agree

JAGE 1-62

In short, Anzena’s matching funds system cannot

be regarded as “closely drawn” to serving anticorrup-

tion purposes by encouraging participation in Clean

Elections. Of necessity, matehing funds impose a

“disproportionate” burden on the exercise of First

Amendment rmghts. Thus, Arizona’s matching funds

svstem fails intermediate scrutiny under the First

and Fourteenth Amendments. Randall, 548 US. at

YAS, 255, 261-62. Therefore. uw cannot possibly wath

stand strict scrutiny’

Ill. ARIZONA'S MATCHING FUNDS SYSTEM

CANNOT WITHSTAND STRICT SCRU-

TINY BECAUSE IT DOES NOT DIRECTLY

SERVE ANTICORRUPTION PURPOSES

IN THE LEAST RESTRICTIVE MANNER.

For a regulation to be regarded as narrowly

tailored under stmet serutiny, the gevernment must

prove that it actually advances a threatened compel

ling state interest bv directly remedving the under

wing problem. Wisconsin Aight to Lire. Ime S50 US

at 465-66. The government must also prove the

challenged regulation is the least restrictive means of

remedying the targeted problem Uonrred Slates v

Plavbov Entertainment Group, Ine. 529 U.S. 808,

S13, S24 (2000). Respondents cannot possibly carry

this burden of proof

* Ioan response to the foregorngs arguments, Respondents

repeat their insisteat cham in the lower courts that the Clean

Flechons system cannot function as if Was uitendea without

matching funds, then the Court shoud regard ARS § 16-942 as

nonseverable and strike down the entire system under the First

>.>

and Fourteenth Amendments See Neneoll 548 US at Se.

A. Arizona's matching funds system does

not directly prevent actual or appar-

ent quid pro quo corruption.

The same reasons that require striking down

Anvona’s matching tunds system under intermediate

scrutiny qustity striking down the system under strict

scrutiny, But even i ene could conclude, as did the

Ninth Crreunt, that Arizona’s matching funds system

is somehow substantially, proportionately and effies-

chously connected to advancing anticorruption pur:

poses, itis clear that the connection ts not dinec! At

most, the connection between Arivonma’s matching

funds trgver and anticerruption purposes is) an

indirect one = tt efYectuates a scheme of public financ-

Ing thats asserted to shield participating candidates

from the need to accept private campaign contribu,

tions, which, in turn, is asserted to shield candidates

from actual or apparent gad pro que corruption

“t ‘

associated with accepting “large contmbutions ~

Buckley, 424 US. at 2-27, 82. 46, 10-259 PASG-38

This asserted indirect connection between Arizonas

matching funds trigger and antireorruption purposes

parallels the indirect connection between issue adve

eaey regulation and anticerruption purposes, which

did not withstand strict scrutiny in Wesconsr Rusliye

, rs

io Life.

Wisconsin Right to Life, 951 US. at 478. refused

to countenance the argument that limitations on

issue advocacy are justified to effectuate limitations

on express advocacy, which are justified as a means of

efYectuating contribution limits. Declaring “enough is

x"?

enough,” the Court reyected efforts to connect the

regulation of protected speech to antieerrupuion

purposes under strict scrutiny by way of such “pro-

phvlaxis upen prophylaxis” reasoning Jo Instead,

Wisconsin Right fo Life requires “each apphlreation” of

a regulatory regime that triggers strict scrutiny to be

drreetiv supported by a compelling state interest Ja

Wisconsin Right to life recogmved that the First

Amendment prohibits the government from burden

ing core political speech ino the name of reaching

unprotected speech (or conduct) as a corollary of over

breadth doctrine. Ja at 479 touting Ashorott co Free

Speech Coadition, 535 US. 234, 255 (2002) “The

Government may net suppress lawtul speech as the

means to suppress unlawful speech”) Buckley, 424

US. at 44 (expenditure Limitations “cannot be sus-

tained simply by inveking the interest un manumiging

the effectiveness of the less intrusive contmbutien

hiitations’) As underscored in the concurring opimon,

“We have rerected the ‘can’t make-an-omelet-without.

breaking-egys approach to the First) Amendment,

even for the infinitely less umportant (and less pro

Wisconsin Raght to Life, S517 US. at 494 (Scaha, d.

CONCUrTINg!

Wisconsin Right fo life’s rabonale apples equally

here Just as issue advocacy regulations impose a

substantial speech burden that is distinet trom ex

press advocacy regulations, Arnimvonas matching tunds

imposes a substantial burden on tully protected tree

speech rights thatus entirely distinct from any speech

burden that might be intrinsic to maintaining a

system of pubhe finaneing Unhke lump sum publi

financing alone. matching funds pointedly cause

(radiiiona: candidates and independent expenditure

committees to disseminate hostile speech as a conse:

quence and condition of exercising First Amendment

rights) Therefore, anv anticorruptien rationale that

mav justify pubhe financing cannot pustity the speech

burden imposed by Arivona’s matching funds trigger,

yust as the anticorruption purpose of express advo

caev regulations cannot qustity the speech burden of

issue oadvecacy regulations Instead. to withstand

strict scrutiny, the distinct speech burden unposed by

Arivonass matching taunds must be independently

yustified as directly serving antieorruption purposes

Because Arvona’s matching tunds svstem does not

direchy serve: antioorraptien purposes. it) cannot

withstand stret serutiny under Wisoonsen Rusht 4

Life

B. Arizona's matching funds system is not

the least restrictive means of remedy-

ing any asserted problem of actual or

apparent quid pro quo corruption.

Even at Arivona’s matching funds system were

somehow shown to be the most effective means ot!

directly preventing actual or apparent gaurd pro quo

corruption, a law ois the least restmetive means ot

remedying an asserted harm om/y rf ators the least

drastic remedy, not overbroad, and no more restric:

tive than mecessary 2/2 Stote Baooof Bloctions

-_-

Socialist Workers Party, 440 US. 173, 185 (1979) The

government's chosen means of regulation is not the

least restrictive when there are reasonabiy eflective

less restrictive allernatives to the government's

chosen means of reguhition, and the government has

yt shown them to be implausible Pvavdoy Enter

taamment Group, Inc, 529 US. at S13, S24 Cultus no

response that voluntary blocking requires a consumer

to take action, or mav be inconvement, or may not go

perfectly every time A court should not assume a

plausible, less restricuve alternative would be inet

fective, and a court should not presume parents,

mven full information, wall far to act) Reno:

ACLU, 521 US. 844, S76-79 (1997), Florida Star ;

BJF, 491 US. &l4, S38-41 (1989) In the present

ease, Arivona’s system fails to meet anv of these

requisites of narrow tanloring

First of all, Ghe Court should take pudicial notice

of the elephant in the room matching funds are

obviously more burdensome than lump sum = public

financing Lump sum pubhe financing dees not cause

the exereise of First Amendment rights bv traditional

eandidates and their supporters to heip disseminate

hostile speech It cannot possibly have the punitive

and deterrent effect that matching funds de And it

existing amounts of lump sum publi financing are

inadequate to draw participation from candidates, if

only takes a simple lemrslative act to increase those

amounts” The CCEC has already helped draft mode!

lesnsiation to double the base amount of puble finane-

mg JAMBECLTDT) Reeord 3831-119) There is no

reason to incur the unintended cor intended) conse

quences of the complex regulatory apparatus entailed

by matching funds

In fact. given the grossiv disproportionate fund.

ing recenved by participating candidates im Anzona’s

matching funds system. it is more hkely that the

eXisting svstem makes pubhe financing more expen

sive than would lump sum public financing Respond

ents have never explauned why they could not

promote reasonable husbandry of pubhe funds bv

requiring partioipating candidates to repay what thes

cannot justify spending, perhaps secured bv posting

collateral or a bond Another alternative is to estab:

lish a strong deterrent by prosecuting gross abuses

In contrast te the Nint Coreurt’s naked assertion that

doong “away with matching funds altogether” would make publa

financing “prohitvtwvely expensive and spelb its doom.” 1lO-249

PASS) the CCEC recenth announced that it returned £20

million te the general fund and has returned a total of Sed mul

lan te the yeneral fund since LOO) Press Release, CCEC Gites

SY Malin to Anames Genen! Aung. http. www arcleanchetions

gov DOWN DO TO dass Comrussion Gives to General Pund 2010 stb

ashy Moreover despite being Limited te ther unitial lump sum of

public financing. which ts about ene third of the total amount

they could have obtained with tougwered matching funds about

halt of Che major party winners in the 2010 primary election

wer participating candidates See 2010 Cancidate Listing with

Funding Amounts, http wow ace anclections gow DOU DOT Odoes

Candidate Lasting stb ashx

as the CCEC did) several vears ago when. self

desembed Libertarians spent $100,000 in clean cam

pag funds to party at local otightchibs JAG2?

VAS SSY-9L Record 825 4.8)

Secondly, all bw themselves, Arivonas existing

contmbutien limits and extensive disclosure require:

ments are adequate to prevent actual and apparent

guid pro quo seve pion stemming from. private

campaign financing. LO-289 PAROS S98, 264-70, JAAG2

G4. 474, opgthy sas WOT) P44 420-21), 144-40 1-3

145-130:18-25, 387.1-20)) Simply maintaining or

tweaking lioes regulations by providing for addition

al disclosure requirements is a plausible. less restme

tive alternative to Arivona’s matching tunds svstem

1-289 PALS TO Im this context, the speech burden

imposed by matching funds is overkill, especially in

view of the feasible alternative of lump sum public

financing Arizomas svstem thus faiis the test of

narrow tailoring required by striet scrutiny under the

First and Fourteenth Amendments, and must be

struck down

. : . .

The Court may also affirm the distimet courts mudgment

hased on the determination that the evidence oflered fv Re

spwndents, to which Petaioners objected and moved to stmke was

impheitivy stmeken from the record Compan JAQGS 60) Reoord

S4MTLIVS, 2-87), BAMGN1) sorth Qk 1-9)) JATSO-54. SAG?

VIMWGS) This uw because Petitioners motion to strike Respon

dents’ evidence was merged bv local rule and actual practice

inte their summary miafgiment filings Covmpaee 2 Amr 1 Rn

PAms2) awk Rewond S481 25-08) 2 1-10) The distrret court's dec:

ston to grant the entirety of Petitioners’ motions for suminary

Continued or followrngy pr pte

CONCLUSION

In both Pacific Gas & Flee Co and Davis, the

Court struck down regulatory schemes that punished

and deterred the exercise of First Amendment rights

by imposing the msk of disseminating hostie speech

on those who would engage in free speech In Crrreens

(neted, the Court integrated disapproval of influence

equalivation with the longstanding principle that

xovernment may not devise regulatory schemes that

protubit or burden free speech by disfavored groups to

balance electoral opportunities

Contrary to Crfizens United and Davis, Arizona's

matching funds system is expressly premised on the

goal of equaliting electoral opportunities, resources

and disproportionate influence among competing

candidates and interest groups Arivona’s matching

mdgment and to denv the entirety of Respondents’ motions

should, therefore, be construed as impheitly reacting eviden

Gary rubbags in tavor of Petrioners and against Respondents Cr

Shak « United States. STS Fld TS6) 1162 (9th Coir). cert

denied, AMS US S69 (C1989) The case rebed upon bw the Ninth

Circuit for the determunation that exaphent evidentiary rulings

were required te exclude anv evidence from the record name

Vinson o Thomas, 288 F3d 1145, 1152 & v8 (oth Cir 2002), 1s

mapposite because there is mo mudieation that the parties in

Vinson were required to merge ther evidentiary motions with

their summary qudgment flings. and the case dig not yrapple

with the dectrine of anphet rulings The Ninth Crreust erred

because i should have apphedc an abuse of diseretion standard

and sustained the distriet court's rmphot evidentiary rohngs

basa on the reasening centamed im Petitioners motion to

strike Cf GE: Jomter, 522 US 186, 142-43 (1997)

funds svstem is designed to level and swamp the

resources of tradiuonal candidates and their support

ers, including self-financed candidates, third party

contributers and independent expenditure commuit-

tees Contrary to Dacss, Arizona's system ensures the

robust exercise of First Amendment rights bv trad)-

tional candidates and allied independent expenditure

committees wall trigger lopsided fundraising advan-

tages for participating candidates. And centrarv to

both Davis and Pacfic Gas & Elec Co. matching

funds force the exercise of First Amendment rights by

traditional candidates and their supporters to help

dissenunate hostile speech bv opposing publicly

financed candidates No anticorruption purpose is

served by the substantial burdens placed by Artvonas

matching funds trigger on the exeremse of First

Amendment rights. Respondents simply cannot carrs

their burden of proving that the mechanism ts closely

drawn or narrowly tarlored to preventing actual or

apparent gaurd pro guco corruption

It the Ninth Cireuit’s gmevous error upholding

Arigona’s system Were not corrected, the foundational

principle Chat government must not be Crusted when

tt meddles tn the open marketp.ace of political ideas

will be undone. State and federal governments wali be

free to shape that marketplace to produce whatever

outcome they desire Chrough a combination of trig-

gered campaign subsidies, low contribution limits and

strict disclosure requirements. If millonaire candi-

dates, corporations, umons or ordinary citizens are

deemed to have disproportionate influence on thre

politcal debate through their campaign contmbutions

or expenditures, the government will be free to lavish

milhons of dollars on their political opponents, while

maintaming low contribution limits and strict disclo-

sure requirements, to nmeutrahze that influence.

Outright censorship will be replaced with high regu

latery hurdles and punitive consequences for exereis-

ing First Amendment rights. In a few vears’ time, the

political process will be jerry-rigged inte a system

that will produce the same curtailment of free speech

that would have obtatned had Buckley, Pacific Gas &

Flee Co., Randall, Wisconsin Right to Life, Davis, and

Citizens (United mever come down. And while courts

puzzle over particular rerations of such regulatory

schemes and statistical expositions on the magnitude

of ther burdens, political candidates and their sup.

porters will no longer have uninhibited freedom to

project their ideas to the public) Freedom of speech

will be abmdged

Indeed. the regulatory push to force speakers to

trigger rebuttal speech subsidies combined with the

political pull to expand the scope of such regulation to

avoid the appearance of disfavoring particular speak-

ers or Viewpoints naturally leads to the expansion of

such regulatory regimes to encompass all speakers

and all forms of speech. Allowing matching funds to

burden core political speech thus lavs the groundwork

tor the government to restructure the entire market.

place of ideas

\y)

A fork in the read taken by our Republic thus

approaches yet again. But this time, the choice ts

clear. Fiscally-engineered censorship must not stand.

The Court should reverse the Ninth Circuit's

decision to uphold Arizona’s matching funds system,

affirm the distmet court’s permanent injunction on

A.R.S. §$ 16-952, and award reasonable fees and costs

on appeal to Petitioners. To fully protect First

Amendment nghts, and to preserve judicial economy,

the Court should also consider granting reasonable

ancillary relief, such as enjoining reporting require-

ments that chiefly serve to effectuate triggered

matching funds. See, e.g.. A-R.S. $$ 16-941(B2), CD),

958.4), (B), (DD), CE}, 939, 961(G), (LH). And if Respon-

dents contend that matching funds are integral to

Arizona’s Clean Elections system, the Court should

refuse to sever A.R-S. §$ 16-952.

Respectfully submitted,

CLINT BOLICK

NicHoLas C. DRANIAS*

GOLDWATER INSTITUTE

SCKARF-NORTON CENTER

FOR CONSTITUTIONAL LITIGATION

500 East Coronado Road

Phoenix, AZ 85004

telephone: (602) 462-5000

facsimile: (602) 256-7045

ndramas@goldwaterinstitute org

Counsel for Petitioners

*Counsel of Record

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.