Gibson Dunn | Supreme Court Says California Donor Disclosure Law Violates First Amendment

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July 1, 2021

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Decided on July 1, 2021

Americans for Prosperity Foundation v. Becerra, n ° 19-251, consolidated with Thomas More Law Center v. Becerra, No. 19-255

Today, the Supreme Court ruled 6-3 that California’s requirement that nonprofits disclose their donor lists unconstitutionally weighs on those organizations’ expressive association rights, in violation of the first amendment.

Background:
The California Attorney General requires private charities that operate or fundraise in California to register with the state each year. Registration involves filing various tax forms, including Schedule B of IRS Form 990, which requires charities to list the names and addresses of contributors who have donated more than $ 5,000 or 2% of the budget. of the organization in the tax year. California has advised charities that their Schedule B disclosures will be kept confidential; in reality, however, California law required public disclosure of these documents until 2016. The state’s justification for the disclosure requirement is an enforcement interest in regulating non-profit activities. lucrative. Two nonprofits have challenged the disclosure requirement as unconstitutional, arguing that it cools the expressive association by exposing donors to harassment and that less restrictive means are available to California to promote its claimed interests. . The Ninth Circuit upheld the disclosure requirement, finding that a “comprehensive” review – not a “strict” review – applied and that the requirement was sufficiently linked to an important government interest.

Publish:
(1) Whether close scrutiny or strict scrutiny applies to the disclosure requirements weighing on expressive non-electoral association rights; and (2) whether California’s disclosure requirement violates the freedom of association and expression of charities and their donors, in a facial manner or as applied to applicants.

Court dress:
(1) The court’s decision on the standard of review was fractured: a plurality of three judges said disclosure laws like California’s must pass close scrutiny. While a majority judge reportedly applied strict scrutiny, two others refused to resolve the issue. (2) A majority of the Court ruled that California law is prima facie unconstitutional under close scrutiny. California’s interest in administrative convenience is low, and a general disclosure requirement for organizations not suspected of wrongdoing is not closely aligned with this interest.

“There is a dramatic shift. . . between the interest that the Attorney General seeks to promote and the disclosure regime that he has put in place to that end.

Chief Justice Roberts, writing for the Court

What this means:

  • The court ruling protects sensitive information from donors to nonprofits, ensuring that individuals can contribute to charities without fear of harassment by the forced disclosure. The ruling also calls into question the constitutionality of similar donor disclosure requirements in the federal “For the People” law reintroduced in January 2021, which was passed in the House and is currently awaiting a Senate vote.
  • Today’s decision may have implications for mandatory disclosure requirements beyond the association context. In writing for the Court, the Chief Justice noted that “[t]it “the government can regulate in the [First Amendment] area with narrow specificity, ‘. . . and mandatory disclosure regimes are no exception. Op. 10. The court ruling suggests that other mandatory disclosure regimes that lack narrow adaptation could be challenged under the First Amendment. It remains to be seen how the court will apply today’s ruling to other compelled disclosures.
  • The court ruling continues its trend of giving strong constitutional protection to nonprofits, but leaves undefined the standard of review for forced speech cases. The Court has often used scrutiny to assess other First Amendment free speech and religious freedom challenges raised by nonprofit organizations, and the Court was only able to find one plurality for the “rigorous review” standard of review applied here. Other members of the court have indicated that government regulation of a wide range of First Amendment protected activities generally must pass careful scrutiny.
  • A number of courts have applied Buckley v. Valeo, 424 US 1 (1976) – which applied scrutiny to the limits of political campaign spending – to the larger context of forced speech, and did not confine it to the context of elections.
  • In an opinion from Judge Sotomayor, three justices dissented on the grounds that California’s disclosure requirement did not weigh on First Amendment rights of donors and therefore no adaptation of the law was necessary.

The opinion of the Court is available here.

Gibson Dunn attorneys are available to answer any questions you may have regarding developments at the Supreme Court. Do not hesitate to contact the following practice managers:

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