9th Circuit rules attorney general can demand nonprofit donor’s names

Major donor disclosures required by the California attorney general do not infringe on charities' First Amendment rights, a federal appeals court ruled Tuesday, reversing previous judgments in favor of two conservative nonprofit organizations.

The Thomas More Law Center and Americans for Prosperity Foundation, which was founded by the conservative Koch brothers, successfully challenged Attorney General Kamala Harris' collection of IRS Form 990 Schedule B, which contains the names of the organizations' largest contributors.

The groups argued in district court that those disclosures would subject donors to harassment by the attorney general, and that the information was lazily guarded, opening the donors to harassment should their names go public.

On Tuesday, a 9th U.S. Circuit Court of Appeals panel unanimously reversed permanent injunctions granted to the charities by U.S. District Judge Manuel L. Real of the Central District.

"Even assuming arguendo that the plaintiffs' contributors would face substantial harassment if Schedule B information became public, the strength of the state's interest in collecting Schedule B information reflects the actual burden on First Amendment rights because the information is collected solely for nonpublic use, and the risk of inadvertent public disclosure is trivial," wrote Senior Circuit Judge Raymond C. Fisher.

The district court's reasoning in granting the injunctions was "erroneous", Fisher wrote.

The panel included Judges Richard A. Paez and Jacqueline H. Nguyen. Americans for Prosperity v. Becerra, 2018 DJDAR 9121 (9th Cir., Sept. 11, 2018).

The opinion relies heavily on another decision in a similar case against New York's attorney general, in which Schedule B disclosure requirements were upheld. In that case, the 2nd U.S. Circuit Court of Appeals disposed of parallel arguments by Citizens United. Citizens United v. Schneiderman, 882 F.3d 374 (2nd Cir. Feb. 15, 2018).

In both cases, the plaintiffs argued the disclosures were unnecessarily intrusive because the information had not been used in an investigation. They also argued the disclosures would chill donations for fear of retaliation from the public, and that the offices were prone to hacking, theft or human error public disclosure.

Preemptive access to the information would streamline any investigation, and noticing patterns in disclosures in the first place would play a significant role in the start of any prosecution, Fisher wrote.

"In sum, the record demonstrates that the state has a strong interest in the collection of Schedule B information from regulated charities," he wrote.

Fisher disposed of the chilling effect and public disclosure arguments by pointing out that the experiences of a few donors presented as evidence were insufficient. He also added that Schedule B disclosures only affect "a dozen or so" large contributors who are often already publicly known.

"As applied to these plaintiffs, therefore, the Schedule B requirement is a far cry from the broad and indiscriminate disclosure laws passed in the 1950s to harass and intimidate members of unpopular organizations," he wrote.

He later added that the hacking threat is not a convincing argument, as the plaintiffs cited security issues the attorney general is already addressing, and that nothing is truly secure online in 2018.

"We are disappointed by the Ninth Circuit's latest decision and believe it imperils people's First Amendment right to freedom of speech and of association," sthe Americans for Prosperity Foundation, an organization that promotes conservative and libertarian causes, said in a statement.

"Consistent with the protected, sensitive nature of our donors' identities, the threat and chill they face from disclosure that was established during the trial of this case, and a demonstrated pattern of misuse of Schedule B information by California officials, the foundation intends to continue doing all it can to champion and protect the important constitutional rights at stake," the statement said.

The Michigan-based Thomas More Law Center, which aims to "preserve America's Judeo-Christian heritage," did not respond to a request for comment.

Derek L. Shaffer of Quinn Emanuel Urquhart & Sullivan LLP argued for the plaintiffs and referred comment to Americans for Prosperity.

A spokesperson for the attorney general did not respond to a request for comment.