Nonprofit seeks en banc review of ruling it must disclose donors

A conservative nonprofit organization is seeking an en banc rehearing after a federal appeals panel ruled it must disclose major donors to the California attorney general, overturning two lower court decisions.

Americans for Prosperity, founded by conservative megadonors Charles and David Koch, is challenging former Attorney General Kamala Harris' collection of IRS Form 990 Schedule B, which contains the names of its largest donors.

Americans for Prosperity and The Thomas More Law Center, another conservative organization which filed a concurrent lawsuit, argued in U.S. district court that those disclosures would subject donors to harassment by the attorney general. They also argued the information was lazily protected, opening donors to public exposure and further harassment.

U.S. District Judge Manuel L. Real of the Central District granted them injunctions.

That ruling was unanimously overturned on Sept. 11 by a panel of the 9th U.S. Circuit Court of Appeals. The panel reasoned the threat of harassment and security issues were overblown and such large donors are already public figures. Americans for Prosperity v. Becerra, 2018 DJDAR 9121 (9th Cir., Sept. 11, 2018).

The panel included Judges Richard A. Paez, Jacqueline H. Nguyen, and Raymond C. Fisher, who wrote the opinion.

In the petition for rehearing filed Tuesday night, counsel for the Americans for Prosperity Foundation disagreed, and further wrote that the panel incorrectly applied "exacting scrutiny" and used inapplicable precedents to justify itself.

Derek L. Shaffer of Quinn Emanuel Urquhart & Sullivan LLP represents Americans for Prosperity and declined to comment.

"This case has nothing to do with elections or any interest in public transparency," the request for an en banc hearing states. "Indeed, California acknowledges that the donor information at issue is protected and should remain confidential, even while compelling thousands of registered charities to submit Schedule B to IRS Form 990, listing their major donors nationwide."

The disclosures are ostensibly for the purpose of detecting fraud and financial violations by donors. The attorney general's office argued preemptive collection of the information would enable an effective investigation. The charities argued the information should not be collected until needed, if at all.

Finally, the charities argued the disclosures would cause a chilling effect on donations, a First Amendment violation the panel rejected out of hand.

"Because ample means exist for California to achieve its ends without blanket compulsion, the panel's decision rejecting the constitutional challenge conflicts with settled law governing the non-election context," the petition for rehearing continues.

Americans for Prosperity did not respond to a request for comment but previously stated it was disappointed by the panel's decision and referred to a "demonstrated pattern of misuse of Schedule B information by California officials."

The attorney general's office did not respond to a request for comment.