Judge nixes law requiring presidential candidate’s tax returns

SACRAMENTO -- In a move that appeared to surprise many in the courtroom, U.S. Eastern District Judge Morrison C. England Jr. ruled from the bench Thursday that a state law demanding presidential tax returns could not go into effect.

The temporary injunction was a victory for the plaintiffs in five different complaints claiming SB 27 was illegal and preempted under federal law.

The law, signed by Gov. Gavin Newsom in July, would require a presidential candidate to publicly release five years of tax returns to appear on the ballot in California's March primary.

The law would not affect the general election, nor would it likely have any effect on President Donald J. Trump's bid to gain his party's nomination a second time. But Republicans have speculated it could drive down Republican turnout in California's top-two primary, resulting in more Democrat-on-Democrat contests in the fall.

"The burden isn't just on the candidate," said Justin R. Clark, representing the California Republican Party as a partner with Michael Best & Friedrich LLP in Washington, D.C. "The burden is on the voters and the state party and the national party's First Amendment rights."

Multiple sets of plaintiffs quickly sued to block SB 27, resulting in Thursday's hearing featuring a dozen attorneys, who often had to share microphones. England repeatedly noted the tight timeline of the case -- and that he would not be the ultimate decision maker.

"I know it's going through an appellate process regardless of which side prevails," England said.

He already knew which side that would be, giving his bench ruling moments later. He said he would issue a detailed written opinion by Oct. 1. But speaking from the bench, he suggested he was persuaded by lines of argument related to the qualifications clause of the U.S. Constitution and the Ethics in Government Act.

This is a 1978 federal law passed in the wake of the Watergate scandal. It created rules requiring federal candidates to disclose their financial backers and other information, rules the plaintiffs said preempted California's attempt to legislate in the same area.

Deputy California Attorney General Peter H. Chang said Congress failed to write the law in a way that it explicitly barred the state from taking the actions in SB 27. The harm the plaintiffs were warning about -- a "patchwork" of state laws governing ballot access -- is already "the system we have," Chang argued.

"The defendants have EIGA preemption all wrong," Thomas R. McCarthy, a partner at Consovoy McCarthy PLLC, argued while representing the Trump's campaign team. He added the ethics act "is regularly used to preempt state law."

Similar disagreements occurred as the attorneys discussed the qualifications clause and whether a presidential primary was a state or national election.

"The qualifications clause is straightforward," McCarthy said. "This law has the likely effect of disqualifying a class of otherwise qualified candidates."

"It is not like a term limit," countered state Deputy Attorney General Chad A. Stegeman. "It's more like a registration fee."

This was a reference to one of the most widely-cited qualifications clause cases. U.S. Term Limits v. Thornton, 514 U.S. 779, 838 (1995) threw out congressional term limits passed by Arkansas for its own delegation, determining they were an unconstitutional limit on who could run for the federal office.

The five consolidated U.S. Eastern District cases are: Donald J. Trump for President v. Padilla, 19CV01501 (filed Aug. 6, 2019); Griffin v. Padilla, 19CV01477 (filed Aug. 1, 2019); Melendez v. Newsom, 19CV01506 (filed Aug. 6, 2019); Koenig v. Newsom, 19CV01507 (filed Aug. 6, 2019); and De La Fuente v. Padilla, 19CV01659 (filed Aug. 26, 2019).

Thomas W. Hiltachk, the lead plaintiff's attorney in a related California Supreme Court case, was also on hand to observe much of the 2 1/2-hour proceeding. His firm, Bell, McAndrews & Hiltachk LLP of Sacramento, is representing the California Republican Party in its bid to convince the court SB 27 is barred under election rules in the state Constitution. Patterson v. Padilla, S257302 (Cal. Sup. Ct., filed Aug. 8, 2019).

SB 27 did not mention the president by name. But as England noted, "The elephant in the room is Trump's tax returns."

"This is an attempt to harass and target the president," said Harmeet K. Dhillon, who represents the Melendez plaintiffs as the founder of Dhillon Law Group Inc. in San Francisco. "In the two years since the last governor vetoed this, no better arguments have appeared."

That was a reference to the man -- also not present -- who might be considered the corresponding donkey in the room, Gov. Jerry Brown. Brown vetoed a largely identical bill, SB 149, in 2017. In his veto message, Brown acknowledged the "political attractiveness" of going after Trump but said it "may not be constitutional" and could create a "slippery slope" as other states passed tit-for-tat requirements.

England appeared influenced by this argument, saying in politics, "What goes around comes around."

Brown also came up when California's Chang argued that while other presidential candidates besides Trump have declined to release their taxes, no "credible candidate" besides Trump had done so.

England drew laughs when he noted Brown ran for president in 1992. "Even Ralph Nader didn't release his tax returns," England added.

In a tweet, SB 27's author called the ruling "perplexing, premature and unnecessary." Sen. Mike McGuire, D-Healdsburg, added, "There is no irreparable harm to the plaintiffs. We're way out in front of the deadlines for #taxreturns."