This week, the U.S. Supreme Court heard oral arguments in Americans For Prosperity Foundation v. Bonta (formerly Becerra), two combined cases about donor privacy and tax administration. One must always be careful making conclusions about oral argument, given the justices can use their questions to play devil’s advocate, probe weak reasoning, or raise issues for the benefit of other justices. Given all that, I was left with the impression that California will likely lose the case with the real question being how broad the decision will be.
In 2010, then-California Attorney General Kamala Harris began demanding that non-profit organizations provide her office with a list of their donors (IRS 990 Schedule B) in order to be allowed to solicit contributions in that state. Several non-profits filed suit in opposition to the order, saying their donors have a First Amendment freedom of association right to give privately, and that the state should have to demonstrate a compelling interest to demand disclosure of the information.
NTUF filed an amicus brief in support of AFPF, in which we explain why this donor information is not necessary for legitimate tax administration purposes. We also respond to an argument made by the U.S. government in the case that we found very troubling: that the government can force charities to give up constitutional rights as a condition of their accepting tax-exempt status. We argue that Congress cannot insist on a funding condition that entirely restricts a First Amendment right. We asked the Court to reconsider a 1983 decision, Regan v. Taxation With Representation, that the U.S. government relied on for its argument.
Three justices gave me the impression they are likely to side with AFPF using a broad rationale:
Justice Clarence Thomas quoted the NAACP brief which stated that the right to anonymity is important in a democratic state, and questioned why a person must show they are being harassed to be entitled to anonymity.
Justice Samuel Alito brought up the difference between an “as-applied” challenge and a “facial” challenge. This is an important question: one might argue that donor disclosure requirements are allowable for most charities but invalid for a charity that may face a specified amount of harassment. Such a decision would mean the regulation is generally (“facially”) valid but can be invalid as applied to a specific organization. Justice Alito pressed attorneys for what circumstances might make the regulation facially invalid, and if it can only be an as-applied challenge, questioned whether it was fair for every non-profit to have to go through years of court process. Justice Alito also noted that California has suffered data breaches of the information, and asked how often California has used the information in enforcement actions (ten times).
Justice Neil Gorsuch asked each of the attorneys about the distinction between as-applied and facial challenges, posing the hypothetical of a government regulation mandating that charities hand over holiday card lists to evaluate mail delivery or lists of donors’ dating history to study marriage. The lawyers acknowledged that such requests could be hard to uphold constitutionally but Justice Gorsuch did not seem satisfied with their attempts to distinguish this case from those examples. Justice Gorsuch also raised the right to associate privately and the right to be free from compelled speech.
One justice showed strong sympathy for California’s position:
Justice Stephen Breyer mused whether the real purpose of the case is to strike down campaign finance disclosure laws, and hinted strongly that California should argue that the regulation encourages charities to be vigilant against fraud. AFPF’s lawyer replied that this justification was a rationalization offered by amici but not by California itself. For its part, California explained that it uses the Schedule B materials differently than Breyer described, only referencing them after a complaint is filed.
Five justices kept their cards closer to the vest:
Chief Justice John Roberts asked questions about what the standard should be and how to apply it, particularly about the distinction between “exacting scrutiny” and “strict scrutiny.”
Justice Sonia Sotomayor asked AFPF’s lawyer about the case’s potential impact on campaign finance cases, and asked California’s lawyer why they do not accept the filings in written form rather uploading them to the Internet where there is a hacking risk. At two points, Justice Sotomayor said “the real question here” is whether California can keep the information protected from public disclosure.
Justice Elena Kagan sparred with AFPF’s counsel over whether (as she put it) “most charities disclose their donors,” but pressed California’s counsel on exactly what plaintiffs had to show to win an as-applied challenge.
Justice Brett Kavanaugh asked twice about the distinction between California demanding Schedule B forms and the IRS’s practice of collecting them, if one is invalid and the other valid. He also twice noted that almost no other state has a similar practice as California, and that California does so by regulation and not as a result of a law passed by the Legislature. This may mean he sees a narrow reason why California’s practice is invalid.
Justice Amy Coney Barrett asked how to balance governmental interests and First Amendment rights in practice, giving a hypothetical example of a university that banned all political speech and whether it would be unconstitutional even if most students were fine with it. (All lawyers agreed that it would be unconstitutional; Justice Barrett seemed to be referencing an earlier assertion that many charities are fine with complying with the requirement.) Justice Barrett asked California’s counsel whether a facial challenge was appropriate since 250 organizations had filed amicus briefs saying their rights were being violated; California replied that the organizations must show evidence that donors are deterred from giving to them.
If these predictions hold, Justices Thomas, Alito, and Gorsuch may press for a ruling that holds California’s practice of pre-emptively demanding Schedule B forms from all charities to be overbroad and harmful to First Amendment rights. They would need two more justices to form a majority opinion; otherwise, the Court is likely to rule that the regulation must be evaluated as to whether it harms a particular organization on a case-by-case basis. Which path the Supreme Court goes may depend on whether Justice Kavanaugh gets a good answer on how to preserve the IRS practice while invalidating California’s, whether Justice Sotomayor is satisfied that privacy concerns and campaign finance law can be protected, and how expansive a decision Chief Justice Roberts would like to see.
A decision is expected by June.