7th Circuit asks IN Supreme Court to consider dispute about corporate contributions to PACs

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The 7th Circuit Court of Appeals is asking the Indiana Supreme Court to consider whether state law prohibits or otherwise limits corporate contributions to political action committees or other entities that engage in independent campaign-related expenditures.

The certification of a question to the state’s high court comes in a case involving Indiana Right to Life Victory Fund, which wants to operate as an independent-expenditure PAC — commonly called a super PAC — in Indiana but fears the state’s election laws won’t allow it to accept donations from corporations, or that there would be a cap on how much those corporations could donate.

The group believes that would be a violation of its First Amendment rights, so it and a private company — Sarkes Tarzian Inc. — went to federal court seeking to prevent Indiana from enforcing its campaign-finance laws to limit or ban corporate contributions to super PACs.

Sarkes, an Indiana-based TV and radio company, wants to make a $10,000 contribution to the fund, according to an appellants’ brief.

But Indiana’s election officials say they have no intent to enforce the laws that way, and that doing so would be a violation of the First Amendment.

The U.S. District Court for the Southern District of Indiana, Indianapolis Division, found the fund did not allege a credible threat and dismissed the lawsuit for lack of standing.

The fund and Sarkes appealed.

In response, the 7th Circuit certified a question to the Indiana Supreme Court, ruling the state’s high court is the only body that can definitively construe Indiana election laws. The question is: “Does the Indiana Election Code — in particular, §§ 3-9-2-3 to -6 — prohibit or otherwise limit corporate contributions to PACs or other entities that engage in independent campaign-related expenditures?”

In its opinion, the 7th Circuit said the fact that Indiana election officials apparently see no real conflict with the fund’s wishes “sounded alarm bells for the district court, and it does for us too.”

The court noted that because the plaintiffs brought a pre-enforcement challenge, if they don’t allege a “credible threat of prosecution,” federal courts lack subject-matter jurisdiction no matter how strong the merit positions might be on either side.

Election officials argued the fund failed to allege a credible threat because Indiana election law doesn’t cover corporate contributions to super PACs. The election officials also argued that if a statute is “clearly unconstitutional,” there can be no credible threat.

“Yet the Fund — arguing, seemingly against its self-interest, that the Election Code does restrict corporate contributions to independent-expenditure PACs — presses some sound points of its own,” the opinion states.

The fund pointed to sections in election code that limit corporate contributions. And, citing Wisconsin Right to Life, Inc. v. Barland, 751 F.3d 804 (7th Cir. 2014), the fund argued the court can’t “adopt a narrowing construction of a state statute unless such a construction is reasonable and readily apparent.”

“We are therefore hesitant to constrain state law too quickly — even at the behest of state officials,” the opinion states.

The court also noted that current state officials’ promises to not enforce a statute are weighed less heavily, especially because they can’t bind their successors in office.

“What all this means is that the Fund’s standing to bring this case is in serious question,” the opinion states. “On the one hand, Indiana’s Election Code may not even regulate the Fund’s desired conduct, meaning the Fund would face no credible threat of an injury. But resolving this question would require us to interpret an Indiana state statute where both sides have advanced credible positions. On the other hand, Indiana officials say they will not enforce the Election Code in the way that concerns the Fund.”

Before getting into a “fine-grained constitutional analysis” of two related cases — Citizens United v. FEC, 558 U.S. 310 (2010), and Wisconsin Right to Life State Political Action Committee v. Barland, 664 F.3d 139 (7th Cir. 2011) ­— the 7th Circuit noted the U.S. Supreme Court has instructed federal courts to ensure any conflict between state law and the First Amendment is not “purely hypothetical.”

“To that end, when we are faced with both statutory and constitutional questions, we must prioritize resolving the statutory issues if doing so would prevent us from engaging in unnecessary constitutional analysis,” the opinion states.

And noting the U.S. Supreme Court’s guidance that the best way to resolve a question of state law could be through the state’s highest court, the 7th Circuit concluded certification to the Indiana Supreme Court is the best course of action.

Certification is appropriate because answering the question “will likely resolve the case,” the opinion states, and it doesn’t appear any state court has addressed the issue.

The appellate court said nothing in its opinion should be construed to limit the inquiry, and it welcomed the justices to reform the question.

Judge Michael Scudder wrote the opinion. Judges Frank Easterbrook and John Lee concurred.

The case is Indiana Right to Life Victory Fund and Sarkes Tarzian, Inc. v. Diego Morales, et al., 22-1562.

The 7th Circuit previously denied an “Appellants’ Motion Requesting Judicial Notice” under Federal Rule of Evidence 201 in the case after current Indiana Secretary of State Diego Morales replaced Holli Sullivan, who held the position when the lawsuit was filed. The court called the motion “unnecessary” and “improper.”

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