Arizona State Democratic Party v. State

SUPREME COURT OF ARIZONA
En Banc

ARIZONA STATE DEMOCRATIC PARTY, ) Arizona Supreme Court
) No. CV-04-0346-PR
Plaintiff-Appellant, )
) Court of Appeals
) Division One
v. ) No. 1 CA-CV 02-0180
)
) Maricopa County
STATE OF ARIZONA, ) Superior Court
) No. CV-00-011655
Defendant-Appellee. )
__________________________________) O P I N I O N

Appeal from the Superior Court in Maricopa County
The Honorable Roland J. Steinle, III, Judge

REVERSED
________________________________________________________________

Opinion of the Court of Appeals, Division One
209 Ariz. 103, 98 P.3d 214 (App. 2004)

VACATED
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Shughart Thomson & Kilroy, P.C. Phoenix
By Rudolph J. Gerber
Marty Harper
Kelly J. Flood
Attorneys for Arizona State Democratic Party

Matthew J. Smith, Mohave County Attorney Kingman
By William J. Ekstrom, Jr., Deputy County Attorney
Jeffrey D. Dollins, Deputy County Attorney
Attorneys for State of Arizona
________________________________________________________________

B E R C H, Vice Chief Justice
The question in this case is whether the Arizona State Democratic Party
violated Arizona Revised Statutes (“A.R.S.”) § 16-919 by accepting
contributions from corporations and labor organizations to pay the Party’s
general operating expenses. We hold that it did not.
FACTS AND PROCEDURAL BACKGROUND
In 1998, the Arizona State Democratic Party solicited and accepted
approximately $100,000 in donations from corporations and labor unions.
The funds were used to pay Party operating expenses, such as rent, payroll,
taxes, insurance, supplies, and overhead. The Party accepted these
donations on the theory that, if they were used to pay operating expenses,
they were not prohibited “contributions” because they were not made “for
the purpose of influencing an election” as described in A.R.S. § 16-919
(Supp. 2004). See also id. §§ 16-901(5) (Supp. 2004) (defining
“contribution”), 16-901(5)(b)(v) (exempting payments by a political party
for operating expenses from the definition of “contribution”). The Party
deposited these donations into an administrative checking account, separate
from accounts maintained to support candidates for election, and, with two
minor exceptions not important to this case, used the money to pay
administrative expenses.
When then-Attorney General Grant Woods learned that the Party was defraying
administrative expenses with corporate donations, his office began an
investigation. The successor Attorney General, Janet Napolitano, referred
the matter to the Mohave County Attorney’s Office because of a conflict of
interest.
When the parties could not negotiate a settlement, the State issued an
administrative order directing the Party to return all the contributions.
On appeal of the order to superior court, both parties moved for summary
judgment. Reasoning that the Party violated A.R.S. § 16-901 et seq., the
trial court entered judgment against the Party and ordered it to deposit
all contributions received from “corporate sources” into the Citizens Clean
Election Fund. The Party appealed.
A divided panel of the court of appeals held that “the Arizona statutory
scheme prohibits contributions by corporations and labor unions . . . to
political parties for operating expenses.” Ariz. State Democratic Party v.
State, 209 Ariz. 103, 115, ¶ 40, 98 P.3d 214, 226 (App. 2004). The
majority found that A.R.S. § 16-919(A) was meant to prohibit corporate
contributions to a political party “for the purpose of influencing an
election,” and concluded that the contributions at issue were ultimately
made to further the election of Democratic candidates. Id. at 111-12 n.11,
¶ 25, 98 P.3d at 222-23 n.11. Thus, it concluded, the Party violated
A.R.S. § 16-919. The majority also held that the statutory provision was
constitutional under both the Arizona and United States Constitutions and
that the Party did not violate Article 14, Section 18 of the Arizona
Constitution, which makes it “unlawful for any corporation, organized or
doing business in this state, to make any contribution of money or anything
of value for the purpose of influencing any election or official action.”
Id. at 110-11, 118, ¶¶ 20, 50, 98 P.3d at 221-22, 229. The State has not
challenged those latter rulings before this court.
In dissent, Judge Timmer noted that A.R.S. § 16-919(F)(1) resolves any
perceived ambiguity in § 16-919(A) and (B) by defining the term “election”
as relating to the election of an individual person to a particular office.
Id. at 119, ¶¶ 55, 56, 98 P.3d at 230. She therefore reasoned that the
contributions at issue were not given to influence an election and thus did
not violate § 16-919. Id. at 121, ¶ 61, 98 P.3d at 232. Judge Timmer also
observed that § 16-919(A) “does not prohibit individuals and entities that
are not associated with an individual’s campaign from accepting corporate
contributions,” which led her to conclude that the legislature intended
only to prevent corporations from influencing political campaigns, not to
prevent corporations from contributing to the political parties themselves.
Id. at 119-20, ¶ 57, 98 P.3d at 230-31.
The Party petitioned for review, which this court granted. We have
jurisdiction pursuant to Article 6, Section 5(3) of the Arizona
Constitution and A.R.S. § 12-120.24 (2003).
DISCUSSION
Section 16-919 controls the disposition of this case. It prohibits “a
corporation,” “a limited liability company” (“LLC”), or “a labor
organization” from making “any contribution[1] of money or anything of
value for the purpose of influencing an election.” A.R.S. § 16-919(A),
(B).[2] It also prohibits a candidate, the candidate’s campaign committee
or exploratory committee, or the person who formed the exploratory
committee, from accepting from a corporation or LLC “any contribution of
money or anything of value . . . for the purpose of influencing an
election.” Id. § 16-919(A).
The penalties for violation of § 16-919 are serious. Section 16-919(C)
makes a corporation, LLC, or labor organization that violates the above
proscriptions “guilty of a class 2 misdemeanor.” The person who
“effect[s]” such a violation “is guilty of a class 6 felony.” Id. § 16-
919(D).
Because violations of A.R.S. § 16-919 are punishable by criminal penalties,
we must construe the statute “according to the fair meaning of [its] terms
to promote justice and effect the objects of the law.” A.R.S. § 13-104
(2001). Due process requires that a criminal offense be “defined in terms
that [people] of average intelligence understand” and be clear enough to
give “sufficient warning that [people] may conform their conduct to its
dictates.” State v. Bateman, 113 Ariz. 107, 109-10, 547 P.2d 6, 8-9
(1976). These due process requirements pertain even in the administrative
context in which this case arises.
The critical question in this case is whether the Party has violated any
provision of A.R.S. § 16-919. The Party maintains that it is not one of
the donors – a corporation, LLC, or labor organization – that is prohibited
by § 16-919(A) or (B) from making contributions to influence an election.
Instead, the Party is a political party, defined in A.R.S. § 16-901 as “the
state committee as prescribed by § 16-825 . . . of an organization that
meets the requirements for recognition as a political party.”[3] A.R.S. §
16-901(21) (Supp. 2004). The State agrees that the Party is not a
prohibited donor under § 16-919.
Nor does any language in A.R.S. § 16-919 make it a violation for a Party to
accept contributions from corporations, LLCs, or labor organizations; the
statute makes it a violation only for candidate exploratory or campaign
committees, candidates, or those who form exploratory committees to accept
contributions. The Party is not one of the listed entities. We must defer
to the plain language of the statute, see N. Valley Emergency Specialists,
L.L.C. v. Santana, 208 Ariz. 301, 303, ¶ 9, 93 P.3d 501, 503 (2004), and
may not include within it entities not named by the legislature.
Section 16-907 does prevent political parties from accepting “earmarked”
contributions. A.R.S. § 16-907(B) (Supp. 2004); see also A.R.S. § 16-
901(6) (defining “earmarked” as designated for a particular candidate or
campaign committee). In this case, however, the stipulated facts submitted
by the parties do not suggest, and the State has not argued, that the
contributions at issue were “earmarked” in any way. Therefore, nothing in
A.R.S. § 16-907 prohibits the Party from accepting the contributions in
this case.
In short, the State seems to have brought this action against the wrong
party. While A.R.S. § 16-919 prohibits corporations, LLCs, and labor
organizations from contributing money or other things of value for the
purpose of influencing an election and further prohibits campaign and
exploratory committees, candidates, and “designating individual[s]” from
accepting corporate contributions, nothing in the statute prohibits a
political party from accepting such contributions and using them to pay
overhead expenses. We therefore need not decide whether the donations at
issue were “contributions” as defined in A.R.S. § 16-901(5) or whether they
were given “for the purpose of influencing an election.” Finally, we do
not decide the question of the constitutionality of A.R.S. § 16-919.
CONCLUSION
For the foregoing reasons, we vacate the opinion of the court of appeals
and reverse the trial court’s grant of summary judgment. We further grant
the Party’s request for an award of attorneys’ fees and other expenses
pursuant to A.R.S. § 12-348 (2003).

_______________________________________
Rebecca White Berch, Vice Chief Justice

CONCURRING:

______________________________________
Ruth V. McGregor, Chief Justice

______________________________________
Michael D. Ryan, Justice

______________________________________
Andrew D. Hurwitz, Justice

______________________________________
Charles E. Jones, Justice (Retired)

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[1] A “contribution” is “any gift, subscription, loan, advance or deposit
of money or anything of value made for the purpose of influencing an
election.” A.R.S. § 16-901(5). Payments of party operating expenses or
for party activities not related to a specific candidate are excluded from
the definition of “contribution.” Id. § 16-901(5)(b)(v).

[2] Although A.R.S. § 16-919 was amended in 1999, the operative language
has remained unchanged. See 1999 Ariz. Sess. Laws, ch. 297, § 27.
[3] A.R.S. § 16-825 (1996) provides as follows:
The state committee of each party shall consist, in addition to the
chairman of the several county committees, of one member of the county
committee for every three members of the county committee elected
pursuant to § 16-821. The state committeemen shall be chosen at the
first meeting of the county committee from the committee’s elected
membership.