At Supreme Court, billionaires argue they’re like NAACP in 1958 Alabama
Rosa Parks is escorted by E.D. Nixon, former president of the Alabama NAACP, on arrival at the courthouse in Montgomery March 19, 1956, for the trial in the racial bus boycott. There were 91 other defendants. SCOTUS decided that the NAACP did not have to release the names of their members to the state of Alabama. Now the right-wing Koch Foundation wants to use this example to keep their donors secret. Gene Herrick | AP

WASHINGTON (PAI)—In 1958, in the wake of Brown v. Board of Education and the Montgomery bus boycott, and using its power to regulate out-of-state corporations, Alabama demanded the NAACP disclose its Alabama members’ names and addresses. Fearing the effect on its membership, the NAACP refused.

A unanimous Supreme Court sided with the NAACP. The U.S. Constitution’s 14th amendment, said the court, protects the right to associate. Where a group “espouses dissident beliefs,” the right to associate can also include the right to “privacy in one’s associations.”

Because the NAACP had made an “uncontroverted showing” that previous disclosure of members’ names had led to “economic reprisal, loss of employment,” and “threat[s] of physical coercion,” the NAACP could keep its Alabama membership secret.

On April 26, the Americans for Prosperity Foundation (AFPF)—an organization founded by the right-wing billionaire Koch brothers—argued the U.S. Supreme Court should treat AFPF like the NAACP in 1958 Alabama.

In what all concede is a good-faith effort to investigate fraud, for ten years, California has required charities to file, with the state Attorney General, a copy of their federal tax schedule B, listing all donors who have each given the charity over about $341,000. AFPF refused—even though California, unlike Alabama in 1958, promised to keep the submitted information confidential.

Arguing for AFPF, attorney Derek Shaffer urged the court to invalidate the law across the board. For many charities, he claimed, public disclosure of major donors’ names would deter donations. He pointed to examples of California’s past occasional inadvertent public disclosure of charitable donors’ names.

Moreover, he added, this deterrence would come “for no good reason.” It was “totally gratuitous.” As Justice Brett Kavanaugh noted, in determining a law’s necessity, the courts often look to history and other states’ laws.

But 46 other states don’t require schedule B. For years, California itself did without it. In ten years since adopting the requirement, California has only used these schedule B forms 5-10 times. As the trial court found, compelled submission of schedule B simply “does not further the state’s law-enforcement goals.”

Asked Justice Clarence Thomas: What about charities that don’t engage in controversial advocacy? One can’t identify, in advance, charities that will never become controversial, replied Shaffer. Justice Thomas, who’s married to a conservative activist, seemed to agree. He expressed concern about “loose accusations” of racism against particular organizations.

Asked Justice Stephen Breyer: What about the Internal Revenue Service’s demand for the same information reported on IRS schedule B? The IRS, replied Shaffer, operates under a federal statute, nationwide in scope, with a statutory penalty for violating confidentiality. By contrast, no California statute requires submission of schedule B, and public disclosure carries no criminal penalty.

Shaffer derided the requirement as a “bureaucratic whim,” though it’s in the California Code of Regulations.

What about California’s recent strengthening of its privacy protocols? asked Justice Samuel Alito. Reasonable donors might doubt their reliability, Shaffer replied, and stop donating.

What about donor preference for disclosure?

And what, asked Justice Elena Kagan, about most charitable donors’ preference for public disclosure, to trumpet their generosity? Even if California’s demand didn’t discourage most charitable contributions in California, argued Shaffer, AFPF had shown that once known, its donors did face harassment. So the court should at least declare California’s regulation invalid as to AFPF.

No one pointed out that, as Shaffer’s co-counsel Kathleen Sullivan admitted that morning to National Public Radio, AFPF could show no connection between donor harassment and California’s accidental public disclosure of donors’ identities.

California Deputy Solicitor General Aimee Athena Feinberg represented the state against the Koch brothers’ foundation. To overturn the submission requirement completely, she noted, AFPF must show the requirement’s unconstitutionality as applied to many California charitiesthat it would deter donations for many of them. But the evidence focused only on the AFPF and its co-party, the Thomas More Law Center, not other charities.

Moreover, Feinberg added, nonprofits generally prefer robust state oversight. Indeed, both the California Association of Nonprofits and the American Council of Nonprofits filed briefs supporting California’s schedule B requirement. California’s bolstered protocols, she argued, eliminated any “reasonable probability” of public disclosure, and therefore any significant risk of deterred donations.

That assertion prompted Justice Alito to accuse Feinberg of making it impossible for any charity to challenge the schedule B requirement. Even Justice Sonia Sotomayor wondered if, “given your past breaches,” a reasonable donor “might not have that much faith” that California would keep the information secret. Justice Kagan cited the trial court’s finding of a “pervasive recurring pattern of inadvertent disclosure.”

For that reason, briefs from the ACLU and the NAACP support AFPF and urge the court to read California law as requiring “de facto” public disclosure.

Feinberg could only reply the Constitution doesn’t force California to “guarantee” confidentiality.

Feinberg contradicted AFPF’s denial of a state interest furthered by the schedule B requirement. State regulators “routinely” use schedule B forms to help determine the need for further investigation of fraud—such as self-dealing or asset diversion by a charity’s officers. A routine intrusive investigation would burden charities far more than does routine submission of Schedule B forms.

Speaking for the Biden administration, which filed a friend-of-the-court brief, Acting U.S. Solicitor General Elizabeth Preloga urged a middle approach: the court leave the law largely intact but return the case to the lower courts to assess the specific burden on AFPF and the Thomas More Law Center.

The constitutionally protected freedom to associate, Preloga argued, doesn’t always include a right to privacy. For the average charity, public disclosure of donor names wouldn’t expose donors to harassment. Many charities even sell donor lists.

Therefore, the court should send the case back to assess the actual risk of harassment in this case. California should implement an administrative procedure for threatened charities to secure an exemption, and if necessary, further enhance protections against public disclosure.

Justice Sotomayor seemed to agree: Inquiry into the actual harassment risk, she said, is what “our case law would suggest.” But, she added, the charities here had shown that public disclosure would harm them. So the only real question was the risk of public disclosure.

Two issues lurk under the surface. Justice Breyer raised one: Whether the case could be a “stalking horse” for attacks on campaign finance disclosure laws. As Chief Justice John Roberts pointed out, political speech lies “at the heart of the First Amendment.” If compelled disclosure of donor names for an ordinary charity violates the First Amendment, wouldn’t the same compelled disclosure in the context of campaign financing violate the First Amendment?

An even more troubling concern

Justice Kagan raised an even more troubling concern in her dissent in Janus v. AFSCME Council 31. In that 2018 case, the court overturned a 41-year-old precedent and invalidatedunder the First Amendment—the requirement that non-union members pay public-sector unions “fair share” fees for representing them.

Historians may someday see Janus as similar to Americans for Prosperity, both cases where, in Justice Kagan’s words, conservatives, by “weaponizing the First Amendment,” had “unleashe[d] judges, now and in the future, to intervene in economic and regulatory policy.”

A decision in the Americans for Prosperity case is expected in late June.


CONTRIBUTOR

David Sobelsohn
David Sobelsohn

David Sobelsohn is Supreme Court correspondent for Press Associates Inc. (PAI), the union news service in Washington D.C.

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