Southern District Rebuffs Citizens United's Speech Claim

Steven D. Schwinn, John Marshall Law School

Judge Sidney Stein (SDNY) this week denied Citizens United's motion to preliminarily enjoin the New York Attorney General from enforcing his policy of requiring registered charities to disclose the names, addresses, and total contributions of their major donors.

The ruling, which follows a similar Ninth Circuit ruling this past spring, is a blow to the organization's efforts to keep their donors secret through the 501(c) form. But it does not mean that Citizen United's donors will be available to all of us: both the IRS and the state AG refuse to disclose the names of donors.

The case tests the AG's rule that charities registered in the state provide to the state AG their Schedule B to IRS Form 990. Schedule B includes names of persons who donate over $5,000 to a charity. Citizens United, a 501(c) organization, challenged the rule, arguing that it violated free speech, and due process, among other claims, and filed for a preliminary injunction.

Judge Stein rejected the motion, saying that Citizens United was unlikely to win on the merits. As to the free speech claim, Judge Stein wrote that the AG's rule bears a substantial relation to the sufficiently important government interest in enforcing charitable solicitation laws and protecting state residents from illegitimate charities, and that the strength of the state's interest justified the minimal burden on the organization. Judge Stein also concluded that the rule was not an unconstitutional prior restraint on speech, because the rule "sets forth 'narrow, objective, and definite standards' that cabin the Attorney General's exercise of discretion.'" Finally, Judge Stein rejected Citizens United's claim that the rule came without warning and thus violated due process, because in fact the rule did nothing new. (Judge Stein also rejected the non-constitutional claims.)

But while Judge Stein's ruling rejected Citizens United's motion to stop the state AG from enforcing the rule for now, nothing in the ruling compels the public release of the organization's major donors. Indeed, the ruling hinges on the fact that New York law and IRS regs both bar the public release of Schedule B. The ruling only allows the state AG to collect this information for the purpose of ferreting out charitable fraud and related crimes.