Friday, July 2, 2021
The Supreme Court ruled yesterday that California's requirement that tax-exempt organizations operating in the state disclose the names and addresses of their major donors violated the First Amendment.
The ruling strikes California's requirement from the books. It puts similar reporting and disclosure requirements on the chopping block, and it could even lay the groundwork for striking campaign finance disclosure requirements.
The case, Americans for Prosperity Foundation v. Bonta, involved California's requirement that tax-exempt organizations in the state provide to the state attorney general their IRS Form 990, along with Schedule B, which includes the names and addresses of major donors. The state says that it needs the information in order to police misconduct by charities.
Organizations sued, arguing that the requirement violated their First Amendment rights. A sharply divided Court--6-3, along conventional ideological lines--agreed.
The six-justice majority ruled that California's requirement did not sufficiently serve its interest in policing misconduct:
There is a dramatic mismatch, however, between the interest that the Attorney General seeks to promote and the disclosure regime that he has implemented in service of that end. . . .
Given the amount and sensitivity of this information harvested by the State, one would expect Schedule B collection to form an integral part of California's fraud detection efforts. It does not. To the contrary, the record amply supports the District Court's finding that there was not "a single, concrete instance in which pre-investigation collection of a Schedule B did anything to advance the Attorney General's investigative, regulatory or enforcement efforts."
The Court ruled the requirement overbroad and facially unconstitutional, which means that it is unconstitutional not just in this case, but in every conceivable application.
The six-justice majority split on the level of scrutiny to apply to such requirements. Chief Justice Roberts, joined by Justices Kavanaugh and Barrett, argued that "exacting scrutiny" is the right standard for all disclosure requirements, with no least-restrictive-means requirement. Justice Thomas argued that the more stringent strict scrutiny applied. (Justice Thomas also argued that the Court shouldn't rule the requirement facially unconstitutional, just unconstitutional in this case.) Justice Alito, joined by Justice Gorsuch, wrote that he was "not prepared at this time to hold that a single standard applies to all disclosure requirements."
Still, all six agreed that the requirement failed either level of scrutiny in this case, and five (minus Justice Thomas) agreed that it was therefore facially unconstitutional.
Justice Sotomayor wrote the dissent, joined by Justices Breyer and Kagan. Justice Sotomayor argued that the Court wrongly heightened the standard for disclosure requirements, failed to demand that the plaintiffs show a real harm or actual burden, and wrongly held the requirement facially invalid.
In so holding, the Court discards its decades-long requirement that, to establish a cognizable burden on their associational rights, plaintiffs must plead and prove that disclosure will likely expose them to objective harms, such as threats, harassment, or reprisals. It also departs from the traditional, nuanced approach to First Amendment challenges, whereby the degree of means-end tailoring required is commensurate to the actual burdens on associational rights. Finally, it recklessly holds a state regulation facially invalid despite petitioners' failure to show that a substantial proportion of those affected would prefer anonymity, much less that they are objectively burdened by the loss of it.
She noted that "[t]oday's analysis marks reporting and disclosure requirements with a bull's-eye."