Indiana Right to Life Victory Fund v. Diego Morales

112 F.4th 466

• Court: Court of Appeals for the Seventh Circuit
• Decided: August 8, 2024
• Docket: 22-1562
• Status: Published

Opinion

In the

United States Court of Appeals For the Seventh Circuit ____________________ No. 22-1562 INDIANA RIGHT TO LIFE VICTORY FUND and SARKES TARZIAN, INCORPORATED, Plaintiffs-Appellants,

v.

DIEGO MORALES, et al., Defendants-Appellees. ____________________

Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:21-cv-02796-SEB-TAB — Sarah Evans Barker, Judge. ____________________

ARGUED DECEMBER 2, 2022 — DECIDED AUGUST 8, 2024 ____________________

Before EASTERBROOK, SCUDDER, and LEE, Circuit Judges. SCUDDER, Circuit Judge. Before us is a First Amendment challenge to Indiana campaign-finance restrictions that the State’s Supreme Court, after accepting our prior certification, has held prohibit corporations from making contributions to independent-expenditure political action committees—com- monly known as super PACs. The Indiana Supreme Court’s decision all but resolves this appeal, as we agree with the 2 No. 22-1562

parties that the statutory provisions in question cannot be ap- plied to super PACs consistent with the First Amendment. So we return the case to the district court with instructions to en- ter the preliminary injunction sought by the corporation and super PAC that brought this preenforcement challenge. I Our prior opinion and, more recently, that of the Indiana Supreme Court provide a full account of the pertinent facts and background. See Indiana Right to Life Victory Fund v. Mo- rales, 66 F.4th 625 (7th Cir. 2023); Indiana Right to Life Victory Fund v. Morales, 217 N.E.3d 517 (Ind. 2023). A summary suf- fices here. Sarkes Tarzian, Inc. is an Indiana-based television and ra- dio company that would like to make a $10,000 donation to the Indiana Right to Life Victory Fund, a super PAC. Unlike ordinary political action committees, which accept contribu- tions and then, in turn, give money directly to candidates, party committees, or ballot-initiative movements, super PACs spend the money themselves to advocate for or against a can- didate, party, or initiative. For this reason, super PACs are called independent-expenditure PACs, and their expendi- tures often go towards television and online ads promoting the election or defeat of a particular candidate or cause. Sarkes Tarzian and the Fund invoked 42 U.S.C § 1983 in a challenge to two provisions of Indiana law (Ind. Code §§ 3-9- 2-4 & 3-9-2-5) that they read to prohibit corporate contribu- tions earmarked for independent expenditures. The district court denied their request for a preliminary injunction. Alt- hough the court viewed the challenged provisions as likely unconstitutional under the reasoning in Citizens United v. No. 22-1562 3

FEC, 558 U.S. 310 (2010), it found no credible threat that Indi- ana officials would enforce those provisions to limit a com- pany like Sarkes Tarzian from contributing to a super PAC like the Fund. And without such a threat no injunction was warranted. In the prior appeal we saw the statutory interpretation question as close and chose to certify it to the Indiana Su- preme Court, the definitive authority on the meaning of Indi- ana law. The State’s Supreme Court accepted the question and has since issued a decision concluding that “Indiana Code sections 3-9-2-3 to [3-9-2]-6 prohibit corporate contributions to PACs earmarked for independent campaign-related expend- itures.” Indiana Right to Life Victory Fund, 217 N.E.3d at 524. II In the wake of the Indiana Supreme Court’s decision, both parties filed statements of position on the next steps for re- solving this appeal. See Cir. R. 52(b). The parties start from a common point of agreement: applying sections 4 and 5 of the Indiana Election Code to prohibit a corporate contribution to an independent-expenditure PAC would violate the First Amendment under the reasoning of Citizens United and our 2011 decision in Wisconsin Right to Life State Political Action Committee v. Barland, 664 F.3d 139. Sarkes Tarzian and the Fund urge us to announce that ex- act holding and, in turn, to direct the district court on remand to enter an order granting their request for a preliminary in- junction. For their part, the named defendants—Indiana’s Secretary of State, Attorney General, and members of the State’s Election Commission—suggest a different approach. They invite us to refrain from reaching the merits and instead 4 No. 22-1562

to dismiss the action for lack of subject matter jurisdiction. They see the unconstitutionality of the challenged statutory provisions as so clear in light of the Indiana Supreme Court’s decision as to eliminate any likelihood of state officials enforc- ing the challenged provisions to prohibit corporate contribu- tions to a super PAC. With no actual threat of enforcement, the argument runs, Sarkes Tarzian and the Fund lack Article III standing to bring any preenforcement challenge to sections 4 and 5 of the Indiana Election Code. See California v. Texas, 593 U.S. 659, 670 (2021) (explaining that a plaintiff bringing a preenforcement challenge against a statute must “assert an in- jury that is the result of a statute’s actual or threatened enforce- ment … in the future”). The state officials have the analysis backward. They im- plore us to find subject matter jurisdiction missing because the answer to the underlying merits questions is beyond de- bate. But that approach collides with Steel Company v. Citizens for a Better Environment, where the Supreme Court held in no uncertain terms that merits questions, no matter how clear cut, cannot be resolved before questions of subject matter ju- risdiction—before a federal court ensures itself of the pres- ence of a Case or Controversy under Article III of the Consti- tution. See 523 U.S. 83, 94 (1998). We have zero difficulty concluding that Sarkes Tarzian and the Fund have standing. The Indiana Election Code, we now know, prohibits independent expenditures like the ear- marked $10,000 contribution that Sarkes Tarzian planned to make to the Fund. See Ind. Code § 3-9-2-5. The Fund has cred- ibly alleged that the statute poses a threat of enforcement la- tent in the statute’s existence and traceable to its enforcement. See Majors v. Abell, 317 F.3d 719, 721 (7th Cir. 2003). That No. 22-1562 5

chilling effect can be remediated, however, by a preliminary injunction against the named defendants blocking any en- forcement. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992) (articulating the requirements for Article III standing). All the defendant election officials offer in response is an invitation to trust their word that they do not intend to en- force unconstitutional statutes. True enough, a credible threat of injury may cease to exist “when a state agency acknowl- edges that it will not enforce a statute because it is plainly un- constitutional.” Wisconsin Right to Life, Inc. v. Schober, 366 F.3d 485, 492 (7th Cir. 2004). But the necessary promises fall well short here. Indeed, not every defendant—most especially the State’s Attorney General—has filed an affidavit or taken any official action purporting to disavow any intent to enforce the challenged provisions against a company like Sarkes Tarzian and a super PAC like the Fund. In Trustees of Indiana University v. Curry, 918 F.3d 537 (7thCir. 2019), we rejected these kinds of just-trust-us argu- ments. Prosecutors cannot bind their successors. See id. at 540. At the very least, the record before us here is missing repre- sentations about future intent from most defendants, a cir- cumstance (among others) distinguishing this case from Law- son v. Hill, where we concluded that plaintiffs lacked standing because the county prosecutor’s disavowal to enforce a stat- ute altogether neutralized any threat of enforcement. See 368 F.3d 955, 959 (2004). III Turning to the merits, recall that this appeal comes to us following the district court’s denial of a motion for a prelimi- nary injunction. The standards for receiving such relief are 6 No. 22-1562

clear. Sarkes Tarzian and the Fund must first carry the burden of demonstrating a likelihood of success on the merits and a likelihood of “irreparable harm in the absence of preliminary relief.” See Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). They must also ultimately convince us that the balance of equitable interests tips in favor of injunctive relief. See id. This latter inquiry requires us to consider both “the public in- terest” as well as the “competing harms” that would flow to the parties from a grant or denial of the requested injunction. Korte v. Sebelius, 735 F.3d 654, 665 (7th Cir. 2013). These principles entail added considerations in the context of protected speech. “The loss of First Amendment free- doms,” we have emphasized, “is presumed to constitute an irreparable injury for which money damages are not ade- quate,” meaning there is no adequate remedy at law. Christian Legal Soc’y v. Walker, 453 F.3d 853, 859 (7th Cir. 2006) (citing Elrod v. Burns, 427 U.S. 347, 373 (1976)). To reach equitable bal- ancing, then, all Sarkes Tarzian and the Fund need show is a likelihood of success on the merits. In light of the Indiana Su- preme Court’s answer to our certified question, the defendant officials concede this prong, as they must. It is now resolved that Indiana law “prohibit[s] corporate contributions to PACs earmarked for independent campaign-related expenditures.” Indiana Right to Life Victory Fund, 217 N.E.3d at 524. For such a limitation on political speech to survive First Amendment scrutiny, it must advance a sufficiently compelling govern- ment interest. The state official defendants have conceded that they have failed to make this showing. Their concession is sound. First Amendment concerns be- come most serious when government officials attempt to curb political speech. See Eu v. San Francisco Cnty. Democratic Cent. No. 22-1562 7

Comm., 489 U.S. 214, 222–23 (1989); Barland, 664 F.3d at 152 (“In our system the individual free-speech right has structural significance; unencumbered discussion about political candi- dates and issues is integral to the operation of the system of government established by our Constitution.” (internal quo- tation marks and citation omitted)). This principle explains why state action restricting political speech is highly disfa- vored, surviving only if the government identifies a suffi- ciently weighty justification for the imposed restriction. See Barland, 664 F.3d at 153 (“’Laws that burden political speech are subject to strict scrutiny’”) (quoting Citizens United, 558 U.S. at 340). To date the Supreme Court has recognized just one: pre- venting actual or apparent quid pro quo corruption in the form of direct contributions to political candidates. See Buckley v. Valeo, 424 U.S. 1, 26–29 (1976); Citizens United, 558 U.S. at 356– 61; see also Barland, 664 F.3d at 153 (“[P]reventing actual or apparent quid pro quo corruption is the only interest the Su- preme Court has recognized as sufficient to justify campaign- finance restrictions.”). In Citizens United, however, the Court “made it clear that the government’s interest in preventing ac- tual or apparent corruption … cannot be used to justify re- strictions on independent expenditures.” Barland, 664 F.3d at 153; see also Citizens United, 664 F.3d 357 (“[W]e now con- clude that independent expenditures, including those made by corporations, do not give rise to corruption or the appear- ance of corruption.”). That conclusion resolves this case. Indi- ana’s prohibition on corporate contributions to super PACs therefore cannot be upheld on corruption-prevention grounds because that interest does not extend to such inde- pendent expenditures. And because the defendants have 8 No. 22-1562

offered no other justification, the Fund’s success on the merits is all but a foregone conclusion. Every other circuit to have considered this issue in the wake of Citizens United agrees. See, e.g., Texans for Free Enter. v. Texas Ethics Comm’n, 732 F.3d 535, 537–38 (5th Cir. 2013) (recognizing that the government’s interest in preventing cor- ruption does not provide a legitimate basis to prohibit corpo- rations’ independent expenditures); Thalheimer v. City of San Diego, 645 F.3d 1109, 1118 (9th Cir. 2011) overruled on other grounds by Bd. of Trustees of Glazing Health & Welfare Tr. v. Chambers, 941 F.3d 1195 (9th Cir. 2019) (same); SpeechNow.org v. FEC, 599 F.3d 686, 692–93 (D.C. Cir. 2010) (same). In the final analysis, though, we may not issue a prelimi- nary injunction unless doing so would be equitable, see Korte, 735 F.3d at 665—an inquiry that requires us to balance the “competing harms” that the parties would suffer from the grant or denial of injunctive relief, as well as “the public in- terest” at large. Id. Where, as here, free speech is at stake, the law places a heavy thumb on the scale favoring injunctive re- lief. Indeed, an injunction that “protect[s] First Amendment freedoms [is] always in the public interest.” Christian Legal Soc’y, 453 F.3d at 859 (relying on Elrod, 427 U.S. at 373). Add to this the lack of any discernible harm that the defendant of- ficials would suffer if the injunction is issued. The defendants, after all, have vowed not to enforce the unlawful campaign- finance restrictions against the Fund. All an injunction would do is bind the defendants to that promise. Compare the ab- sence of any concrete harm to the defendants with the chill that the risk of enforcement might place on the political activ- ities of the Fund and its donors were an injunction not issued. No. 22-1562 9

In the end, all factors point in favor of issuing the injunction sought by the Fund. For these reasons, we VACATE the decision of the district court and REMAND with instructions to enter a preliminary injunction barring enforcement of Indiana’s campaign-fi- nance restrictions against either the Fund or Sarkes Tarzian.