Dark money group says appeal should go forward

A dark money group urged the Arizona Court of Appeals to allow it to challenge the Citizens Clean Elections Commission’s authority to levy a $96,000 fine against it after a judge ruled that it missed the deadline for filing an appeal, a case that could settle the long-running dispute over the extent of the commission’s jurisdiction.

Legacy Foundation Action Fund, a 501(c)(4) nonprofit organization, spent about $275,000 on ads attacking then-Mesa Mayor Scott Smith during the 2014 GOP gubernatorial primary. Because the group deemed the ads to be issue advocacy unrelated to Smith’s campaign, it did not report the expenditures to state election officials. Clean Elections disagreed, and fined it for failing to disclose the spending.

LFAF appealed the commission’s fine, saying the ads did not constitute express advocacy in an election. Furthermore, the group argued that Clean Elections does not have any authority under Arizona law to enforce campaign finance statutes against it because it is not a participant in the Clean Elections system.

But a judge sided with Clean Elections, which said Legacy Foundation missed a 14-day statutory deadline for filing the appeal. Maricopa County Superior Court Judge Crane McClennen did not rule on the merits of the Iowa-based group’s arguments on Clean Elections’ authority or whether its ads met the definition of express advocacy.

Now, the group wants an appellate court to let the case move forward.

In a hearing on Wednesday, Jason Torchinsky, an attorney for LFAF, told a three-judge panel at the Arizona Court of Appeals that the deadline cannot be applied to such challenges over jurisdiction. Case law, he said, backs up the assertion that there is no time limit for appealing such void judgments.

“The fundamental jurisdiction question here is whether the Clean Elections Commission can mission creep into areas that it really doesn’t have jurisdiction over. An agency that exceeds its jurisdiction can’t, just because of a lapse of time or some other issue by a party, let that go.”

The judges repeatedly questioned Torchinsky on what, if any, timeline should apply.

“From your perspective, you could have waited a year? You didn’t have to go under any particular timeframe for filing an appeal? You could have waited two years from now and filed a challenge saying the Clean Elections Commission acted outside their authority?” Judge Kent Cattani asked.

Torchinsky was adamant that jurisdictional challenges are not subject to the deadline. He said a plethora of case law backed up his assertion, including a 1973 ruling in which the Arizona Supreme Court stated that “although it was more than two years since the final judgment, it has always been held that the mere lapse of time is no bar to an attack on a void judgment.”

“And what we’re seeing here is this is a void judgment because the Clean Elections Commission didn’t have either subject matter jurisdiction or personal jurisdiction over Legacy Foundation Action Fund. So we could have, even if we had waited two years, attacked this judgment as void under Wells and its progeny,” said Torchinsky, of the Washington, D.C., law firm Holtzman Vogel Josefiak Torchinsky.

In addition, Torchinsky argued that there is some confusion in Arizona statutes as to when the final judgment was issued against Legacy Foundation, and on which laws should be applied. Clean Elections statutes impose a 14-day deadline, while another law in a different title of Arizona Revised Statutes sets a 35-day deadline for appealing an administration decision.

Joseph Roth, an attorney representing Clean Elections, said the issue was simple. State law lays out a 14-day deadline to appeal an administration decision. And Legacy Foundation missed it.

“The question for the court today is really rather a simple and narrow one – was the 14-day deadline applicable? Was it jurisdictional? And did LFAF fail to meet it? And the answer to all three of those questions is yes,” said Roth, of the law firm Osborn Maledon. “It simply wasn’t timely and the right to appeal was lost.”

Roth said the commission’s March 27, 2015, order was clear that it was the administrative decision in the case, coming after Clean Elections rejected an administrative law judge’s recommendation that the fine be reversed on the grounds that LFAF’s ads were in fact issue advocacy. And the order clearly specified that it was subject to the 14-day deadline for an appeal, Roth said.

If the Court of Appeals sides with Legacy Foundation, it could ultimately settle longstanding questions over how far Clean Elections’ authority extends. Foes, most notably Secretary of State Michele Reagan, whose elections director attended the hearing on Wednesday, argue that the commission’s authority extends only to people and entities that participate in the public campaign funding system it oversees. The commission argues that its jurisdiction stems from the 1998 Clean Elections Act, which imposes disclosure requirements for independent expenditures.