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Issue: Kim Demarchi

Federal judge hears arguments in challenge to initiative law

Hundreds of people who circulated petitions for a clean energy initiative measure show up at Maricopa County Superior Court last year after being subpoenaed by foes of the measure hoping to knock it off the ballot. (Photo courtesy of Maricopa County Superior Court)
Hundreds of people who circulated petitions for a clean energy initiative measure show up at Maricopa County Superior Court last year after being subpoenaed by foes of the measure hoping to knock it off the ballot. (Photo courtesy of Maricopa County Superior Court)

An attorney for the state asked a federal judge Wednesday to uphold a law that challengers say is designed to make it more difficult for people to propose their own laws.

Assistant Attorney General Joseph La Rue acknowledged that the measure requires a judge to throw out all the signatures of paid or out-of-state circulators of initiative petitions if that person does not respond to a subpoena, regardless of whether the signatures gathered are actually valid. La Rue argued, however, that restriction is necessary to protect the integrity of the election process.

But U.S. District Court Judge Susan Bolton questioned why, if such automatic disqualification is necessary, that same provision does not apply when initiative signatures are collected by volunteers who are Arizona residents.

Potentially more significant, the judge pointed out that the concern of legislators about the practices of out-of-state and paid circulators does not seem to extend to petitions for candidates for public office – including themselves.

“There has to be a rational basis for this distinction,” Bolton told La Rue. And she said there is “no rational distinction” between petitions gathered for candidates and those for initiatives.

La Rue countered that there’s no requirement for the Legislature to address each and every problem with each and every kind of petition for this law to be valid. Anyway, La Rue said, there is no evidence that lawmakers, in imposing the restriction only on initiatives, had a “bad motive.”

But Elisabeth Frost who represents challengers, told Bolton that she should block the state from enforcing the law because it infringes on First Amendment rights.

She said the restrictions make it more difficult for those proposing their own laws to find circulators. And Frost said if measures cannot make the ballot, then Arizona voters don’t get a chance to decide the issue.

“When you regulate circulators and you don’t get on the ballot, that’s when you implicate the First Amendment,” she said.

Arizona law has always required that those who circulate petitions respond to subpoenas when there are challenges.

But in 2014 lawmakers added a new twist. They said if paid or out-of-state circulators do not show up, then a judge is required to disqualify all the signatures that person collected.

Frost told Bolton that’s different than other election cases where attorneys can argue whether that person’s presence actually is necessary, whether there’s a “good faith basis” for the subpoena, and whether signatures should be tossed if the circulator does not appear. The result, Frost said, is that initiative foes can use the new law to issue multiple subpoenas in hopes that a certain percentage of circulators won’t show up, allowing them to kill the measure without actually having to campaign against it.

“That’s the way the law is designed to work,” Frost said.

The attorney pointed to one instance last year where foes of a clean energy initiative issued subpoenas for more than 1,000 circulators. But when most showed up, Frost said, the challengers called “virtually none” of them to the stand and the measure went on the ballot.

“It doesn’t sound like somebody had a good faith basis” for the subpoenas, Bolton agreed. And she even suggested there might have been an abuse of the subpoena process in that case.

But the judge questioned whether that can be the basis for her to block the state from enforcing the law and whether it violates the U.S. Constitution.

That latter question is crucial for Bolton.

Last year another group – this one proposing to put a ban on “dark money” political contributions – challenged the same law after a trial judge disqualified the signatures collected by 15 circulators who did not respond to a subpoena. That left the measure short of the needed signatures.

In that case, attorney Kim Demarchi argued that a circulator’s signature should be tossed only when there is a “valid objection” to the circulator or the “need for a circulator’s testimony.”

But Arizona Supreme Court Justice John Lopez, writing for the unanimous court, said the right in the Arizona Constitution of people to propose their own laws and constitutional amendments “is, and must be, subject to reasonable regulation.” Lopez said requiring circulators to appear in court and tossing their signatures if they don’t show “furthers the constitutional purpose of the initiative process by ensuring the integrity of signature gathering by reasonable means.”

Both Frost and La Rue told Bolton she is not bound by that decision, particularly as the Arizona Supreme Court decided it based solely on state constitutional issues and not the federal First Amendment. But La Rue told the judge she should consider the ruling “persuasive.”

If Bolton enjoins the state from enforcing the 2014 law, that still leaves the underlying statute that says circulators can be called into court, but with protections against blanket subpoenas and without the requirement for automatic disqualification of all signatures if the person does not appear.

The judge gave no indication when she will rule.

That 2014 law was an early version of what has become a series of changes to the rules that govern the initiative process for people to propose their own laws and constitutional amendments.

That includes a 2017 measure pushed through the Republican-controlled Legislature to require that all initiatives be in “strict compliance” with every election law before they go to voters. That overruled prior court decisions which said that initiatives need only be in “substantial compliance” with the law to survive a legal challenge, a standard that allowed for minor errors.

And earlier this year lawmakers imposed new requirements on paid circulators and the organizations that hire them. These range from a mandate to provide a phone number and email address to insisting that when petitions are turned in they are grouped by circulators.

Federal lawsuit challenges law to regulate signature gatherers

lawsuit

A new lawsuit seeks to strike down a statute that can invalidate otherwise legitimate and qualified signatures on an initiative petition.

Attorney Sarah Gonski said the requirement unconstitutionally “discourages the people of Arizona … from exercising their fundamental right to make law without consulting the Legislature.” She is asking U.S. District Court Judge Susan Bolton to block Secretary of State Katie Hobbs from enforcing the requirement.

Gonski may have an uphill battle.

The statute in question was upheld just this past year by the Arizona Supreme Court. But Gonski is trying a different path of attack, alleging that it runs afoul of protections in the U.S. Constitution.

Katie Hobbs
Katie Hobbs

Arizonans can propose their own constitutional amendments and laws by gathering enough signatures to put the issue directly to voters.

The 2014 law, which passed without significant debate, spells out that paid circulators and those who do not live in Arizona must first register with the Secretary of State or their signatures collected do not count.

More significant, it allows those trying to keep a measure off the ballot to subpoena those circulators. And if any circulator who has to register does not show up, then all the signatures that person gathered can be struck, potentially leaving the petition drive short of its goal.

One of the plaintiffs is Next Gen Climate Action Committee which pushed an unsuccessful measure last year to impose new renewable energy mandates on utilities. Gonski, arguing on behalf of the organization, said the statute has taken its toll, citing the experience of Jessica Miracle, a paid petition circulator on that measure.

Subpoenaed by foes of the measure, the lawsuit says Miracle could not attend because her children were sick, she did not have her own transportation to Phoenix, and no one would tell her clearly how many days she would need to be in Phoenix.

The result, according to Gonski, was that all of the 2,604 signatures Miracle gathered were invalidated.

Gonski said the law is not just unfair to circulators.

One of the plaintiffs in the lawsuit is Mary Katz, listed as a Phoenix resident and registered voter.

According to Gonski, Katz signed that renewable energy measure.

“But her signature was later invalidated when the circulator who witnessed it was unable to appear in court when subpoenaed,” the lawsuit states. And Gonski said Katz was not told until long after the election that her signature has been invalidated, meaning there was no way for her to go to court to tell the judge that it was, indeed, a valid signature.

The other key plaintiff in the case is Arizonans for Fair Lending which is currently circulating petitions to enact a law to outlaw title loans. Rod McLeod, who is managing that campaign, said the law has now become a tool for challengers to use to keep measures opposed by certain business interests from ever getting to voters.

He pointed out that challengers to the renewable energy measure issued subpoenas for about 1,180 circulators. McLeod said it was clear from the start there was no way they were going to question that many people in the one week the judge had set aside for trial.

In fact, Gonski said, out of the 913 circulators who appeared, 872 were sent home without ever being asked a single question about their work.

McLeod said challengers know that, using the massive subpoenas “just for intimidation” in hopes that some people would not show up, allowing all the signatures they gathered to be voided. And that could become an issue as his organization seeks to obtain the 237,645 valid signatures it needs by July 2, 2020, to put the title loan measure on the 2020 ballot.

The tactic of issuing subpoenas to disqualify signatures actually worked last year, though it didn’t involve nearly as many subpoenas.

At issue was an initiative to insert a “right-to-know” provision in the Arizona Constitution, requiring any group seeking to influence a political race or ballot measure to reveal the identity of anyone who contributed more than $10,000.

Sarah Gonski
Sarah Gonski

Challengers issued subpoenas for 15 circulators, leaving them with a security guard at an office building which had been used by a company that had hired the paid circulators. When none appeared, the judge disqualified the 8,824 signatures they had collected, leaving the petition drive short.

Attorney Kim Demarchi challenged the law in that case in a bid to put the “Outlaw Dark Money” measure on the ballot. She argued that a circulator’s signatures should be tossed only when there is a “valid objection” to the circulator or the “need for a circulator’s testimony.”

But Supreme Court Justice John Lopez, writing for the unanimous court, said the constitutional right of people to propose their own laws and constitutional amendments “is, and must be, subject to reasonable regulation.” And he said requiring circulators to appear in court and tossing their signatures if they don’t show “furthers the constitutional purpose of the initiative process by ensuring the integrity of signature gathering by reasonable means.”

Gonski, in her new lawsuit, argued to Bolton that the law is unfair and discriminatory. She pointed out that lawmakers decided the requirement to registering paid and out-of-state circulators and allowing their signatures to be struck if they don’t show up, applies only to ballot measures and not to nominating petitions for political candidates.

“There is no evidence to suggest that initiative petitions are more susceptible to fraud than candidate nomination petitions, nor that paid or out-of-state circulators are in need of special punishment above and beyond other circulators to compel their attendance in court,” she wrote.

A spokeswoman for Hobbs, who is the defendant in the case, said her office was reviewing the challenge.

The case presents an interesting situation for Hobbs: She actually voted for the measure when she was a state senator in 2014. In fact, all but two Senate Democrats supported it: Andrea Dalessandro of Green Valley and Robert Meza of Phoenix.

Correction: A previous version of this story erroneously reported that Arizonans for Fair Lending needed to enough signatures by July 2 to make the 2018 ballot. The group actually has until July 2, 2020, to make the 2020 ballot.

Justices: Subpoenaed petition circulators must show for court

The Arizona Supreme Court from left are Robert Brutinel, John Lopez, John Pelander, Scott Bales, Andrew Gould, Clint Bolick, Ann Scott Timmer.
The Arizona Supreme Court from left are Robert Brutinel, John Lopez, John Pelander, Scott Bales, Andrew Gould, Clint Bolick, Ann Scott Timmer.

The Arizona Supreme Court has upheld the constitutionality of a legal tactic used by those seeking to keep voter-proposed laws off the ballot.

In a unanimous ruling Wednesday, the justices reaffirmed the right of people to craft initiatives and seek to have them approved.

“And we are reluctant to impede such civic efforts,” they said.

But Justice John Lopez, writing for the court, said there is nothing unduly burdensome about requiring paid circulators to register and provide an address where they can be subpoenaed. More to the point, Lopez said throwing out the signatures collected by those who don’t show up in court does not impair the constitutional rights of people to propose their own laws.

Wednesday’s ruling most immediately explains the decision the justices made months ago to block a vote on the “Outlaw Dirty Money” proposal. But the implications go far deeper, providing a legal road map for others who want to challenge ballot measures.

“It’s going to be almost impossible for anybody who doesn’t have incredibly deep pockets to carry a petition using paid circulators,” said Terry Goddard who was the prime moving force behind the measure the Supreme Court knocked off the ballot.

The initiative would have inserted a “right-to-know” provision in the Arizona Constitution requiring any group seeking to influence a political race or ballot measure to reveal the identity of anyone who contributed more than $10,000. Organizations that the Arizona Legislature has exempted from disclosure and would have been forced to identify donors sued, contending there were not enough valid signatures.

Challengers issued subpoenas for 15 circulators, leaving them with a security guard at an office building which had been used by a company that had hired the paid circulators. When none of the circulators appeared at trial, the judge disqualified the 8,824 signatures they had collected.

It was ultimately ruled that the initiative drive came up short of the 225,962 valid signatures needed to qualify for the ballot.

Attorney Kim Demarchi, representing the initiative drive, challenged the automatic disqualification of the signatures as unconstitutional. She argued that a circulator’s signatures should be tossed only when there is a “valid objection” to the circulator or the “need for a circulator’s testimony.”

Lopez acknowledged that it took a lot of work to gather the signatures.

“We do not discount the civic activism or the resources devoted to this campaign,” he wrote.

But Lopez said the right of people to propose their own laws and constitutional amendments “is, and must be, subject to reasonable regulation of the initiative process.”

And in this case, he said, requiring circulators to appear in court and tossing the signatures they gathered if they don’t show up it fits within what can be regulated.

“The statute represents a reasonable means of fostering transparency, facilitating the judicial fact-finding process, including compliance with valid compulsory process, and mitigating the threat or fraud or other wrongdoing infecting the petition process,” Lopez wrote. “It furthers the constitutional purpose of the initiative process by ensuring the integrity of signature gathering by reasonable means.”

Goddard, however, suggested the justices got it backwards.

He said the prime concern should be to determine, in whatever way possible, whether an individual’s signature is valid. Goddard said what the court has ruled is that otherwise valid signatures can be disqualified solely because the person who collected them didn’t show up in court.

That gets to the issue of the additional financial burden.

“You not only have to get valid signatures but then you have to keep the circulator around and have them appear at a hearing or all their signatures are going to be determined invalid,” said Goddard, a former state attorney general. “I think that undercuts our citizens’ right to petition our government, which is guaranteed in the constitution.”

The justices also rejected the contention that the subpoenas could not be enforced because they were not properly served. Rather than being left with the individuals — or even with an adult at the office that the petition company had rented — 14 of the subpoenas were left with a guard stationed on the first floor of the office building.

Lopez said that was a reasonable effort at serving the subpoenas.

Anyway, he said, requiring subpoenas to be served in person or at a specific office address “would encourage a circulator to register a statutory service address beyond the reach of a process server.” And that, said Lopez, would remove the deterrence of circulators to commit fraud because they could never be called to court to account for their actions.

But Goddard said that is contrary to court rules which require reasonable efforts be made to ensure people know they have been subpoenaed.

“Most tenants in a building don’t say, ‘If you want to subpoena me for a trial it’s OK to just leave it with a guard,” he said.

‘Dark money,’ renewable energy ballot measures in court

The question of whether voters get to decide whether to outlaw “dark money” could depend on whether a judge voids a law that throws a hurdle in the path of initiative organizers.

Kory Langhofer
Kory Langhofer

Attorney Kory Langhofer who represents groups that now do not disclose the source of their funds contends that the Outlaw Dirty Money committee does not have sufficient valid signatures to put the issue on the November ballot. At a hearing Monday, Langhofer told Maricopa County Superior Court Judge Teresa Sanders there are flaws with many of the signatures.

But much of Langhofer’s case rests on the fact that he issued more than a dozen subpoenas to people who circulated petitions, people who he contends were not legally qualified. These include people who Langhofer contends have felony convictions or did not provide a proper address.

None of those subpoenaed showed up in court on Monday.

He said a state law requires Sanders to automatically disqualify all of the signatures each gathered. If she agrees, that likely would leave the initiative with fewer than the 225,963 valid signatures needed to be placed on the ballot.

But attorney Kim Demarchi who represents initiative organizers is urging Sanders to reject that contention. If nothing else, she said these subpoenas were served just days ago, giving people insufficient time to respond.

Beyond that, Demarchi contends that automatic-disqualification law, approved in 2014 by the Republican-controlled Legislature, is an unconstitutional infringement on the right of judges to decide the issue of whether a person’s failing to show up means they weren’t obeying the law on petition circulators.

For example, she said the question of whether a person is a convicted felon and ineligible to circulate petitions is not a simple yes-no question. Demarchi said some of the circulators come from states where an individual’s civil rights are restored once they complete their sentence.

And Demarchi suggested that the automatic-disqualification provision was approved solely to place a hurdle — she says unconstitutionally — in the path of those who want to create their own laws.

“I think it’s hard to deny that it’s significantly easier to run to be a member of the Legislature and to file a lawsuit to kick off someone who’s trying to challenge you for that office or to file a lawsuit to kick off an initiative than to keep an initiative on the ballot,” she said.

That question of what happens when people who are subpoenaed do not show up also could affect another trial, also started Monday, in a bid by the parent company of Arizona Public Service to block a vote on a new renewable energy mandate. In that case, foes of the initiative have subpoenaed more than 1,600 circulators in their bid to disqualify any signatures they gathered.

Maricopa County Superior Court Judge Daniel Kiley struck down signatures collected by 254 circulators for the Clean Energy for a Healthy Arizona Act because the subpoenaed circulators did not show up to court Monday. Brett Johnson, an attorney representing those opposed to the initiative, could not immediately say how many signatures would be struck down because those circulators failed to appear.

More than 870 circulators showed up to the courthouse, overtaking a room used to keep jurors during jury selection and the building where the Maricopa County Supervisors meet. The 254 circulators whose signatures were invalidated make up about 15 percent of those who circulated petitions for the clean energy measure.

The business community and the Republican lawmakers who are their allies have shown an increasing hostility to voter-approved laws. These range from a system of public financing for candidates — meaning they are not beholden to special interests for their campaigns — to legalizing medical marijuana and requiring employers to pay their workers more than is required under federal law.

What has resulted is a series of new laws, including one that requires judges to keep initiatives off the ballot if their petitions do not strictly comply with all election laws.

That law, too, is being challenged in the “dark money” case. A judge in the renewable energy case has upheld the law as constitutional; a different judge reached a contrary ruling in a case challenging a ballot measure to hike income taxes on the rich for education.

The conflicts ultimately will have to be resolved by the Arizona Supreme Court, as will Demarchi’s contention that the automatic-disqualification provision is unconstitutional.

This lawsuit was brought by officials from the Free Enterprise Club, Americans for Prosperity and Concerned Veterans for America.

All three groups have put money into campaigns in Arizona. But all three have refused to disclose who is providing the cash, citing state law that allow them to use their status under the Internal Revenue Code as “social welfare” organizations to shield the names of donors.

This initiative would put what amounts to a “right-to-know” provision in the Arizona Constitution, mandating public disclosure the names of any individual, association or corporation that spends at least $2,500 in any two-year cycle. Those that fail to comply could be fined equal to triple the disclosed amount.

The renewable energy measure, being challenged in front of Judge Daniel Kiley, would constitutionally mandate that most utilities obtain half of their energy from renewable sources by 2030. That would override existing Arizona Corporation Commission rules which say utilities need to provide 15 percent of electricity from renewables by 2025.

APS is financing that fight, with utility officials and campaign spokesmen saying it would lead to higher energy costs and potentially even the closure of the Palo Verde Nuclear Generating Station, as nuclear power would not be counted as renewable.

Arizona Capitol Times reporter Carmen Forman contributed to this report. 

‘Dark money’ initiative comes up short in signatures

dark-money-620

The question of whether voters get to outlaw “dark money” will depend on what judges think of the signatures collected.

On Wednesday, Secretary of State Michele Reagan reported the Outlaw Dirty Money campaign came up 2,071 short of the 225,963 valid signatures to put the issue on the November ballot. That follows action by the 15 county recorders who each were given a 5 percent sample to verify the names.

But Kim Demarchi who represents the initiative organizers told Capitol Media Services the fight to put the issue to voters is far from over.

She claims the Secretary of State’s Office improperly removed 8,042 signatures from the total that were submitted. Maricopa County Superior Court Judge Teresa Sanders is expected to rule on that claim no later than Thursday.

At the same time, though, Sanders also is weighing claims by attorney Kory Langhofer, representing those who want to quash the initiative, that Reagan’s office allowed some petitions to be counted — and the up to 15 signatures on each of them — even though he contends they were circulated by people who were not legally qualified. That includes convicted felons and people who did not provide a proper address.

Whoever loses in Sanders’ court is virtually certain to seek Arizona Supreme Court review.

But even that is not the end of the legal maneuvering.

Demarchi said she is filing suit against several county recorders — the people who checked the random samples — contending that they erred in concluding that some of the signatures were not from valid registered voters.

The outcome of those lawsuits could have a major impact.

That’s because the counties get a 5 percent sample. So for each signature that Demarchi can get a judge to rule as valid, that translates to 20 signatures in the total needed to qualify.

Those cases are likely to drag into next week.

Hanging in the balance is whether Arizona voters get to enact what amounts to a “right-to-know” provision in the state constitution.

Current law says those who contribute to candidates must disclose their identities. There also are similar requirements when groups spend money independently to help elect or defeat a candidate.

But the Republican-controlled Legislature has said that groups seeking to influence statewide races need not disclose donors if they are set up under the Internal Revenue Code as a “social welfare” organization.

Those groups qualify for the special charity status if no more than half their spending is on political races. But there is no absolute dollar figure on how much they can give.

And the record shows that they do put a lot of money into Arizona campaigns.

In 2014, for example, American Encore spent more than $1.4 million on Arizona races. And while it is known the group originated with an organization founded by the Koch Brothers, there is nothing on the record of who put up those dollars.

What is known is some of that American Encore money helped Republican Doug Ducey defeat Democrat Fred DuVal in the gubernatorial race.

Overall, outside groups spent more than $8 million on Ducey’s behalf in that campaign, outstripping the $7.9 Ducey spent himself that he got from donors whose identities he was required to disclose.

Earlier this year, lawmakers extended the same protection from disclosure to entities seeking to affect local races, effectively overriding a vote by Tempe residents, on a 91-9 margin, to require financial disclosure of all sources of funding on city races.

This initiative, backed by a bipartisan group including two former attorneys general, would put a provision in the Arizona Constitution to require that the public be given the actual identity of anyone who has contributed more than $2,500 to affect any political campaign. And as a constitutional amendment it could not be altered by lawmakers without taking the issue back to the ballot.