[EL] M2D in CREW suit against IRS on political 501(c)(4)s

[BZall at aol.com]

In a message dated 4/25/2013 12:20:12 A.M. Eastern Daylight Time,  
rhasen at law.uci.edu writes:

_“Judge Sets Hearing on  Motion to Dismiss Lawsuit on IRS Handling of 
Political Groups”_ (http://electionlawblog.org/?p=49555)  
Posted  on _April 24, 2013 5:58 pm_ (http://electionlawblog.org/?p=49555)  
by _Rick Hasen_ (http://electionlawblog.org/?author=3)   
 
_Bloomberg  BNA_ 
(http://news.bna.com/mpdm/MPDMWB/split_display.adp?fedfid=30409677&vname=mpebulallissues&jd=a0d7v3b8v4&split=0) : “A federal judge in 
Washington, D.C., has set a court hearing for  June 25 to hear arguments 
about whether to allow a lawsuit charging that the  Internal Revenue Service 
has failed to enforce federal tax laws restricting  political activity of 
nonprofit organizations (_Gill v. Internal Revenue Service,_ 
(http://www.bloomberglaw.com/public/document/GILL_et_al_v_US_DEPARTMENT_OF_THE_TREASURY_INTERNAL
_REVENUE_SERVI)  D.D.C., No. 1:13-cv-00213,  order 4/23/13).”



Standing is usually a highly-technical matter, which  often gets 
misunderstood, so please permit me a brief introduction before  getting to what I 
think is an interesting and informative position taken  by the Dept of Justice 
in this filing.  
 
CREW filed suit claiming that the "primarily" test in Treas.  Regs 
1.501(c)(4)-1 is "arbitrary and capricious," and should be enjoined because  the 
statute doesn't support a "primarily" test for electioneering. The  "primarily" 
regulation says that a c4 can engage in electioneering (which itself  is a 
technical term with a precise meaning often overlooked in these  
discussions) so long as electioneering isn't its "primary" activity; this has  been 
interpreted as permitting up to half a c4's activities to be  electioneering. 
Sen. Sheldon Whitehouse, at his recent hearing on "dark money,"  argued that 
this regulation was misguided. CREW also disagrees with the  Service's 
interpretation of electioneering, believing that the true nature of  activity 
affecting elections is broader than encompassed by the regulations (it  is not 
alone among such organizations in this belief). It wants the IRS to  
restrict c4s to only "social welfare," which it interprets as not including  
political activity (the IRS has long held that electioneering is not social  
welfare, so this is only a dispute about percentages of activity  denying 
exemption). 
 
So, as expected and discussed on this list, DoJ filed a  12(b)(1) Motion to 
Dismiss in Gill v. IRS, 
http://www2.bloomberglaw.com/desktop/public/document/GILL_et_al_v_US_DEPARTMENT_OF_THE_TREASURY_INTERNAL_REVENUE_SERVI. 
 
The M2D only addresses the standing issue because "The United States  
contends that the regulation is a permissible interpretation of the statute."  
M2D, at 2 n. 1. Federal Rule of Civil Procedure 12(b)(1) permits this kind  of 
threshold battle, in fact, is intended for this type of question, knocking  
out non-justiciable or plainly unsustainable lawsuits before forcing 
defendants  to go through the torture of discovery and motions practice. The 
standing  requirement is a reflection of the Constitutional limitation of court  
review to actual "cases and controversies," meaning that a claimant must  
show actual, imminent, concrete injury, caused by the defendants' actions,  
and redressable by the remedy sought. The burden is on CREW to show that it 
has  standing to sue. 
 
The M2D contains the expected standing arguments: 1) CREW's injuries  
occurred in the past and not to CREW; 2) any "harm" is purely speculative  and 
was caused by the actions of the voters and not by the complained-of  ads, or 
by the government or its regulations; and 3) simply enjoining the  
"primarily" test will not achieve the undistorted elections that CREW seeks. 
 
Then there is also a "prudential standing" doctrine which allows a  court 
to deny  standing to someone who meets the constitutional tests  but isn't 
the sort of person Congress had in mind to protect the interests  underlying 
the statute; the M2D notes: "Here, Congress expressly and exclusively  vested 
enforcement of the Internal Revenue Code with the Secretary of the  
Treasury, and therefore it 'cannot reasonably be assumed' that Congress intended  
to permit a suit seeking to limit others’ ability to claim a tax exemption." 
In  other words, where a statute commits enforcement to someone, Congress 
probably  did not want a third party like CREW trying to also enforce the 
statute  through the courts; that leads to confusion. Where Congress intends a  
third-party to enforce, it usually adds an express standing provision to  
overcome the prudential standing hurdle. 
 
None of these are exceptional arguments, and they were all anticipated in  
the discussions of this case here and in other venues. The speculation has 
been  that this case will likely be thrown out, and there is substantial 
justification  for that speculation. 
 
But what is interesting in the M2D is the argument the DoJ is making  in 
Section One of its standing argument:
 
In addition, the only harm that CREW alleged it  suffered was the ability 
to disclose the identity of special interests that  influenced the election 
to others. However, this harm does not constitute a  “concrete and 
demonstrable injury to the organization’s activities—with [a]  consequent drain on 
the organization’s resources – constituting . . . more than  simply a setback 
to the organization’s abstract social interests.” Common Cause,  108 F.3d 
at 417. In fact, this Court has previously held that CREW lacked  standing 
to sue the Federal Elections Commission in order to force disclosure of  
election-related information on the grounds that it did not itself suffer injury 
 from the nondisclosure. Citizens for Responsibility & Ethics in Wash. v.  
FEC, 401 F. Supp. 2d 115, 121 (D.D.C. 2005), aff’d, 475 F.3d 337 (D.C. Cir.  
2007) (“CREW is really asserting a derivative harm -- an alleged inability 
to  help others . . . realize that they may have been deprived of 
information. But  to withstand the rigors of Article III, an injury in fact must be 
suffered by  the plaintiff or the plaintiff's members; one cannot piggyback on 
the injuries  of wholly unaffiliated parties.”). 
 
M2D, Pp. 10-11. 
 
There is often much talk about (and some legal support for) a governmental  
interest in informing the public. This is, in fact, a position offered in 
some  cases to support legal claims, such as Cong. Chris Van Hollen's lawsuit 
against  the FEC's electioneering communications regulations. It is a view 
that supports  more, rather than less, disclosure. Contrary to some claims, 
this is not a  settled area and the actual limits of this argument have yet 
to be  explored, though there are many claims so offered. 
 
But it is not, as the DoJ position in the M2D points out, a right that can  
be asserted willy-nilly by just anyone. The basic rules of standing, both  
constitutional and prudential, apply to disclosure claims as they do to any  
other federal claim. There is no right for the public, as individuals or as 
 organizations, to force disclosure through court action in the absence of 
a  specific or general ground for standing. This is the flip side of those 
opposing  disclosure in the Washington State Petition signers case, Doe v. 
Reed,  130 S.Ct. 2811 (2010) (not enough specific evidence shown of harm from  
disclosure to justify a general rule against disclosure, though if such 
specific  evidence was shown, it would justify blocking disclosure), and an 
active issue  in the current Supreme Court's consideration of the Proposition 8 
same-sex  marriage case, Hollingsworth v. Perry, No. 12-144, discussing  
Arizona v. Arizonans for Official English, 520 U.S. 43 (1996) (question  about 
whether initiative proponents had standing to defend, but passing over the  
question to discuss related doctrine of mootness)(disclosure: I was 
prevailing  counsel in AOE). 
 
It's nice to see the DoJ, which has been amply criticized by both sides on  
this issue, present a simple and clear statement of the standing rules in 
this  area. One hopes they will do the same in the Van Hollen and similar  
cases. On the other hand, having had the same argument rejected in 2007 in its 
 suit against the FEC, I'm sure CREW has researched this question and is  
prepared to defend its standing. I look forward to seeing their defense, 
which,  under the Court's June 25 hearing schedule, ought to be filed pretty 
soon. 
 

Barnaby Zall 
Of Counsel 
Weinberg, Jacobs & Tolani, LLP  
10411 Motor City Drive, Suite 500
Bethesda, MD 20817
301-231-6943  (direct dial) 
bzall at aol.com  
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