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Tennesseans For Sensible Election Laws v. Tennessee Bureau of Ethics and Campaign Finance

Court of Appeals of Tennessee, Nashville

December 12, 2019


          Session August 14, 2019

          Appeal from the Chancery Court for Davidson County No. 18-821-III Ellen H. Lyle, Chancellor

         This appeal involves a constitutional challenge to two Tennessee statutes that are part of Tennessee's campaign finance law. Prior to trial, the chancery court granted several motions in limine that effectively excluded all of the testimonial and documentary evidence proffered by the State in defense of the statutes. With no evidence presented by the State, the trial court concluded that the State failed to meet its burden of proof as to the constitutionality of the two statutes. Consequently, the trial court held that Tennessee Code Annotated sections 2-10-117 and 2-10-121 violate the First and Fourteenth Amendments to the United States Constitution and Article I, section 19 of the Tennessee Constitution. The State appeals. The State first argues that the trial court abused its discretion by excluding the State's evidence. Additionally, the State argues that the constitutional challenge to one of the statutes has become moot due to a statutory amendment. Finally, the State argues that the remaining statute is constitutional. For the following reasons, we affirm and remand for further proceedings.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed and Remanded

          Herbert H. Slatery III, Attorney General and Reporter; Andrée S. Blumstein, Solicitor General; Janet M. Kleinfelter, Deputy Attorney General; Matthew F. Jones, Assistant Attorney General; and Kelley L. Groover, Assistant Attorney General, for the appellant, Tennessee Bureau of Ethics and Campaign Finance, Registry of Election Finance.

          Daniel A. Horwitz and Jamie R. Hollin, Nashville, Tennessee, for the appellee, Tennesseans for Sensible Election Laws.

          Braden H. Boucek, Nashville, Tennessee, for the Amicus Curiae, Beacon Center of Tennessee.

          Brian Kelsey, Chicago, Illinois, and Jacob Huebert, pro hac vice, Phoenix, Arizona, for the Amici Curiae, Liberty Justice Center and Goldwater Institute.

          Carma Dennis McGee, J., delivered the opinion of the court, in which J. Steven Stafford, P.J., W.S., and Arnold B. Goldin, J., joined.



         I. Facts & Procedural History

         Tennesseans for Sensible Election Laws ("TSEL") describes itself as a nonpartisan nonprofit group that engages in substantial advocacy efforts regarding election related issues in Tennessee. To further its objectives, TSEL makes direct monetary contributions to state and local candidates for public office across the State of Tennessee. During 2018, TSEL expended over $3, 000 on direct campaign contributions and election expenditures for and against various candidates and measures.

         Because of this political activity, TSEL must comply with Tennessee's "Campaign Financial Disclosure Act of 1980," Tenn. Code Ann. § 2-10-101, et seq., in addition to the "Campaign Contribution Limits Act of 1995," Tenn. Code Ann. § 2-10-301, et seq.[1]Under these Acts, any group that "receives contributions or makes expenditures to support or oppose any candidate for public office or measure during a calendar year in an aggregate amount exceeding one thousand dollars ($1, 000)" meets the definition of a "political campaign committee." Tenn. Code Ann. § 2-10-102(12)(B). There are several types of political campaign committees, including multicandidate political campaign committees, single-candidate political campaign committees, and single-measure political campaign committees. Tenn. Comp. R. & Regs. 0530-01-01-.01(5). TSEL meets the definition of a "[m]ulticandidate political campaign committee" because it is "a political campaign committee to support or oppose two (2) or more candidates for public office or two (2) or more measures."[2] Tenn. Code Ann. § 2-10-102(9).

         On July 26, 2018, TSEL filed a verified complaint for injunctive and declaratory relief in the chancery court of Davidson County, challenging the constitutionality of two statutes applicable to multicandidate political campaign committees. TSEL alleged that it had endorsed a certain candidate for state representative and desired to make an immediate contribution of $500 to his campaign prior to the upcoming competitive primary election on August 2, but it was prevented from doing so by Tennessee Code Annotated section 2-10-117, which provides:

No multicandidate political campaign committee other than a committee controlled by a political party on the national, state, or local level or by a caucus of such political party established by members of either house of the general assembly shall make a contribution to any candidate after the tenth day before an election until the day of the election.

         TSEL alleged that its proposed contribution would be illegal because it is a nonpartisan multicandidate political campaign committee, while a partisan or party-controlled political campaign committee would be permitted to contribute under the exception provided in the statute. TSEL claimed that a violation of the statute could subject it to criminal prosecution with a sentence of up to thirty days and/or a civil penalty up to $10, 000. See Tenn. Code Ann. §§ 2-19-102, 40-35-111(e)(3), 2-10-110(a)(2).

         TSEL sought a preliminary injunction prohibiting the State (through the Registry and/or the District Attorney General) "from prosecuting [it] either criminally or civilly" for contributing to the aforementioned candidate. TSEL also sought a declaratory judgment and a permanent injunction prohibiting enforcement of the statute on the basis that it was unconstitutional "for multiple reasons." TSEL alleged that the statute contained an impermissible speaker preference, permitting only groups controlled by political parties or caucuses to contribute during the final ten-day period, discriminating on the basis of identity and political affiliation. TSEL asserted that the statute imposed a content-based restriction on disfavored political speech and association. It also alleged that this blanket ban on political speech during the most critical phase of an election was a severe burden that was not sufficiently tailored to a compelling state interest. TSEL claimed that the ten-day blackout period had not only prevented it from making contributions but also caused it to make contributions at such an early stage that it was not advantageous, as one candidate it supported had withdrawn from the race prior to the election and another returned a mailed donation because it was not received before the blackout period began.

         Additionally, TSEL alleged that Tennessee Code Annotated section 2-10-121 was unconstitutional, because, at the time, it imposed a $100 annual fee exclusively on nonpartisan multicandidate political action committees:

No later than January 31 of each year, each multicandidate political campaign committee registered with the registry of election finance shall pay a registration fee to be determined by rule promulgated pursuant to § 4-55-103(1). . . . All fees collected under this section shall be retained and used for expenses related to maintaining an electronic filing system. This section shall not apply to any statewide political party as defined in § 2-1-104 or subsidiaries of the political party.

Tenn. Code Ann. § 2-10-121 (2018). TSEL emphasized that the fee is assessed exclusively against nonpartisan multicandidate political campaign committees, but not party-controlled political campaign committees or individual contributors. It alleged that this assessment against "disfavored political speakers" was unconstitutional, as it expressly discriminated based on political association, charging only "disfavored non-party political speakers" the $100 fee while charging partisan speakers nothing. TSEL asserted that section 121 was unconstitutional both facially and as applied because it discriminated on the basis of political association by exempting both political parties and individual political speakers. It sought a declaratory judgment and a permanent injunction prohibiting enforcement of section 121.

         In summary, TSEL asserted that Tennessee Code Annotated sections 2-10-117 and -121 were unconstitutional, both facially and as applied, violating the First and Fourteenth Amendments to the United States Constitution and Article I section 19 of the Tennessee Constitution. Along with the filing of its complaint, TSEL also filed a motion for preliminary injunction. "Barring objection from Defendants," TSEL moved that the trial on the merits be advanced and consolidated with the preliminary injunction hearing pursuant to Tennessee Rule of Civil Procedure 65.04(7).[3]

         The Attorney General and Reporter for the State of Tennessee filed a response on behalf of the Registry and District Attorney General. The State asserted that the General Assembly added Tennessee Code Annotated section 2-10-117 and its contribution ban to the statutory scheme in 1995 as part of its effort to place limits on campaign contributions and expand reporting requirements. See 1995 Pub. Acts, c. 531, § 10, eff. Jan. 1, 1996, "Campaign Contribution Limits Act of 1995." The State explained that political campaign committees are required to file disclosure reports detailing their contributions to candidates pursuant to Tennessee Code Annotated section 2-10-105(c) and (d). These disclosure reports are due at various intervals, and one particular pre-election report is due seven days before an election. Tenn. Code Ann. § 2-10-105(c)(1). The pre-election report must detail contributions "through the tenth day" before the election. Id. Thus, the State argued that the contribution ban in section 117 was "directly tied to" the preelection disclosure statements and "a crucial part of the disclosure scheme." It suggested that the statute utilized the "smallest possible window" to ensure full disclosure.[4] The State asserted that section 2-10-117 serves the State's interests in "ensuring a fully informed electorate and preventing corruption or its appearance." According to the State, if multicandidate political campaign committees were permitted to contribute during the final days of the campaign, such contributions would not be disclosed to the public until after the election, when the information was no longer useful to voters. The State also suggested that it was unnecessary to ban contributions from political campaign committees controlled by political parties or caucuses because it was "intuitive and self-evident" that those committees would be contributing to their respective party candidates.

         The response filed by the State Defendants did not address TSEL's request for consolidation of the hearing with the trial on the merits. A hearing was held on July 31, 2018. The next day, the trial court entered an order denying the application for a temporary injunction but providing that a final decision would be rendered on the merits within thirty days. According to the trial court's order, the court deemed it inappropriate to issue a preliminary injunction with only two days remaining before the primary election because other nonpartisan political campaign committees similar to TSEL would not have time to seek relief before the court, and TSEL would have an advantage in the August 2 primary that no other nonpartisan political campaign committee would have. However, noting TSEL's previous request for the case to be decided promptly, the order provided that the trial court would issue a final order on the merits by September 5, 2018 (prior to the upcoming general election in November). The order stated, "This disposition of the case has been consented to by Counsel who agree the issues are matters of law and that an evidentiary record is not necessary."

         On August 24, 2018, the trial court sua sponte entered a revised order scheduling "a trial on limited fact issues." The trial court noted its previous order provided for a ruling by September 5, as TSEL had sought a "speedy" ruling before the November election. However, the trial court explained that in studying and researching in preparation for its ruling, the court had determined that "an evidentiary record on limited issues is needed to inform the questions of law." Because the statutes at issue restrict speech, the court explained, the State would bear the burden of proof as to the constitutionality of the statutes. See McCutcheon v. Fed. Election Comm'n, 572 U.S. 185, 210 (2014) ("When the Government restricts speech, the Government bears the burden of proving the constitutionality of its actions.") (internal quotation omitted). The trial court explained that under prevailing caselaw, that burden could not be met by "mere conjecture" regarding the governmental interests at stake. Id. ("[W]e have never accepted mere conjecture as adequate to carry a First Amendment burden[.]") (quotation omitted).

         Because the record before the trial court did not contain the necessary factual proof, the trial court determined that it was unable to decide the matter on the present record and that a brief trial on limited issues was needed. The August 24 revised order proposed an "expedited schedule" with specific deadlines. By September 12, the State was required to file its answer to the complaint along with "a list of exhibits and witnesses" it expected to introduce at trial. By September 19, TSEL was required to file its list of rebuttal exhibits and witnesses. On September 26, the bench trial would be held on the limited issues requiring evidentiary proof. Lastly, the trial court noted that it was the court's impression from the last hearing that "both parties, in consenting to have the entire case decided on the temporary injunction record alone, wanted this matter decided in an expeditious manner." Because the trial court had proposed a different schedule, the trial court recognized that the parties "may have a different perspective as to the timing and disposition of this case." The order provided that if either party desired to seek a modification of the trial court's proposed expedited schedule, it must file a "Notice" by Friday, August 31, stating its position as to the timing and/or disposition of the case and any relief requested.

         Thereafter, TSEL filed such a Notice, seeking modification of the revised order. TSEL argued that the State had taken a "binding litigation position" at the original hearing regarding its intention not to present evidence. TSEL argued that this constituted a formal voluntary waiver of its right to present evidence, recognized by the trial court's original order, and therefore, the trial court should not relieve the State of that decision sua sponte. TSEL asked the court to reinstate the original order and decide the matter without additional evidence.

         The trial court ordered the State to respond to TSEL's Notice. In its response, the State argued that the position it took at the injunction hearing did not constitute a judicial admission amounting to a waiver of its right to present evidence. The State asserted that it was "fully prepared to go forward with the proposed schedule set forth in the August 24, 2018 [revised] Order."

         On September 4, the trial court entered an order denying TSEL's "Notice" requesting reinstatement of the original order and confirming the trial date of September 26. The trial court reiterated its belief that "if it were to proceed to rule on the merits of this lawsuit without an evidentiary record, it would be a clear error of law that would require a remand by the Court of Appeals." The court restated its original deadline of September 14 for the State to file its answer and list of exhibits and witnesses and directed it to include "a brief description as to what the Defendants expect the witnesses will testify about at trial." The order stated the court's assumption that no depositions would be taken given the expedited nature of the proceeding. However, it also stated that if TSEL determined that depositions were needed once it received the list of exhibits and witnesses the State intended to present at trial, the above schedule would have to be adjusted to allow additional time for discovery. TSEL was again directed to file its list of exhibits and witnesses by September 21, with a brief description of their expected testimony.

         On the September 14 deadline for the State, it filed its answer as instructed along with a "List of Exhibits and Witnesses." The List stated:

a. Witnesses Defendants expect to present:
1) Drew Rawlins, Executive Director of the Tennessee Bureau of Ethics and Campaign Finance[.]

         The List did not contain any description of what the State expected Mr. Rawlins to testify about at trial, as required by the prior order. As for exhibits, the List included 24 exhibits the State expected to present at trial. The first six were affidavits of various individuals who were listed by name and title, similar to the designation of Mr. Rawlins above, with no description of the content of the affidavits. For Exhibits 7 through 24, the list contained titles of articles from newspapers and other publications dating back to 1992, "Legislative history from 99th Session of the Tennessee General Assembly for House Bill 89 and Senate Bill 79," one particular candidate's "Campaign Financial Disclosure Reports" from 1992, and "Broadband Internet Deployment, Availability, and Adoption in Tennessee, Tenn. Advisory Comm'n on Intergovernmental Relations (2017)."

         One week later, on September 21, TSEL filed its witness and exhibit list as directed by the prior order. As for witnesses, TSEL listed "[a]ny witnesses called by Defendants, if necessary[.]" It also listed two exhibits. However, TSEL contemporaneously filed three motions in limine seeking to exclude the testimony of the State's sole witness along with the State's listed exhibits. The first motion in limine addressed the sole witness. TSEL sought an order precluding the State from calling Drew Rawlins as a witness at trial because its witness list did not include the required description of his testimony. The second motion in limine sought exclusion of the State's proposed exhibits one through six, which were described as affidavits of various individuals. TSEL again noted that the trial court's order required the State to describe the substance of its witnesses' expected testimony. TSEL argued that the State had attempted to circumvent that requirement by proposing to have six witnesses testify by affidavit. TSEL argued that the affidavits constituted inadmissible hearsay pursuant to Tennessee Rule of Evidence 801(c) and should not be admitted because doing so would deprive it of the opportunity to cross-examine the witnesses. Finally, in the third motion in limine, TSEL sought exclusion of the remaining exhibits, spanning from number seven to number twenty-four. TSEL argued that some of these exhibits were inadequately described, but in any event, they should all be excluded as conditionally irrelevant pursuant to Tennessee Rule of Evidence 104(b). TSEL asserted that none of the remaining exhibits were relevant if the State could not first demonstrate that the statutes were narrowly tailored to achieve the interests it asserted.

         On Monday, September 24, 2018, the trial court entered an order scheduling oral argument on the three motions in limine for 9:00 a.m. on September 26, the morning of the scheduled bench trial. Also on Monday September 24, late that afternoon, counsel for TSEL sent the following email to the three attorneys of record for the State:

[Subject:] Local Rule 29.01 Exchange of Exhibits[5]
We look forward to seeing you all on Wednesday morning.
Local Rule 29.01(b) contemplates the exchange of exhibits at least 72 hours before trial. You already have ours, so we'd be grateful if you'd send us yours at your earliest convenience, since we don't have any of them.
We appreciate your time.

         When counsel received no response to his email by noon the next day, which was less than twenty-four hours before the trial would begin, he filed a fourth motion in limine, seeking to exclude all of the State's exhibits (1-24) on the basis that they were not exchanged prior to trial in accordance with the local rule.

         The hearing commenced the following morning. At the outset, the trial judge considered the four motions in limine filed by TSEL. Counsel for TSEL reiterated the bases for the four motions and stated that the requested exhibits were finally received the previous afternoon around 2:00 or 2:30 p.m. The trial judge discussed the possibility of continuing the hearing, but at the same time, the trial judge noted that a continuance would result in the hearing being held after the upcoming November election. She noted that both parties had agreed to have an expedited hearing before the election. Instead of a continuance, counsel for TSEL asked the trial judge to proceed with consideration of the motions in limine and to grant the motions, excluding the State's evidence and "restor[ing] them to the position that they previously took, which is that they don't need evidence and they don't have to introduce evidence[.]"

         The trial judge then proceeded to hear from counsel for the State. With respect to the first motion in limine, regarding the lack of any description of the witness testimony, counsel noted that Mr. Rawlins was identified by his title of "Executive Director" of the Registry, and she suggested that it should have been "pretty obvious as to what he was going to testify is the actions of the Registry of Election Finance."

         With regard to the second motion in limine, addressing the affidavits listed as exhibits one through six, counsel for the State stated that "because of the expedited basis of this trial, there was no way that we could have these witnesses available today." She explained that some of the witnesses were located more than 100 miles away, and at least two were "extremely busy at this moment preparing for the November elections." Counsel explained that she was unable to ensure that the witnesses would be available for the trial date, and she suggested that TSEL could have requested a continuance if it desired to depose these witnesses.

         As for the third motion in limine, regarding conditional irrelevance, counsel simply argued that the exhibits were adequately described and that "it's the Court that decides whether or not a particular exhibit is relevant, not opposing counsel." She argued that even if it was the State's burden to demonstrate narrow tailoring, the evidence would be necessary for that purpose.

         Finally, concerning the fourth motion in limine, counsel stated that the documentary exhibits from its list were "public records" that could have been obtained from the internet or from "the State library and archives." She suggested that it was simply impossible to exchange the affidavits by the deadline because "we were still in the process of getting executed affidavits, and two of the affidavits were not actually executed until yesterday."

         At the conclusion of oral argument, the trial judge orally announced that she was granting all four motions in limine for the reasons set forth by TSEL. She explained,

[T]he State failed to comply with measures that this Court had put in its order to regulate and provide structure and fair notice when we were having a bench trial on an expedited basis.
The Court was careful and thoughtful in crafting regulations so that the trial of this case would be fair, even though it was expedited, and the State has not complied with the Court's order. The State did not provide a description of the testimony that would be given by its witness.
The Court had also put in footnote 1 of its order that if there were difficulties or problems complying with the deadlines, that relief should be sought from the Court, and the Court anticipated or acknowledged that that was a possibility. The State never came forward and asked for any additional time or measures in which to put their evidence on before the Court, other than the limited bench trial that the Court had set up. These are in addition to the reasons that are stated by the plaintiff in their oral argument and their briefing.
The Court concludes that the way that the State has proceeded, it has the effect of a trial by ambush, and it doesn't provide an opportunity for the other side to defend against the proof that the plaintiff seeks -- that the defendant, the State, seeks to offer.

         The trial judge then announced that "having granted the motions in limine, the State has insufficient facts of record to withstand the plaintiff's claim, and so judgment is granted in favor of the plaintiff[.]" However, the trial judge permitted the State to make an offer of proof, introducing its twenty-four exhibits for identification only and examining its only witness outside the presence of the judge.

         The trial court entered a written order on October 11, 2018. The order states that the trial court convened a limited bench trial in order to provide the State an opportunity to present evidence in defense of the constitutionality of the restrictions on speech found in Tennessee Code Annotated section 2-10-117 and -121. However, the order added, "the State Defendants [] inexplicably failed to comply with orders to give the Plaintiff fair notice of Defendants' proof." The trial court found that the State did not comply with the court's order or the local rules of court, as it failed to provide a description of the testimony that would be given by its witness, and it did not timely provide its trial exhibits to TSEL. The order repeated the trial judge's observation that the State's course of action had "the effect of a trial by ambush, and it does not provide a fair opportunity for the Plaintiff to defend against the proof that the Defendants seek to offer."

         The order acknowledged that normally a continuance and possible sanction of attorney's fees would have been an appropriate option but explained that "a continuance was not possible in this case." The order noted that the State had consented to an expedited bench trial due to the upcoming November 6, 2018 election. The court also noted that the State had announced at the first hearing in this case that it "would not and did not need to present evidence in this matter," and at that time, "the parties mutually agreed to submit this case for immediate decision on the merits without additional evidence beyond the exhibits introduced into the record by the parties in advance of the July 31, 2018 hearing." The trial court noted that it had decided that a limited bench trial was necessary based on its own research, and it had specifically stated in its revised order that if either party sought a modification of the expedited schedule, it must file a Notice stating its position by August 31. The trial court emphasized that the State did not file such a notice, and to the contrary, it represented that it was "fully prepared to go forward with the proposed schedule." According to the final order, it was not until oral argument on the motions in limine, at the beginning of trial, that the State complained that the expedited schedule made it impossible to have witnesses present.

         The order stated that all four motions in limine were granted. The trial court stated that the effect of its granting the four motions in limine was "the State not being permitted to present proof and the Plaintiff prevailing." The trial court explained that the "temporal restriction on political speech" found in Tennessee Code Annotated section 2-10-117 was subject to the "closely-drawn" test set forth in Buckley v. Valeo, 424 U.S. 1 (1976). The trial court found that TSEL's additional challenges to the statutes - based on speaker-based discrimination, content discrimination, and discrimination based on political association - were subject to strict scrutiny.

         Having failed to present any evidence at trial, the trial court found that the State failed to meet its burden of proof as to the constitutionality of Tennessee Code Annotated sections 2-10-117 and -121. The trial court entered a declaratory judgment that both statutes are unconstitutional, both facially and as applied, in violation of the First and Fourteenth Amendments to the United States Constitution and Article I, section 19 of the Tennessee Constitution. The trial court permanently enjoined the Registry from enforcing the two statutes. However, the trial court dismissed the District Attorney General from the action, without prejudice, pending the conclusion of appellate review. The Registry timely filed a notice of appeal to this Court.

         II. Issues Presented

         The State presents the following issues for review on appeal:

1. Whether the trial court abused its discretion in excluding all the evidence proffered by the State in support of the constitutionality of the two statutes;
2. Whether TSEL's constitutional challenge to Tennessee Code Annotated section 2-10-121 is moot due to a recent statutory amendment; and
3. Whether the trial court erred in declaring Tennessee Code Annotated section 2-10-117 unconstitutional.

         In its posture as appellee, TSEL asserts that the trial court did not abuse its discretion in granting the four motions in limine. It also argues that the constitutional challenge to Tennessee Code Annotated section 2-10-121 was not rendered moot by the statutory amendment. TSEL maintains that the trial court correctly held that Tennessee Code Annotated section 2-10-121 is unconstitutional. TSEL also raises the following additional issues on appeal:

4. Whether the District Attorney General should be enjoined from enforcing Tennessee Code Annotated section 2-10-117 and -121; and
5. Whether TSEL is entitled to an award of attorney's fees incurred on appeal.

         Amicus curiae briefs were filed on appeal by the Beacon Center of Tennessee, the Goldwater Institute, and the Liberty Justice Center, who urge this Court to affirm the trial court's decision ...

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