Judge Graber, joined by Judges Gould and Watford, in No on E, San Franciscans Opposing the Affordable Housing Production Act v. Chiu, in a Ninth Circuit opinion released today (highlights with some revisions below–there’s lots more in the opinion but here are a few choice excerpts):

On November 5, 2019, San Francisco voters passed Proposition F. Referred to by proponents as the “Sunlight on Dark Money Initiative,” Proposition F changed the disclaimer requirements for advertisements paid for by independent political committees, among other provisions. After the passage of Proposition F, “all committees making expenditures which support or oppose any candidate for City elective office or any City measure” must comply with the City’s new disclaimer requirements in addition to the state’s requirements.

Under the new ordinance, ads run by primarily formed independent expenditure and ballot measure committees must include a disclaimer listing their top three contributors of $5,000 or more. Additionally, “[i]f any of the top three major contributors is a committee, the disclaimer must also disclose both the name of and the dollar amount contributed by each of the top two major contributors of $5,000 or more to that committee.” Id. The ad also must inform voters that “[f]inancial disclosures are available at sfethics.org” or, if an audio ad, provide a substantially similar statement that specifies the website.

Printed disclaimers that identify a “major contributor or secondary major contributor” must list the dollar amount of relevant contributions made by each named contributor. Print ads must include the disclaimers in text that is “at least 14-point, bold font.” Audio and video advertisements must begin by speaking the required disclaimers of major contributors and secondary major contributors, but need not disclose the dollar amounts of those donors’ contributions. In addition, video ads must display a text banner that contains similar information to that required in print ads.

Violations of the City’s campaign finance laws are punishable by civil, criminal, and administrative penalties. A committee’s treasurer may be held personally liable for violations by the committee. Any individual who suspects a possible violation may file a complaint with the Ethics Commission, City Attorney, or District Attorney.

. . .

This action was brought by three plaintiffs: (1) No on E, San Franciscans Opposing the Affordable Housing Production Act (“the Committee”), a primarily formed independent expenditure committee that runs ads subject to the secondary-contributor requirement; 3 (2) Todd David, the founder and treasurer of No on E (and the founder of Yes on Prop B); and (3) Edwin M. Lee Asian Pacific Democratic Club PAC Sponsored by Neighbors for a Better San Francisco Advocacy (“Ed Lee Dems”), a committee and a direct contributor to No on E, whose major donors would be subject to disclosure in ads under the San Francisco ordinance. David established the Committee to support the passage of Prop B in the June 7, 2022 election. The Committee sought to communicate its message by publishing mailers, print ads in newspapers, and digital ads on the internet.

As of May 10, 2022, the Committee had raised a total of $15,000 from three donors, each of which contributed $5,000. Two of those donors were committees that, in turn, had donors that had made contributions of more than $5,000. Thus, according to the examples provided by Plaintiffs, San Francisco’s ordinance would require the following disclaimer on the Committee’s print and video advertisements:

Ad paid for by San Franciscans Supporting Prop. B 2022. Committee major funding from:

1. Concerned Parents Supporting the Recall of Collins, Lopez and Moliga ($5,000) – contributors include Neighbors for a Better San Francisco Advocacy Committee ($468,800), Arthur Rock ($350,000).
2. BOMA SF Ballot Issues PAC ($5,000).
3. Edwin M. Lee Asian Pacific Democratic Club PAC sponsored by Neighbors for a Better San Francisco Advocacy ($5,000) – contributors include Neighbors for a Better San Francisco Advocacy Committee ($100,000), David Chiu for Assembly 2022 ($10,600).

Financial disclosures are available at sfethics.org.

On May 11, 2022, Plaintiffs filed this action. Plaintiffs allege that the secondary-contributor disclaimer requirement violates the First Amendment, both on its face and as applied against Plaintiffs. . . .

Plaintiffs seek a preliminary injunction on the ground that the secondary-contributor disclaimer requirement violates the First Amendment. We hold that the district court acted within its discretion to conclude that Plaintiffs did not establish a likelihood of success on the merits.

The district court applied “exacting scrutiny,” which “requires a ‘substantial relation’ between the disclosure requirement and a ‘sufficiently important’ governmental interest.” Citizens United v. FEC (2010) (quoting Buckley v. Valeo (1976) (per curiam)). On de novo review, we hold that exacting scrutiny is the correct legal standard.

Regardless of the beliefs sought to be advanced by association, “compelled disclosure requirements are reviewed under exacting scrutiny.” Ams. for Prosperity Found. v. Bonta (2021) (opinion of Roberts, C.J.); see also id. (applying exacting scrutiny to First Amendment challenge to compelled disclosure) (Sotomayor, J., dissenting). In the electoral context, both the Supreme Court and our court have consistently applied exacting scrutiny to compelled disclosure requirements and on-advertisement disclaimer requirements. See Citizens United (holding that disclaimer and disclosure requirements are subject to exacting scrutiny); John Doe No. 1 v. Reed (2010) (applying exacting scrutiny to disclosure requirement); Buckley, 424 U.S. at 64 (requiring that compelled disclosure requirements survive exacting scrutiny); Davis v. FEC (2008) (evaluating whether disclosure requirements satisfy exacting scrutiny) . . . .

Plaintiffs’ argument to the contrary is unavailing. Plaintiffs take the position that disclaimer and disclosure are “terms of art,” and argue that the City’s ordinance should be reviewed under strict scrutiny because it is a “hybrid disclaimer/disclosure requirement.” But Plaintiffs cite no authority that makes a similar distinction.[fn. 6] Indeed, they acknowledge that the Supreme Court has applied exacting scrutiny to both disclosure rules, John Doe No. 1, and disclaimer requirements, Citizens United

[fn. 6: Citing Americans for Prosperity Foundation v. Bonta, Plaintiffs further argue that San Francisco’s “hybrid” requirement should be reviewed under strict scrutiny because “[t]he Supreme Court recently signaled that it may be increasing the scrutiny given to any disclosure regime.” This reading of Americans for Prosperity Foundation clashes with a plain reading of the case and the manner in which other courts have applied it to disclaimer laws. We hold that Americans for Prosperity Foundation does not alter the existing exacting scrutiny standard.]

. . .

The second burden identified by Plaintiffs—that the secondary-contributor requirement violates their right to freedom of association and drives away potential donors—is likewise insufficient to outweigh the strength of the governmental interests. “It is undoubtedly true that public disclosure of contributions to candidates and political parties will deter some individuals who might otherwise contribute.” Buckley,. But to support an exemption from a compelled disclosure requirement, Plaintiffs must show more than a “modest burden.” See Ams. for Prosperity Found. (concluding that petitioners had shown a “widespread burden on donors’ associational rights” where there was evidence that petitioners and their supporters had been subjected to “bomb threats, protests, stalking, and physical violence,” and hundreds of organizations expressed that they shared the petitioners’ concerns).

Plaintiffs provided only two declarations in support of their contention that San Francisco’s ordinance burdens their right to freedom of association. David asserts that “[p]otential donors have expressed concern to me about the secondary disclosure rules and are more reluctant to contribute to committees where their donors need to be disclosed.” Ed Lee Dems asserts that it would have to withdraw its donations from the Committee and would have its own fundraising challenges if donors thought that their names might become public through the secondary-contributor requirement.

The district court was within its discretion to conclude that Plaintiffs failed to demonstrate that the secondary-contributor requirement “actually and meaningfully deter[s] contributors.” Plaintiffs have not provided evidence of any specific deterrence beyond some donors’ alleged desire not to have their names listed in an on-advertisement disclaimer. That level of hesitation on the part of donors is insufficient to establish that the “deterrent effect feared by [Plaintiffs] is real and pervasive.” Ams. for Prosperity Found.