Citizens United: Federal Judge’s Denial of Preliminary Injunction ‘First Step in Lengthy Process’ To Protect Privacy of Members

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“This is just the first step in a lengthy process to protect the privacy of our members and supporters, and we are confident that in the end we will prevail,” Michael Boos, Citizens United Vice President and General Counsel tells Breitbart News.

The comment came in response to a federal judge’s decision denying the conservative group’s request for a preliminary injunction to “enjoin the New York Attorney General from enforcing his policy of requiring registered charities to disclose the names, addresses, and total contributions of their major donors in order to solicit funds in the state.”

U.S. District Judge Sidney Stein ruled that Citizens United had not “made a ‘clear showing’ that they are entitled to the ‘extraordinary remedy’ of a preliminary injunction.”

Citizens United asked for the preliminary injunction as a pre-emptive strike in the event New York State Attorney General Eric Schneiderman attempts to prohibit Citizens United from raising funds from donors in New York State because the group has failed to respond to his request that it provide him directly with the same list of donors who have given more than $5,000 that it currently provides the IRS in its annual Form 990 filing.

In his ruling, however, Judge Stein wrote, “[t]he court cannot find a specific future threat that the Attorney General will prohibit plaintiffs from soliciting in New York as a result of their refusal to disclose their major donor information.”

Monday’s ruling was the opening volley in a carefully crafted legal strategy on behalf of Citizens United to assure the privacy rights of its donors.

“Today’s victory over Citizens United reaffirms some of our most basic responsibilities in overseeing the nonprofit sector in New York State,” Attorney General Eric Schneiderman, who was first elected in 2010 and re-elected in 2014, said on Monday in a statement.

David Bossie, President of Citizens United, says that the ruling should not prevent the organization from soliciting donations while it continues to dispute Attorney General Schneiderman’s filing request.

“New York’s attorney general should not take any adverse actions against Citizens United while this matter continues through the court system,” Bossie said.

“While we would have preferred the court to issue a preliminary injunction, we are pleased that the court recognized that donor information is confidential and cannot be released to the public,” he added.

The case hinges on how Schneiderman interpreted a regulation promulgated by then-Attorney General (now-Governor) Andrew Cuomo in 2006, 13 NYCRR § 91.5. The law on which the regulation is based, N.Y. Exec. Law § 172-b(1),  reads,“[e]very charitable organization registered or required to be registered … shall file with the attorney general an annual written financial report, on forms prescribed by the attorney general, on or before the fifteenth day of the fifth calendar month after the close of such fiscal year.”

The regulation promulgated by then-Attorney General Cuomo in 2006, 13 NYCRR § 91.5, specifies that “[a]ll organizations that do not claim annual report exemptions for all laws under which they are registered.. . must include a copy of the following IRS forms with their submission of the CHAR500, regardless of whether such IRS forms are submitted or required to be submitted to the IRS: (a) a copy of the complete IRS form 990, 990-EZ or 990-PF with schedules; and (b) a copy of the complete IRS form 990-T, if applicable.” (emphasis added)

Citizens United, which registered as a charity in New York State in 1995, has “never filed copies of their Schedules B with the Attorney General,” according to the court ruling.

The controversy, the court said, began in 2012, two years into Schneiderman’s tenure, when “the Charities Bureau [of the NY State Attorney General’s Office] conducted a review of its operations and determined that certain organizations were not filing Schedule B along with their annual reports.”

“In April 2013,” the court continued, “the Attorney General notified plaintiffs [Citizens United] that their annual reports for tax year 2011 were incomplete due to the absence of Schedule B.”

As the court noted, Citizens United “argue[s] that the Schedule B policy is preempted by federal law, which sets out a mechanism for states to request Schedules B from the IRS and also ensures the confidentiality of donor information.” They further argue that “the Attorney General’s policy of obtaining Schedules B directly from charities, rather than requesting them from the IRS, conflicts with these federal statutory provisions.”

By obtaining Schedules B information with its list of all of Citizens United’s donors around the country, not just those who are residents of New York, without complying with the federal confidentiality requirements which guide IRS disclosure of this information to the various state entitities, the New York State Attorney General would be in a position to publicly disclose information of every Citizens United donor.

According to the court, Citizens United “alleges that the Attorney General [Schneiderman] initially read section 91.5 of the promulgated regulation as not requiring registered charities to submit Schedule B, but then reversed his interpretation without providing notice of his reversal or an opportunity for public comment.”

In addition, the court noted, Citizens United “contend[s] that the Attorney General adopted the Schedule B policy in contravention of the New York State Administrative Procedure Act (“SAPA”). Because on plaintiffs’ reading the plain text of section 91.5 does not require charities to submit Schedule B with their annual reports, they argue that the Attorney General was obligated to comply with SAPA’s formal rulemaking procedures before reaching the opposite conclusion.”

Citizens United has 30 days to appeal the decision, which appears to be the likely next step.

Though the federal judge did not find in favor of Citizens United’s request for a preliminary injunction against the New York State Attorney General, the facts outlined in the ruling offer the conservative group reason to be optimistic on appeal.