California’s history of data-privacy gaffes left its donor-disclosure law open to attacks from across the political spectrum.
WASHINGTON (CN) — In a closely watched case for nonprofit political groups that want privacy for their supporters, the U.S. Supreme Court on Thursday struck down a California law that says groups seeking tax-exempt status must tell the state the names of some of their biggest donors.
California has long insisted that it will not share the information it gathers, and legislative efforts aimed at beefing up security abound, but the state's own history of data vulnerabilities undercut those assurances.
A 6-3 conservative majority of the high court focused on that vulnerability in striking the law down as unconstitutional Thursday.
"Given the amount and sensitivity of this information harvested by the state, one would expect Schedule B collection to form an integral part of California’s fraud detection efforts," Chief Justice John Roberts wrote for the majority. "It does not. To the contrary, the record amply supports the District Court’s finding that there was not 'a single, concrete instance in which pre-investigation collection of a Schedule B did anything to advance the attorney general’s investigative, regulatory or enforcement efforts.'”
The data collection was also fraught with examples of lax control. When the conservative Americans for Prosperity Foundation filed its 2014 case, an amicus brief by a group on the opposite side of the political spectrum, the American Civil Liberties Union, found nearly 1,800 confidential disclosure forms on the website for the State Registry of Charitable Trusts. Thirty-eight of these were discovered on the eve of trial, and some had been up since at least 2012.
"'By altering the single digit at the end of the URL' corresponding to each file on the Registry website, Petitioner’s expert witness 'was able to access, one at a time, all 350,000 of the Registry’s confidential documents,'" the ACLU wrote, quoting from the trial record.
The names of donors appear on Schedule B tax forms that nonprofit organizations file with the IRS, listing the names and addresses of individuals who contributed $5,000 or more in a given tax year. Though the IRS does not include Schedule B forms among the documents it makes available for public inspection, the California Department of Justice has said its duty to police charitable fraud and self-dealing justify giving it blanket access to the filings.
At the time the suit was filed, the California Justice Department was led by now-Vice President Kamala Harris.
A federal judge ruled against the state in 2016, but the San Francisco-based Ninth Circuit reversed two years later, setting the stage for Supreme Court oral arguments in April.
On appeal, the challenge by the Americans for Prosperity Foundation, the charitable arm of Charles and David Koch’s libertarian advocacy group Americans for Prosperity, was consolidated with that of the Thomas More Law Center.
“Once the state posts donors’ personal information on the internet, it remains public forever and puts donors’ and their families’ privacy at risk,” Kristen K. Waggoner, an attorney with Alliance Defending Freedom, wrote in a 2019 petition to the high court.
The majority was sympathetic to that argument in Thursday’s ruling, part of the high court’s final release of opinions for this term.
“When it comes to ‘a person’s beliefs and associations,’ ‘[b]road and sweeping state inquiries into these protected areas . . . discourage citizens from exercising rights protected by the Constitution,’” Roberts wrote, citing the court’s 1971 ruling in Baird v. State Bar of Arizona. “We understand this Court’s discussion of rules that are ‘broad’ and ‘broadly stifle’ First Amendment freedoms to refer to the scope of challenged restrictions—their breadth—rather than the severity of any demonstrated burden.”
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