CHICAGO (CN) — A long-running challenge to Indiana's campaign financing rules is returning to the District Court of Southern Indiana, following a Seventh Circuit panel's ruling in favor of a SuperPAC and its contributor on Thursday.
A three-judge appellate panel unanimously ruled to vacate a March 2022 order from the lower court which barred Indiana media company Sarkes Tarzian Inc. from contributing $10,000 to the Indiana Right to Life Victory Fund, an anti-abortion political action committee.
The panel considered the relevant campaign finance rules inconsistent with the First Amendment, and remanded the case to the lower court with instructions to enjoin it.
"Where, as here, free speech is at stake, the law places a heavy thumb on the scale favoring injunctive relief," U.S. Circuit Judge Michael Scudder Jr., a Donald Trump appointee, wrote in the 9-page opinion.
The state rules in question set limits of between $2,000 and $5,000 for corporate donations to candidates and political committees, depending on the nature of the recipient. Sarkes Tarzian and the Right to Life Victory Fund first sued Indiana in federal court in November 2021, hoping to enjoin the law in time for the 2022 election cycle. But the federal court rebuffed their complaint the following March.
U.S. District Judge Sarah Evans Barker, a Ronald Reagan appointee, found then the parties lacked standing for an injunction.
State authorities, she noted, had actually declined to enforce the rules in light of the U.S. Supreme Court's 2010 Citizens United v. FEC ruling. In Citizens United, the Supreme Court ruled that limiting corporations,' labor unions' and other collectives' independent expenditures on political campaigns violates the First Amendment.
"Defendants state that they have no intention of applying the statutes in the manner plaintiffs reference because to do so would violate clearly established federal prohibitions against such action," Evans Barker wrote.
Unsatisfied, the plaintiffs appealed the decision to the Seventh Circuit. The parties presented oral arguments in December 2022, and from there the appellate court punted the case to the Indiana Supreme Court. The appellate judges asked the state's high court to rule on a specific question:
"Does the Indiana Election Code ... prohibit or otherwise limit corporate contributions to PACs or other entities that engage in independent campaign-related expenditures?"
The Indiana Supreme Court majority ruled the answer was "yes" in September 2023. Only state Supreme Court Justice Christopher Goff issued a dissent. He warned against judicial meddling in Indiana's campaign finance system, echoing Evans Barker's earlier decision.
"Today, in this post-Citizens United era, all parties here agree that the First Amendment prohibits limitations on corporate contributions to independent-expenditure PACs. And it has been clear for well over a decade that, should an Indiana official seek to enforce such a restriction, they would likely subject themselves to civil damages, including attorney’s fees, for violating the aggrieved corporation’s federally protected rights," Goff wrote.
The state high court's majority confirmation was nevertheless what the Seventh Circuit needed to justify an injunction on the offending rules. Scudder wrote Thursday that it was better to err on the side of constitutional caution, even if state authorities said they would steer clear of enforcement actions.
"Compare the absence of any concrete harm to the defendants with the chill that the risk of enforcement might place on the political activities of the fund and its donors were an injunction not issued," Scudder wrote. "In the end, all factors point in favor of issuing the injunction sought by the fund."
Scudder was joined on the appellate panel by U.S. Circuit Judges Frank Easterbrook and John Lee, Ronald Reagan and Joe Biden appointees respectively.
Follow @djbyrnes1
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.
