Colorado Ethics Watch v. Gessler, Denver District Court Case Nos. 2012CV2133 and 2153, Order Denying Stay Pending Appeal, September 4, 2012.
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DISTRICT COURT, CITY AND COUNTY OF DENVER, STATE OF COLORADO 1437 Bannock Street, Room 256 Denver, Colorado 80202 COLORADO ETHICS WATCH; COLORADO COMMON CAUSE; DAVID PALADINO, et al., Plaintiffs, v. SCOTT GESSLER, as Secretary of State for the State of Colorado, Defendant.
EFILED Document CO Denver County District Court 2nd JD Filing Date: Sep 04 2012 03:13PM MDT Filing ID: 46248680 Review Clerk: Kyle T Gustafson
▲ COURT USE ONLY ▲ Case No.: 2012CV2133 (consolidated with 2012CV2153) Courtroom: 280
ORDER DENYING MOTION FOR STAY PENDING APPEAL THIS MATTER comes before the Court on Defendant’s (“Secretary”) Motion for Stay Pending Appeal (“Motion”). For the reasons set forth below, the Motion is denied. I. Introduction The Secretary seeks a stay of my August 10, 2012, order which invalidated a number of Campaign Finance Rules. The Secretary argues that he is entitled to a stay as of right under C.R.C.P. 62(d). Alternatively, he argues that under C.R.C.P. 62(c), the four equitable factors all mandate that a stay issue in these circumstances. Plaintiffs oppose a stay, essentially arguing that a stay would allow the rules, which I found were enacted in excess of the Secretary’s authority, to remain in place while the 2012 general election looms ever closer, which Plaintiffs maintain would be contrary to the public interest and result in irreparable harm to their interests. II. Standard of Review under C.R.C.P. 62 To begin, the Secretary takes the position that under C.R.C.P. 62(d), he is entitled to a stay as of right. In support of this proposition, he cites a single case, United States v. Wylie, 730 F.2d 1401 (11th Cir. 1984). In Wylie, the trial court quashed a subpoena for documents issued by the government. During appeal the defendant turned the responsive documents over to his attorney, which mooted the appeal. The Eleventh Circuit observed in a footnote that
Fed.R.Civ.P. 62 governs application for stays of judgment in the district court. See United States v. Powell, 379 U.S. 48, 58 n. 18, 85 S.Ct. 248, 255, n. 18, 13 L.Ed.2d 112 (1964) (actions under 26 U.S.C. § 7604 governed by Federal Rules of Civil Procedure). Fed.R.Civ.P. 62(a) provides for an automatic tenday stay as against any execution upon a judgment or enforcement proceeding. (The automatic stay is not applicable to actions for injunction or receivership, or judgments directing an accounting in an action for patent infringement). The government does not contend that the records were turned over during this ten day period. Fed.R.Civ.P. 62(d) allows for a stay pending appeal if the appellant files a supercedeas bond. The stay is a matter of right. See American Manufacturers Mutual Insurance Co. v. American BroadcastingParamount Theatres, 87 S.Ct. 1, 17 L.Ed.2d 37 (1966) (Harlan J., Circuit Justice); 11 C. Wright & A. Miller, Federal Practice & Procedure, § 2905 at 326. Fed.R.Civ.P. 62(e) provides as follows: When an appeal is taken by the United States or an officer or agency thereof or by direction of any department of the Government of the United States and the operation or enforcement of the judgment is stayed, no bond, obligation, or other security shall be required from the appellant. Id. at 1402, n.2. The court then observed that the government did not seek a stay pending appeal. Id. at 1402. From this dicta, the Secretary takes the position that C.R.C.P. 62(d) mandates a stay as of right in a nonmonetary case. Wylie does not compel this reading, and indeed it seems unlikely that the court would have made such a ruling without further comment or analysis since it would be contrary to the universally held proposition that a Rule 62(d) stay is of right only in the case of a monetary judgment. See e.g. American Mfrs. Mut. Ins. Co. v. American Broad.Paramount Theatres, 87 S.Ct. 1, 17 L.Ed.2d 37 (1966) (“it seems to be accepted that a party taking an appeal from the District Court is entitled to a stay of a money judgment as a matter of right if he posts a bond in accordance with Fed.R.Civ.P. 62(d)”); Donovan v. Fall River Foundry Co., 696 F.2d 524 (7th Cir. 1982). Because Rule 62(d) does not automatically apply in this circumstance, I must look to the factors relating to a discretionary stay. The parties agree that the following four factors should be examined: 1) whether the applicant for a stay has made a strong showing that he is likely to succeed on the merits: 2) whether the applicant will be irreparably injured absent a stay; 3) whether a stay will substantially injure other interested parties; and 4) where the public interest lies. Motion at pp. 56 citing U.S. Fishing Vessel Maylin, 130 F.R.D. 684, 686 (S.D. Fla. 1990). See also Desktop Images v. Ames, 930 F. Supp. 1450, 1451 (D. Colo. 1996) (test for stay pending appeal is the same as that for an injunction
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III. Analysis A. Likelihood of Success on the Merits In my order, I ruled that certain of the Secretary’s rules exceeded his rulemaking authority because they redefined or imposed additional restrictions on statutory and constitutional provisions. Sanger v. Dennis, 148 P.3d 404, 412 (Colo. App. 2006). In his Motion, the Secretary essentially reargues his position and presents nothing substantially new or different. He has not convinced me that his likelihood of success on appeal is so substantial that a stay of my ruling is in order. Moreover, in Colorado Common Cause v. Gessler, 2010 COA 147 (Aug. 30, 2012), the Court of Appeals applied an analysis similar to that contained in my order. Specifically, the Court of Appeals held that the agency does not have the authority to promulgate rules that modify or contravene statutory authority. See § 244103(4)(b)(IV), (8)(a), C.R.S. 2011 (no rule may conflict with other provision of law, and any rule that conflicts with a statue shall be void); Colo. Consumer Health Initiative v. Colo. Bd. of Health, 240 P.3d 525, 528 (Colo. App. 2010) (“A rule may not modify or contravene an existing statute, and any rule that is inconsistent with or contrary to a statue is void.”) Sanger v. Dennis, 148 P.3d 404, 413 (Colo. App. 2006) (recognizing the lack of authority to promulgate rules that modify or contravene constitutional provisions). Colorado Common Cause v. Gessler, 2010 COA 147 at ¶ 18. The Secretary has established only the possibility, not a strong likelihood, of success on the merits. This factor therefore weighs against issuing a stay of my order. B. Irreparable Injury The Secretary does not seriously argue that either he or the state will be irreparably harmed absent a stay. Instead, the Secretary points to various organizations and individuals whom he claims will be harmed absent a stay. I reject this contention for a number of reasons. First, as Plaintiffs point out, in some ways this is a conundrum of the Secretary’s own making. Rather than waiting for the end of the election cycle, he implemented new rules which departed substantially from state statues and constitutional provisions virtually on the eve of the 2012 general election. These rules were in effect for only five months, whereas the existing statutory scheme has been in place since before the 2004 election. Second, citing to a 2007 case, the Secretary argues that organizations relying on the new rules would be subject to “massive retroactive penalties.” Because the rules were in place for a 3
short duration, it is hard to know just how “massive” any penalties might be. Nevertheless, an administrative law judge may consider such reliance and impose “any appropriate sanction.” Patterson Recall Comm, Inc. v. Patterson, 209 P.3d 1210, 121819 (Colo. App. 2009) (discussing ALJ’s discretion in imposing fines and sanctions). Third, the Secretary’s motion ignores the significant countervailing interest of those Colorado citizens, including Plaintiffs, who have an interest in the disclosures mandated by state statute and constitution. Those interests are embodied in the Colorado Constitution, which states that . . . the interests of the public are best served by limiting campaign contributions, encouraging voluntary campaign spending limits, providing for full and timely disclosure of campaign contributions, independent expenditures, and funding of electioneering communications, and strong enforcement of campaign finance requirements. Colo. Const. Art. XXVIII § 1. The Secretary has pointed to no specific group which may face irreparable harm if a stay is not granted. Any such group is likely protected by the substantial discretion possessed by the administrative law judges who would initially hear election law complaints. Moreover, the interests of those groups are offset by those that have an interest in disclosure. A stay would deprive those groups of information, and they likely would have no remedy until near to, or even after, the upcoming election, at which point it would be too late. Of most relevance, the Secretary and his department face no harm in the absence of a stay. C. Substantial Injury to Other Interested Parties The interest of other parties is addressed above. Both sides of the debate have legitimate, countervailing interests. However, if a stay enters, those favoring more disclosure would be effectively deprived of a significant amount of information under the Secretary’s rules. If my ruling is upheld, those same interests would then be entitled to disclosure, but the disclosure would come too late. The Secretary’s rules then would have deprived those parties of the very information to which they are entitled, and they would be without a remedy. There is no such risk of permanent injury to those interested in upholding the Secretary’s rules. The worst that may happen is that some disclosures will be made between now and the time that the Court of Appeals issues its decision. Simply put, I disagree with the Secretary’s proposition that those seeking to uphold his rules will suffer irreparable harm if they are forced to comply with state election disclosure laws that have been on the books for years. It is the precipitous reduction of mandated disclosures, less than nine weeks before Election Day, which could work serious and irreparable injury to Plaintiffs and others interested in such information.
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D. Public Interest I believe that this factor has been addressed sufficiently elsewhere in this Order. As I noted in my prior ruling and here, the citizens of this state have loudly declared an interest in greater campaign finance disclosure. The Secretary’s rules limit this disclosure, and those limitations are contrary to state statutory and constitutional law. A stay is contrary to the public interest. IV. Conclusion For the reasons set forth above, the Secretary’s Motion is DENIED. ENTERED this 4th day of September, 2012. BY THE COURT: