Reply brief of Scott Gessler in appeal of IEC sanctions order

DISTRICT COURT, CITY AND COUNTY OF DENVER, STATE OF COLORADO 1437 Bannock Street Denver, Colorado 80202 Plaintiff: SCOTT E. GESSLER, individually and in his capacity as the Secretary of State of the State of Colorado v. Defendants: DAN GROSSMAN, SALLY H. HOPPER, BILL PINKHAM, MATT SMITH and ROSEMARY MARSHALL in their official capacities as members of the • COURT USE ONLY • Independent Ethics Commission and the INDEPENDENT ETHICS COMMISSION, an inferior tribunal of the State _____________________________ of Colorado ______________________________________________ Case No.: 13CV030421 Co-Counsel for the Plaintiff and Special Assistant Attorneys General for the State of Colorado: Division: 376 David A. Lane, #16422 The Honorable Herbert L. Stern III KILLMER, LANE & NEWMAN, LLP 1543 Champa Street, Suite 400 Denver, Colorado 80202 Telephone: (303) 571-1000; Fax: (303) 571-1001 [email protected] Robert J. Bruce, #17742 RJB LAWYER, LLC 1543 Champa Street, Suite 400 Denver, Colorado 80202 Telephone: (303) 573-5498 [email protected] Michael R. Davis, #39788 LAW OFFICE OF MICHAEL R. DAVIS, LLC (MRDLaw) 3301 West Clyde Place Denver, Colorado 80211 Telephone: (303) 325-7843; Fax: (303) 723-8679 [email protected] REPLY BRIEF OF SECRETARY OF STATE SCOTT E. GESSLER

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Introduction Like all other statewide elected officials, the Colorado Secretary of State (“the Secretary”) receives a discretionary fund “for expenditure in pursuance of official business as [the Secretary] sees fit.”1 Three weeks before the 2012 presidential election, the leftwing, DCbased 501(c)(4) entity Colorado Ethics Watch (“CREW”) filed a criminal complaint with the Denver District Attorney, alleging that the Secretary committed a felony and two misdemeanors in the manner in which he utilized these discretionary and other state funds. The Denver District Attorney ultimately declined to prosecute CREW’s complaint. On the eve of the 2012 presidential election, however, the Colorado Independent Ethics Commission (“the IEC” or “the Commission”) – a state entity created by the voter-initiated Amendment 41 (Article XXIX) to the Colorado Constitution to address a gift ban, a lobbying ban, and influence peddling – voted to investigate CREW’s same criminal complaint. In other words, even though CREW’s criminal allegations had no nexus to Amendment 41 and the Commission has no criminal jurisdiction, the Commission nonetheless asserted jurisdiction. The State Controller, the Denver District Attorney, and the Colorado Legislative Audit Committee separately and independently reviewed CREW’s allegations and declined to take any action against the Secretary. Yet, after a fatally flawed seven-month process driven by an objectively biased chairman (Dan Grossman) and later joined by an objectively biased commissioner (Rosemary Marshall), a Commission hearing devoid of evidence of the Secretary’s misconduct, no fair notice of the legal allegations that the Secretary faced, and a convoluted legal rationale, the Commission nonetheless found that the Secretary “breached the

1

C.R.S. § 24-9-105(1) (emphasis added).

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public trust for private gain in using public funds for personal and political purposes” related to the manner in which he spent $1,396.89 from his $5,000 annual discretionary fund in FY201112.2 In a 3-to-2 vote, the Commission also double penalized the Secretary.3 The Commission did this after flatly and arbitrarily refusing to permit the Secretary to call key witnesses to his defense, including all but one of the former living secretaries of state and none of the other current statewide elected officials who also have the same discretionary fund. The Commission denied the Secretary’s request, even after he represented to the Commission that the testimony from these current and former statewide elected officials would show that the Secretary’s discretionary expenditures were consistent with past agency practices and their interpretations of the discretionary-fund statute4 – the same statute that the Commission held that the Secretary violated. The Commission, comprised of five commissioners with no accounting or auditing experience, even denied the Secretary’s request to call an expert in Colorado government accounting, who the Secretary represented to the Commission would provide expert testimony on government accounting standards and testify that the Secretary’s expenditures were acceptable under those standards.5 In other words, the Commission severely limited the Secretary’s ability to prove that how he spent his discretionary fund was in line with the law, agency precedent, and government accounting standards. In addition to violating Amendment 41 and the explicit language in the enabling statute by asserting jurisdiction, the Commission also violated the discretionary-fund statute itself by
2 3

IEC Decision, R. 1352-58. See id. 4 C.R.S. § 24-9-105(1). 5 See 6/7/2013 Legal Brief Regarding the Probative Value of Opinion Testimony by Auditing Expert Kevin F. Collins (R. 1289-1294); see also R. 6/7/2013 Hearing Transcript, vol. #1, pgs. 253-254 (Commission’s order denying Secretary’s request to call expert witness).

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substituting its own judgment for the Secretary’s in interpreting appropriate uses of his annual discretionary fund.6 This statute explicitly grants to the Secretary – not the Commission – the ability to use state funds for official business as he “sees fit.” 7 And even the counterpart to the statute on which the Commission hangs the Secretary’s “ethical violation” contemplates that the Denver District Attorney – not the Commission – enforces any violation, “in addition to any criminal action which may be brought against such public official . . . .”8 The Denver District Attorney considered and declined to bring such criminal action. Yet the Commission found an “ethical violation,” based upon CREW’s same criminal complaint. The Commission even relied upon the state fiscal rules in finding the Secretary’s “ethical violation,” even though the State Controller indisputably testified that the fiscal rules did not apply to the Secretary’s annual discretionary fund. And the Commission found that the Secretary misspent money from his discretionary fund, even though the Colorado Legislative Audit Committee declined any audit. Reasonable observers could see that the Commission, driven by two objectively biased commissioners (Grossman and Marshall), did not want this exculpatory evidence to get in the way of their preordained determination that the Secretary violated some law, any law – even if the Commission had to devise a convoluted legal rationale to find such a violation. Moreover, the Commission used a double standard when it comes to political activity. On one hand, the Commission represents to the Court that commissioners’ political contributions to the Secretary’s political adversaries do not raise ethical concerns, because the contributions are “minor” and made to a “friend.” Yet on the other hand, the Commission found it unacceptable

6 7

See C.R.S. § 24-9-105(1). See id. 8 Compare C.R.S. § 24-18-103(1) with C.R.S. § 24-18-103(2).

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for the Secretary to use state discretionary funds to attend an accredited CLE because the conference was “political.” To say the least, the Commission uses malleable legal standards to achieve the end it seeks. The Commission also fails to address an overall appearance problem – that Grossman’s and Marshall’s objectively biased participation could have helped convince the other commissioners to vote against the Secretary. Indeed, the Commission’s own response contemplates the “likely possibility” that commissioners influence each other before key votes – apparently even outside of the sunlight of open meetings.9 The Commission’s conclusions were politically driven, and they did not follow even basic legal standards. After watching this case, even a former Democratic state legislator wrote that the Commission is a “joke” and the proceedings against the Secretary were “nonsense.”10 In seeking this Court’s ruling on whether to set aside the Commission’s decision and penalty, the Secretary makes the following arguments: 1. The Commission has made three false representations to the Court, which calls into question the Commission’s credibility. A. B. The Commission misrepresents to the Court that the Secretary never requested fair notice of the legal allegations he faced. The Commission falsely claims harmless error in the final vote, but it conceals the Commission’s assessment of a double penalty by a 3-to-2 vote, with two biased commissioners forming the majority.

9

See Response, at 28-29 (“The Secretary . . . ignores the likely possibility that [Marshall] conferred with other members of the panel before deciding to join the order [denying the motion to dismiss].”). 10 Miller Hudson, The Ethics Commission: What a joke!, The Colorado Statesmen, available at www.coloradostatesman.com/content/994214-ethics-commission-what-joke (last visited Jan. 10, 2014).

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C.

In its attempt to retroactively rewrite the criminal complaint, the Commission misrepresents to the Court that CREW alleged violations of “ethical duties.”

2.

The Commission misstates the facts and law in responding to the Secretary’s recusal argument that two of the five commissioners showed bias. A. B. C. The Commission misstates the facts and law in responding to the Secretary’s recusal argument that Marshall showed bias. The Commission misstates the facts and law in responding to the Secretary’s recusal argument that Grossman showed bias. The Commission’s harmless-error analysis is legally flawed and based upon a factual misrepresentation.

3.

The Commission exceeded its jurisdiction by using the term “other standards of conduct” to penalize the Secretary for his expenditures from his annual discretionary fund. A. B. The Court should not simply defer to the Commission’s unreasonable interpretation of its jurisdiction. The Commission does not have the power to assert supervisory power over spending by executive branch officers; Colorado law expressly allocates that power among other state entities. The Commission improperly found that the Secretary violated a statute, even though that statute creates no legal duty for the Secretary to violate.

C. 4.

The Commission fails to respond to the Secretary’s other arguments that the Commission violated his due-process rights to fair notice of the legal allegations against him and a fair hearing on those allegations. A. B. The Secretary received no fair notice that he risked running afoul of Amendment 41 and the enabling statute by using his discretionary fund. The Commission never provided the Secretary with pre-hearing notice of the legal allegations that he faced, and the Commission now falsely represents to this Court that the Secretary “never made any formal request[] for a more definite statement or something similar.” The Commission misleads this Court about the Secretary’s ability to call key witnesses.

C.

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D.

The Commission fails to respond to the Secretary’s legal argument that the Commission assumed an improper prosecutorial role by penalizing the Secretary after finding he violated legal duties separate from the criminal statutes cited in CREW’s criminal complaint.

5.

All of the evidence demonstrates that the Secretary properly spent his discretionary funds, and the Commission fails to cite to any evidence of how the Secretary violated any legal duty. The Commission violated the Secretary’s First Amendment rights to speech and assembly by utilizing a vague and overbroad standard and penalizing the Secretary for using his discretionary fund to attend a state-approved CLE simply because a Republican organization sponsored the CLE. ***

6.

Ultimately, this case is about whether the Court permits the Commission to act as a super-tribunal, empowered to review any action by any employee in any governmental entity, while bending and twisting basic concepts of fairness and due process to achieve the outcome it wants. In its response, the Commission does not even attempt to supply any limiting principle for its overly broad assertion of jurisdiction under Amendment 41’s and the enabling statute’s “other standards of conduct” language. Under the Commission’s legal theory, it has jurisdiction over every alleged violation of any legal standard – apparently so long as the Commission simply slaps an “ethics” label on it. And the Commission itself believes it is the ultimate arbiter of what constitutes “ethics.” One hopes that the Star Chamber remains a historical footnote. But the Commission’s actions show the dangers of a secretive and biased panel, asserting unlimited jurisdiction, and unwilling to follow procedural safeguards painfully established over time and clearly set out in Colorado statute for virtually every other state agency. In fact, the Secretary made numerous requests for the Commission to follow the rules – well established by Colorado statute and

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agency precedent – that virtually every other state agency follows.11 The Commission ignored the Secretary’s reasonable request, instead choosing to follow its own novel, vague, and inconsistent rules and procedures.12 Clearly, the voters of Colorado never intended to create such a monster in passing Amendment 41. The Secretary requests that this Court rein in this state agency that acts without legal, procedural, or ethical restraint. Argument 1. The Commission has made three false representations to the Court, which calls into question the Commission’s credibility.

As a preliminary matter, three of the Commission’s representations to this Court are false and call into question the Commission’s credibility. Unfortunately, correcting the record requires somewhat lengthy discussion. A. The Commission misrepresents to the Court that the Secretary never requested fair notice of the legal allegations he faced.

The Secretary argues that the Commission never provided him with fair notice of the legal allegations he faced. The Commission makes an obvious misrepresentation to the Court when it states that the Secretary never requested such notice. Specifically, the Commission represents to the Court the following: Although the Secretary states that he asked the IEC to identify the charges against him, he does not provide any citations to the record, nor does the record reveal any formal requests for a more definite statement or something similar.13

11

See C.R.S. § 24-4-105; see also, e.g., 2/14/2013 Motion to Delegate to ALJ (R. 736-768, at 2831); 2/22/2013 Amended Motion to Delegate to ALJ (R. 811-847, at 31-35); 5/2/2013 Renewed Motion to Delegate to ALJ (R. 917-929, at 10, ¶¶ 29-31) (three examples of the Secretary’s failed request of the Commission to follow Colorado administrative rules established by C.R.S. § 24-4-105). 12 See id. (comparing C.R.S. § 24-4-105 with the Commission’s rules and procedures). 13 Response, at 23 (emphasis added).

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The Commission ignores large parts of the record, because the Secretary consistently, repeatedly, and sometimes even aggressively requested that the Commission provide the Secretary with fair notice of the legal allegations he faced. As this Court is aware, the Secretary sought a preliminary injunction against the Commission, in part because the Commission provided inadequate legal notice of the charges. In response, on February 7, 2013, Lisa Brenner Freimann assured the Court that the Commission would provide the Secretary such pre-hearing notice of the legal allegations that he faced.14 Relying on this representation, the Court stated: What I hear the Commission saying is that they are very sensitive to the—in this case, Mr. Gessler’s due process rights. They’re certainly going to let him know what it is he is alleged to have—what standard of conduct he is alleged to have violated if, in fact, it gets that way.15 But this simply never happened; the Commission never provided the Secretary with pre-hearing notice of the legal allegations he faced. And it certainly was not for lack of the Secretary’s asking, as the Commission now falsely represents. In fact, the Secretary made many more and repeated (futile) attempts to obtain from the Commission fair notice of the legal allegations that he faced. The Secretary’s opening brief even specifically quotes an early example: On December 20, 2012, the Secretary filed with the Commission a motion to dismiss. In the motion he argued that he did not receive fair notice: CREW’s Complaint alleges that the Secretary violated three criminal statutes, and only three criminal statutes. As noted above, the Commission does not have jurisdiction over criminal statutes. At the same time, the Commission does not have jurisdiction over some unspecified “other standards of conduct” that are separate from the criminal allegations. To
14 15

See Opening, at 35-36 (quoting transcript of the 2/7/2013 preliminary-injunction hearing). Id., at 36 (quoting 2/7/2013 Hearing Transcript, at 84:15-21).

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hold a hearing based on unspecified and vague “other standards of conduct” is unconscionable. Indeed, it is impossible for the Secretary to defend himself against some “other standard[s] of conduct” when he does not even know what that means. (R. 215). The motion continued, “To be precise, if CREW . . . does not allege criminal violations – after citing in its complaint three specific criminal statutes – it is entirely unclear what CREW alleges. The Secretary has no notice or ability to defend himself against evolving and unspecified allegations.” 12/20/2012 Motion to Dismiss, at 13-14.16 *** Moreover, other examples of the Secretary’s requesting notice of the legal allegations he faced include the following seven requests: 1. 1/7/2013 IEC Meeting on Case No. 12-07 (R. Transcript at 15:20-16:7): [DEPUTY SECRETARY OF STATE SUZANNE STAIERT]: We don’t know whether [CREW’s] complaint is about Secretary Gessler’s activity. We don’t know whether the complaint is about the adoption of our fiscal rules. We don’t know whether the complaint is about our accounting processes. We don’t know whether the complaint is criminal in nature. The complaint is so vague that we would have no idea what that defense is in this matter. And so whether this is a defense against Secretary Gessler, or whether this is a defense against the entire department has been made completely unclear, and has not been cleared up at the last meeting. 2. 1/7/2013 IEC Meeting on Case No. 12-07 (R. Transcript at 38:17-24, 41:5-9, 76:1821, 83:11-16, 96:24-98:14, 105:13-106:11): [MICHAEL DAVIS, COUNSEL TO THE SECRETARY]: [T]o the extent that Ethics Watch is somehow making noncriminal allegations, it is entirely unclear what Ethics Watch is alleging. The Secretary has no way of defending himself against vague and undefined allegations. And by interpreting Amendment 41’s, quote, other standards of conduct, unquote, to include undefined allegations, the Commission violates the Secretary’s right to a fair hearing.

16

Response, at 23.

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*** [E]ven if the Commission were to consider Ethics Watch’s complaint under some vague and undefined other standards of conduct, it is entirely unclear how the Secretary would have committed an ethics violation. *** [I]f you interpret the other standards of conduct to include noncriminal allegations, we have no idea what they are. They are not stated. *** [B]y interpreting other standards of conduct to include undefined allegations, the complaint violates the Secretary’s right to a fair hearing. The point is, we don’t know what we’re defending against, and that is fundamentally unfair. *** [MR. DAVIS:] [T]his goes to the bigger problem that the Commission is obviously struggling with, which is, this complaint is very vague. And if you guys can’t figure out what they’re alleging, put yourself in Mr. Gessler’s shoes, where he is trying to defend against a complaint that is completely vague, and they can’t even stand behind their facts, which is required by the Commission rules. From the discussion right here today, it sounds like you guys are denying the motion to dismiss. So apparently you guys are asserting criminal jurisdiction? Because the motion to dismiss was based upon the fact that you guys lack criminal jurisdiction. But that was denied four to nothing. So all four of the commissioners believe you have criminal jurisdiction. Is that a fair reading of today’s vote? CHAIRMAN GROSSMAN: We’re getting beyond the scope. So we’ll go ahead and close, but that’s not what we’re saying. We’ll issue a written order on the fact of the Commission’s denial of your motions today. MR. DAVIS: And what are we supposed to – what are the allegations? I understand that there are factual allegations. What specific laws are you alleging the Secretary violated? We don’t know. How can we defend if we don’t even know what they are alleging he violates? He spent money here, and he spent money there. Well, great. Those are factual allegations. What are the violations? We see three criminal statutes. CHAIRMAN GROSSMAN: Mr. Davis, first we have to go through the investigation. MR. DAVIS: I understand, but we have to respond in the meantime.

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CHAIRMAN GROSSMAN: You also have to respond to the investigation, and you and your client will have ample opportunities to challenge at every opportunity the allegations against your client. Let’s – can I move on from that. *** MR. DAVIS: When are we going to find out what the specific allegations are against the Secretary, meaning, is the Commission going to give us an order saying that, This is what you have to defend against? When is that going to happen? CHAIRMAN GROSSMAN: All I can tell you is the next thing that will happen will be the investigation. And there will be a report of the investigation. That should serve as a guide to the allegations against your client in further proceedings going forward. There may be at some point some sort of a prehearing order by the Commission to kind of set forth what the issues are. I’m sure there would be pleadings from you all and more motions’ practices from you all as the issues move forward. The only thing I can commit to at this point, Mr. Davis, is we will conduct an investigation, and that investigation will probably shed a lot of light on the questions that you’ve been asking. It will give us an opportunity to figure out what the facts and contentions are and what the legal issue are. 3. 2/14/2013 Motion to Delegate to ALJ (R. 736-768), at 2; 2/22/2013 Amended Motion to Delegate to ALJ (R.811-847), at 28 (emphasis in the original): Following further deliberation and argument by counsel [at the January 7, 2013 meeting], the Commission voted to fully deny the Secretary’s motion to dismiss. [See 1/7/2013 IEC Hearing Transcript, at] 80:3-108:7. The Secretary maintains that the Commission acted arbitrarily and contrary to the law in denying the Secretary’s motion to dismiss. The Secretary’s counsel asked the Commission when the Secretary would learn the specific legal allegations against him. See id. 105:11-18. The Chairman [Dan Grossman] stated that the Commission would conduct an investigation and issue a report and potentially a prehearing order. See id. 105:19-106:4. He continued: The only thing that I can commit to at this point, Mr. Davis, is we will conduct an investigation, and that investigation will probably shed a lot of light on the questions that you’ve been asking. It will give us an opportunity to figure out what the facts and contentions are and what the legal issues are. Id. 106:5-11 [emphasis in original submission to the Commission].

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In other words, the Commission has found CREW’s complaint nonfrivolous and is moving forward with an investigation while it admits it has not identified a standard of conduct the Secretary is alleged to have violated. 4. 2/14/2013 Motion for Independent Investigator, (R. 779-794), at 8: The Commission voted during [the November 5, 2012] meeting to move forward with CREW’s criminal (or some other vague legal) allegations. They took this stance, even though Commissioners expressed concern about the vagueness of the Complaint and confusion over their own jurisdiction. And they took this stance, even though the Commission’s rules specifically allow the Commission to ‘defer a frivolous determination until after a preliminary investigation of the complaint by the staff of the Commission.’ IEC Rule 7(F). With the presidential election the next day, it was unclear why the Commission did not appreciate that prudence may require a short investigation, as permitted by the Commission’s rules, before proceeding with what they considered as vague allegations against the state’s chief election officer in a hotly contested swing state. 5. 2/14/2013 Motion for Independent Investigator, (R. 779-794), at 12: The Commission refused to grant the Secretary’s request to have CREW amend its Complaint to include non-criminal legal allegations. Instead, the Commission effectively instructed the Executive Director to go find the Secretary’s potential legal violations, separate from what CREW alleged in its Complaint. By doing this, the Commission inappropriately allowed the Executive Director to assume a biased prosecutorial role, in violation of Colorado law. . . . And this fishing expedition will likely result in new Commission-driven legal allegations in the Executive Director’s report scheduled for release on February 15, 2013, four months after CREW submitted its initial complaint alleging potential violations of three criminal statutes. 6. 5/2/2012 Motion in Limine and Motion to Strike (R. 930-936), at 2, 4-5, § 4-6, 9-11 (emphasis in original submission to the Commission): At the January 7, 2013 hearing, the Commission denied the Secretary’s motion to dismiss. . . . Since this time, the Commission has refused to tell the Secretary what legal allegations he faces. In other words, the Secretary still does not know what law or laws that he allegedly violated. ... On April 30, 2013, the Commission stated the Secretary ‘may or may not’

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have violated five different civil statutes and five different fiscal rules, all of which are subject to change ‘depending on the evidence presented, and the arguments made, at the hearing in this matter.’ In other words, the legal standards against which the Secretary must defend are still unknown, will remain unknown, and may even change, until after the Secretary puts on his defense at his hearing on June 7, 2013. ... To the extent that CREW is not making criminal allegations, the Secretary argued, . . . the legal allegations against the Secretary are vague and undefined. They remain this way. . . . Moreover, the Secretary argued that since CREW’s submission of its complaint, the Commission has refused to tell the Secretary what legal allegations he faces (other than the three criminal allegations in CREW’s complaint). In other words, the Secretary still does not know what law or laws that he allegedly violated. ... By continuing its refusal to specify what legal allegations the Secretary must face at the June 7, 2013 hearing, the Commission is continuing to violate the Secretary’s constitutional right to due process and a fair hearing. The Secretary argued this extensively in his December 20, 2012 motion to dismiss – and numerous hearings since then. The Commission has refused to follow the rule of law; instead, the Commission is effectively laying the groundwork to ensure that it has every conceivable way to find a violation at its June 7, 2013 hearing. See also, Transcript of Proceedings 5/6/2013, pg. 89, 11.8-14. 7. 6/12/2012 Written Closing Argument (R. 1341-1351), at 3, § 4: On April 30, 2013, however, the Commission listed five different civil statutes and five different fiscal rules, any or all of which ‘may or may not’ serve as the legal standard(s) in this case. Neither CREW nor the Commission has alleged that the Secretary violated these legal standards, let alone how the Secretary even could have violated these legal standards. In other words, there are not even legal allegations made against the Secretary in IEC Case No. 12-07. *** Contrary to the Commission’s obviously false representation to the Court, “the record reveal[s] [numerous and repeated] formal requests for a more definite statement or something similar”17 – starting from the Secretary’s very first substantive written submission (motion to

17

See Response, at 23.

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dismiss) on December 20, 2012 through his written closing argument on June 12, 2013. With such obvious and overwhelming evidence contradicting the Commission’s false representation to the Court on this critical legal issue, the Commission’s arguments to the contrary smack of gamesmanship. Under any reasonable interpretation, the Secretary repeatedly and consistently requested more definite and concrete allegations. B. The Commission falsely claims harmless error in the final vote, but it conceals the Commission’s assessment of a double penalty by a 3-to-2 vote, with two biased commissioners forming the majority.

The Secretary argues that he presented prima facie evidence demonstrating that two of the five commissioners (then-Chairman Dan Grossman and Commissioner Rosemary Marshall) had an objective bias against the Secretary, and that the Commission committed reversible error by not recusing them. The Commission now raises harmless error as a defense, claiming that even if Grossman and Marshall were biased, their participation did not change the outcome because the Commission voted against the Secretary by a vote of either 4-to-1 ($117.99) or 5-to0 (all other issues). Thus, according to the Commission, the Secretary would have lost, even without one or more of Grossman’s and Marshall’s votes.18 As discussed below, the Commission’s legal standard is wrong, because biased commissioners influence other commissioners and taint the overall integrity of the proceedings. But the Commission also makes a key factual misrepresentation: The Commission’s response incorrectly states that Commissioner Sally Hopper joined the Commission’s 4-to-1 vote, with just Commissioner Matt Smith dissenting, in imposing the double penalty (an

18

See Response, at 31-32.

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additional $1,396.89).19 In fact, Commissioner Hopper also joined in the dissent, with the biased commissioners forming a partisan, 3-to-2 majority.20 Thus, the Commission’s response fails to address in its harmless-error analysis the fact that without both of Grossman’s and Marshall’s votes, the double penalty would have either failed 2-to-2 or 1-to-2.21 In other words, under the Commission’s own overall simplistic and legally flawed analysis, the Secretary was harmed by $1,396.89 in economic damages alone, separate from any other damages to his liberty interests, when the Commission imposed the double penalty with two objectively biased commissioners voting for it. C. In its attempt to retroactively rewrite the criminal complaint, the Commission misrepresents to the Court that CREW alleged violations of “ethical duties.”

For its complaint, CREW merely submitted a copy of a letter and a supplemental letter that it also sent to the Denver District Attorney, citing a felony and two misdemeanor statutes that the Secretary “may” have “implicate[d]” through his expenditure of state funds. CREW’s complaint never mentioned any “ethical duties.”22 The Commission, however, now represents to the Court that “[i]n the Complaint, CREW alleged that the Secretary engaged in conduct that violated his ethical duties as a public official in three ways.”23 This is simply not true. The Commission’s “ethics complaint” representation is no accident; indeed, as discussed below, the Commission seems to argue that its vague and evolving standard for its jurisdiction

19 20

See Response, at 5, n. 5. See IEC Decision, R. 1352-58. 21 See id. 22 Complaint (R. 1032-64). 23 Response, at 2 (emphasis added) (citing Complaint, R. 1032-64).

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now – at least as of December 17, 2013, when the Commission filed its response – touches on any conduct on which it can slap an “ethics” label. Thus, by retroactively reframing CREW’s criminal complaint as an “ethics complaint,” the Commission’s attorneys are attempting to cleanup the Commission’s jurisdictional and fair-notice mess. This is particularly true, given the numerous examples that the Secretary cites of the Commission’s refusal to provide pre-hearing fair notice of the legal allegations that the Secretary faced. 2. The Commission misstates the facts and law in responding to the Secretary’s recusal argument that two of the five commissioners showed bias.

The Secretary cites to specific factual allegations that amount to a prima facie case that two of the five commissioners (Commissioner Rosemary Marshall and then-Chairman Dan Grossman) demonstrated bias – or at least, the appearance of bias – against the Secretary.24 The Commission fails to even defend several actions by its commissioners, it continues to apply the wrong standard, it advances a non-existent harmless-error theory, and it even misrepresents facts to advance that theory.25 The Commission should have used an objective (not subjective) test to determine whether Marshall and Grossman displayed the appearance of bias: “The test for appearance of impropriety is whether the conduct would create in reasonable minds a perception that the administrative law judge's ability to carry out judicial responsibilities with integrity, impartiality, and competence is impaired.”26 The Colorado Supreme Court “recognized in Johnson v. District Court, 674 P.2d 952, 956 (Colo. 1984), that the purpose of the disqualification requirement is to prevent a party from
24 25

See Opening, at 39-42. See Response, at 26-32. 26 1 Colo. Code Regs. 104-2:2(A), Commentary.

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being forced to litigate a matter before a judge with a ‘bent of mind.’”27 Both Commissioner Rosemary Marshall and then-Chairman Dan Grossman had such a “bent of mind” against the Secretary, as the Secretary argued in his opening brief, and he was “forced to litigate a matter before” them when they evidenced such an appearance of bias.28 The Court utilizes the following test for recusal of judges, based upon bias or the appearance of bias: Ordinarily, the question of whether a judge should be disqualified in a civil case is a matter within the discretion of the trial court. However, where an attorney for one of the litigants signs a verified affidavit alleging conduct and statements on the part of the trial judge which, if true, show bias or prejudice or the appearance of bias or prejudice on the part of the trial judge, it is an abuse of discretion if that judge does not withdraw from the case, even though he or she believes the statements are false or that the meaning attributed to them by the party seeking recusal is erroneous. In such a case, the judge should not pass upon the truth or falsity of the facts alleged in the affidavit, but only upon the adequacy of the motion as a matter of law. The motion and supporting affidavit speak for themselves and the only question involved is whether the facts alleged are sufficient to compel the judge to disqualify himself. The motion and affidavits are legally adequate if they state facts from which it may reasonably be inferred that the judge has a bias or prejudice that will prevent him from dealing fairly with the party seeking recusal.29 Because Marshall’s and Grossman’s “appearance of impropriety is as strong a basis for disqualification as factual impropriety, it is irrelevant that the matters alleged in . . . affidavit may not be accurate.”30 It is not for the Commission to decide whether it agrees with the motion’s factual assertions; “[t]he motion and affidavits are legally adequate” because “they state facts

27 28

Goebel v. Benton, 830 P.2d 995, 998 (Colo. 1992). See Opening, at 39-42. 29 Goebel, 830 P.2d at 998-99 (citations and quotations omitted) (emphasis added). 30 5 Colo. Prac., Civil Rules Annotated R 97 (4th ed.) (citing Goebel, 830 P.2d 995; Holland v. Bd. of Cnty. Comm'rs of Cnty. of Douglas, 883 P.2d 500, 503 (Colo. App. 1994).

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from which it may reasonably be inferred that [Marshall and Grossman] ha[d] a bias or prejudice that [would] prevent [them] from dealing fairly with the [the Secretary].”31 A. The Commission misstates the facts and law in responding to the Secretary’s recusal argument that Marshall showed bias.

The Secretary cites to prima facie factual allegations of Commissioner Rosemary Marshall’s objective bias against the Secretary, including her (1) confronting the Secretary outside a public hearing, accusing him of lying, and warning him that she would “keep an eye” on him; (2) rushing to vote against the Secretary in pending proceedings as her first act on the Commission, without any evidence of being brought up to speed on the pending proceedings; (3) inappropriately discussing with the media the merits of the Secretary’s pending motion to recuse her; (4) donating to the Secretary’s 2010 political challenger; and (5) politicizing at a Commission meeting whether the Secretary would announce a bid for governor.32 The Commission fails to respond to these arguments. First Allegation and Argument of Marshall’s Objective Bias The Secretary cites to prima facie factual allegations that Marshall confronted the Secretary outside a public hearing, accused him of lying, and warned him that she would “keep an eye” on him.33 Specifically, Andrew Cole, one of the Secretary’s aides, swore to the following: 3. In approximately late summer 2011 I attended a preliminary injunction hearing in Denver District Court in an action commenced by Secretary of State Scott Gessler in his official capacity as Secretary of State involving the Denver Clerk’s office. The judge denied the preliminary injunction.

31 32

Goebel, 830 P.2d at 998-99. See Opening, at 39-42. 33 See id., at 40-41.

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4. Rosemary Marshall and Secretary Gessler also attended the preliminary injunction hearing. 5. After the hearing, Rosemary Marshall approached Secretary Gessler in the hallway and stated: “We know what you are all about!” Ms. Marshall was demeaning in her tone. Secretary Gessler responded to the effect that he was surprised by her statement because the Court action was recommended by Department of State staff. Ms. Marshall responded with words to the effect that she did not believe Secretary Gessler and that she intended to keep an eye on him.34 In response, the Commission confusingly dismisses this factual allegation as “an opinion about her [Marshall’s] subjective belief, not a fact.”35 But this is not “opinion”; the Secretary’s aide unequivocally and clearly swore in the affidavit that he personally witnessed Marshall confront, accuse, and warn the Secretary.36 These are more than enough factual allegations to raise a prima facie case of objective bias, and the Commission should have voted to recuse Commissioner Marshall. The Commission’s argument that these factual allegations relate to her “subjective belief” (i.e., that she, in fact, does question the Secretary’s motive, believe that the Secretary lied to her, and “intend[ed] to keep an eye on him”) not only admit apparent bias, but also show that Marshall demonstrated actual (subjective) bias.37 Regardless of whether Marshall’s bias was actual or apparent, the law clearly requires her recusal. It simply does not matter that she stated that she could be fair – or that her fellow commissioners rallied around her and agreed.38 The Commission relied on an improper subjective legal standard.39 Second Allegation and Argument of Marshall’s Objective Bias:

34 35

Affidavit of Andrew Cole (R. 777-778). Response, at 29. 36 See Affidavit of Andrew Cole (R. 777-778). 37 See Response, at 29. 38 See Response, at 29. 39 See supra (discussing Colorado recusal law); see also Opening, at 39-42 (same).

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Next, the Secretary cites to prima facie factual allegations that Marshall rushed to vote against the Secretary in pending proceedings on the Secretary’s motion to dismiss as her first act on the Commission, without any evidence of Marshall being brought up to speed on the pending proceedings.40 The Commission responds with three arguments. First, the Commission argues that “[t]he Secretary ignores the possibility that Commissioner Marshall could have reviewed the motion and listened to the recording in private, and also ignores the likely possibility that she conferred with other members of the panel before deciding to join the order.”41 The Secretary does not ignore the possibility. Rather, the Secretary assumes that Commissioner Marshall and the Commission did not violate the Colorado Open Meetings Law (COML) by conducting proceedings or deliberations in secret. Indeed, if Commissioner Marshall “conferred with other members of the [Commission] before deciding to join the order [denying the Secretary’s December 20, 2012 motion to dismiss],” the Commission violated COML – because the Commission issued no meeting notice, nor did the Commission record any minutes of such a meeting. The Secretary presumes that the Commission did, in fact, follow the law. Accordingly, Marshall did not confer with others and voted against the Secretary without understanding the merits of the matter before her. COML states: “It is declared to be a matter of statewide concern and the policy of this state that the formation of public policy is public business and may not be conducted in secret.”42 Moreover, “[a]ll meetings of two or more members of any state public body at which any public

40 41

See Opening, at 41. Response, at 28-29 (emphasis added). 42 C.R.S. § 24-6-401.

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business is discussed or at which any formal action may be taken are declared to be public meetings open to the public at all times.”43 The Commission is a “state public body,” as it is a “board, committee, commission, or other advisory, policy-making, rule-making, decisionmaking, or formally constituted body of any state agency, [or] state authority . . . to which the state, or an official thereof, has delegated a governmental decision-making function.”44 “Minutes of any meeting of a state public body shall be taken and promptly recorded, and such records shall be open to public inspection. The minutes of a meeting during which an executive session authorized under subsection (3) of this section is held shall reflect the topic of the discussion at the executive session.”45 “If elected officials use electronic mail to discuss pending legislation or other public business among themselves, the electronic mail shall be subject to the requirements of this section.”46 If Marshall “conferred with other members of the panel before deciding to join the order,”47 the meeting was subject to COML.48 COML required the Commission to open the meeting to the public and record minutes of this meeting.49 There is no evidence that the Commission noticed the meeting, opened the meeting to the public, or issued any recorded minutes of Marshall’s “likely possib[le]” “confer[ence] with other members of the panel before deciding to join the order.” In fact, the Commission’s records show the following:

43 44

C.R.S. § 24-6-402(2)(a) (emphasis added). See C.R.S. § 24-6-402(1)(d). 45 C.R.S. § 24-6-402(2)(d)(I). 46 C.R.S. § 24-6-402(2)(d)(III). 47 Response, at 28-29. 48 See C.R.S. § 24-6-402(2)(a). 49 See C.R.S. § 24-6-402(2)(d)(I) (minutes).

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1. dismiss.50 2.

On December 20, 2012, the Secretary filed with the Commission his motion to

On January 7, 2013, the Commission held oral argument on the motion, went into

executive (non-open) session, returned to open session, and orally voted to deny the motion.51 Marshall did not attend this meeting, as she had not yet joined the Commission.52 3. On January 23, 2013, the Commission held a special meeting, to discuss and

approve the draft of the order denying the Secretary’s motion to dismiss.53 Marshall voted to join the draft order.54 This was Marshall’s first Commission meeting as a commissioner, as shown by the fact that the Commission’s own minutes state: “Chairman Grossman welcomed Commissioner Marshall to the Commission.”55

50 51

See Secretary’s Motion to Dismiss (R. 215-30). See IEC 1/7/2013 Minutes, available at http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobhea dername1=Content-Disposition&blobheadername2=MDTType&blobheadervalue1=inline%3B+filename%3D364%2F693%2FMinutes+of+Jan7.pdf&blob headervalue2=abinary%3B+charset%3DUTF8&blobkey=id&blobtable=MungoBlobs&blobwhere=1251849503417&ssbinary=true (last visited Jan. 10, 2014). 52 See id. 53 See IEC 1/23/2013 Minutes, available at http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobhea dername1=Content-Disposition&blobheadername2=MDTType&blobheadervalue1=inline%3B+filename%3D696%2F341%2FMinutes+of+Jan23.pdf&blo bheadervalue2=abinary%3B+charset%3DUTF8&blobkey=id&blobtable=MungoBlobs&blobwhere=1251849503458&ssbinary=true (last visited Jan. 10, 2014). 54 See id. 55 See id., at ¶ 3 (emphasis supplied).

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4.

The Commission posted no other notices of, or minutes from, any other meetings

between December 20, 2012 (when the Secretary filed his motion to dismiss) and January 23, 2013 (when Marshall voted to join the order denying the Secretary’s motion).56 5. Despite an obligation to conduct proceedings in public, no meeting was scheduled

for Marshall to be briefed on the issues, and the minutes of the meeting do not describe any briefing.57 Thus, either (a) Marshall violated COML and “conferred with other members of the panel before deciding to join the order”; or (b) Marshall never conferred, which creates a credibility problem for the Commission’s representation to the Court that there is a “likely possibility” that the meeting occurred. Presuming that Marshall and the Commission did not violate COML, Marshall’s “likely possib[le]” meeting in fact never happened. This only bolsters the Secretary’s factual allegation that she “rushed to vote against the Secretary in pending proceedings as her first act on the Commission, without any evidence of being brought up to speed on the pending proceedings.” Second, the Commission argues “‘[i]n fact, Commissioner Smith stated in an open meeting that ‘Commissioner Marshall reviewed all the material prior to ruling on motions . . . .’”58 Whether the Secretary’s factual allegation is incorrect is not the appropriate legal standard for determining recusal.59 The issue for the Court is whether the Secretary’s factual allegation that Marshall “rushed to vote against the Secretary in pending proceedings as her first act on the

56

See IEC Agenda and Minutes, available at http://www.colorado.gov/cs/Satellite/DPAIEC/IEC/1209461755470 (last visited Jan. 10, 2014). 57 See R. 1365. 58 Response, at 29 (citing 3/4/13 Meeting Minutes, R. 1371). 59 See Goebel, 830 P.2d at 998-99.

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Commission, without any evidence of being brought up to speed on the pending proceedings” – assuming it is true – is enough, on its own or cumulatively with the other allegations of bias, to make a prima facie showing of Marshall’s objective bias, for which the Commission must have recused her.60 Third and finally, the Commission argues that “Commissioner Smith also stated that . . . Commissioner[] Marshall . . . could be fair and impartial, and the remaining Commissioners concurred.”61 As discussed, this shows that the Commission continued to utilize the legally incorrect subjective legal standard in determining recusal. The Colorado Supreme Court has already squarely addressed this issue and found that it is reversible error: Although the trial judge is convinced of his or her own impartiality, if it nonetheless appears to the parties or the public that the judge may be biased or prejudiced, the same harm to public confidence in the administration of justice occurs.62 Simply put, it does not matter what Marshall or the other commissioners subjectively believed about her fairness; what matters is whether the factual allegations, taken as true, objectively evidence bias or the appearance of bias. They did, and the Commission committed reversible error by refusing to recuse Marshall.63 Third, Fourth, and Fifth Allegations and Arguments of Marshall’s Objective Bias:

60 61

See id. Response, at 29. 62 Johnson, 674 P.2d at 956-57. 63 See, e.g., People v. Dist. Court In & For Third Judicial Dist., 560 P.2d 828, 831-32 (1977); Johnson, 674 P.2d at 956-57; United States v. Amico, 486 F.3d 764, 777 (2d Cir. 2007); Preston v. United States, 923 F.2d 731, 735-36 (9th Cir. 1991); Potashnick v. Port City Constr. Co., 609 F.2d 1101, 1115 (5th Cir. 1980) (reversible error for failure to recuse).

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The Secretary also cites to prima facie factual allegations that Marshall inappropriately discussed with the media the merits of the Secretary’s pending motion to recuse her; donated to the Secretary’s 2010 political challenger; and politicized at a Commission hearing whether the Secretary would announce a bid for governor.64 The Commission fails to respond to these last three factual allegations and the related legal arguments.65 The Commission, therefore, waives these arguments.66 Any one of these last three factual allegations evidences Marshall’s objective bias and the need for her recusal. Thus, the Commission committed reversible error by refusing to recuse Marshall, based upon any of these allegations.67 B. The Commission misstates the facts and law in responding to the Secretary’s recusal argument that Grossman showed bias.

The Secretary also cites to prima facie factual allegations of then-Chairman Dan Grossman’s objective bias against the Secretary, including Grossman’s (1) making campaign contributions to the Secretary’s 2010 and 2014 political challengers; (2) improperly instructing the Commission’s independent investigator to add to his investigative report, and thus politicizing, allegations surrounding the Secretary’s and his family’s personal security following specific and credible threats of sexual violence against the Secretary’s wife and then-four-yearold daughter; (3) potentially misleading the Commission and improperly participating in denying the Secretary the right to learn the truth about Grossman’s involvement with the potential politicization of the Secretary’s and his family’s personal security; and (4) refusing to deny

64 65

See Opening, at 40-41. See Response, at 28-29. 66 See Moody v. People, 159 P.3d 611, 614 (Colo. 2007). 67 See, e.g., People, 560 P.2d at 831-32; Johnson, 674 P.2d at 956-57; Amico, 486 F.3d at 777; Preston, 923 F.2d at 735-36; Potashnick, 609 F.2d at 1115 (reversible error for failure to recuse).

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evidence that Grossman made sexist and derogatory comments about the Secretary’s deputy, Suzanne Staiert, referring to the Deputy Secretary of State as “The Dragon Lady.”68 First Allegation and Argument of Grossman’s Objective Bias: First, the Secretary cites to prima facie factual allegations that Grossman made campaign contributions to former Secretary of State Bernie Buescher and former Senate Majority Leader Ken Gordon, the Secretary’s 2010 and 2014 Democratic challengers, respectively, for election to the Office of the Secretary of State.69 This is evidence of objective bias and the Commission committed reversible error by refusing to recuse Grossman.70 The Commission’s response dismisses the Secretary’s argument by stating that “[a] minor campaign contribution to a friend does not demonstrate a bias against his political opponent for purposes an ethics inquiry.”71 As an initial matter, the fact that the Secretary’s political challenger was Grossman’s “friend” exacerbates – not mitigates – Grossman’s appearance of bias. It shows not only a political connection, but also personal motivation to help the Secretary’s political opponents. Any reasonable observer would come to the conclusion that Grossman’s political contributions show that he wanted his friend to succeed politically. His friend was running against the Secretary. The Secretary is elected. The Commission’s actions were front-page news, and the Commission’s finding may be politically damaging to the Secretary. This could hurt the Secretary’s ability to win re-election and hurt his ability to succeed electorally against Grossman’s friend. Thus, Grossman’s decisions in this case helped his friend politically.
68 69

See Opening, at 39-42. See Opening, at 41. 70 See id. 71 Response, at 30.

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The Commission’s minor-contribution-to-a-friend argument is without merit. A judge’s contribution to a litigant’s opponent – especially one who also happens to be the judge’s “friend” – raises an appearance of bias. Colorado recusal law does not distinguish between “minor” and “major” bias; the Commission cannot argue that it was permitted to allow Grossman’s objectively biased participation, because it was only “minor.” Moreover, Grossman’s campaign contributions to the Secretary’s 2010 and 2014 political challengers were not minor; they were actually major contributions, compared to Grossman’s other campaign contributions. On July 29, 2008, Grossman made a $100 campaign contribution to Bernie Buescher, the Secretary’s 2010 Democratic challenger.72 But on October 30, 2006, Grossman made a $500 campaign contribution to the late-Ken Gordon, the Democratic candidate for Colorado Secretary of State in 2006 and the candidate who had filed paperwork to run against the Secretary for the same job in 2014.73 Further, the $500 contribution made up a very large percentage of all of Grossman’s political contributions. Grossman made up to twelve campaign contributions as of the time the Secretary sought his recusal.74 Of the twelve contributions, the contribution to the Secretary’s 2014 political challenger ($500) is the largest.75 In fact, it is 250% larger than Grossman’s next-biggest contribution ($200), and it is 417% larger than Grossman’s average contribution ($120).76 Grossman’s contributions to the Secretary’s 2010 and 2014

72 73

See Affidavit of Stephen Bouey (R. 870-871). See id.; see also FIVE AGAINST TWO: Dems Gang Up on Gessler for IEC Hearing, ColoradoPeakPolitics, available at http://coloradopeakpolitics.com/2013/02/26/five-against-twodems-gang-up-on-gessler-for-iec-hearing/ (last visited Jan. 10, 2014). 74 See Affidavit of Stephen Bouey (R. 870-871). 75 See id. 76 See id.

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challengers comprise 42% ($600) of the twelve total identified contributions to date ($1,440).77 In other words, Grossman supported with his wallet the Secretary’s political challengers. For Grossman, the Gordon contribution was major, and the contribution showed bias against the Secretary. Grossman and the Commission committed reversible error, for voting to deny recusing Grossman.78 This again shows the Commission’s double standard when it comes to political activity.. Second Allegation and Argument of Grossman’s Objective Bias: Second, the Secretary cites to prima facie factual allegations that Grossman improperly instructed the Commission’s independent investigator to add to his investigative report, and thus politicize, allegations surrounding the Secretary’s and his family’s personal security after specific and credible threats of sexual violence against the Secretary’s wife and then-four-yearold daughter.79 In response, the Commission argues that “[t]he Secretary did not present any evidence supporting his accusation. . . .”80 This is clearly incorrect, as evidenced by the May 2, 2013 affidavit submitted to the Commission by Colorado Deputy Secretary of State Suzanne Staiert.81 The relevant portion of Staiert’s affidavit states the following: 13. Moreover, on March 28, 2013, the Commission’s independent investigator Ellis Armistead interviewed me about Case No. 12-07. He told me that “the Chair” (who was then-Chairman Dan Grossman) asked him to investigate the Secretary’s discretionary expense for the resumption of the Secretary’s monthly home-alarm monitoring service. The Secretary resumed his
77 78

See id. See, e.g., People, 560 P.2d at 831-32; Johnson, 674 P.2d at 956-57; Amico, 486 F.3d at 777; Preston, 923 F.2d at 735-36; Potashnick, 609 F.2d at 1115 (reversible error for failure to recuse). 79 See Opening, at 41. 80 Response, at 31. 81 R. 896-900.

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alarm service, following specific and credible threats of sexual violence against his wife and four-year-old daughter last summer, directly related to the Secretary’s official duties. 14. I represented to the Commission on April 8, 2013 the following:

The investigator told me – when I pointed out to the investigator, as he was asking questions, that this was not part of the complaint, he indicated that Chairman Grossman had told him to follow up on this issue specifically. And it not being part of the complaint, we find that outrageous. And I will also note that the payment for this item had not even come -- the payment came the same day we got the records request from the investigator. The Secretary had not even been reimbursed for the alarm system. It was quite concerning to us that somehow people in the community had found out about the Secretary’s security system in his home and were now coming back this quickly, within one day of even making the request. I mean this is the security of his house, of his family, of his wife and his daughter. So yes, we took it very seriously. That is why I asked the question of the investigator, “Where is this coming from?” We didn't know how many people were aware of what kind of security the Secretary of State has. We were told at that time that -- the investigator said to us at that time that Chairman Grossman instructed him to investigate it. Exhibit B to Renewed and Supplement to Motion to Recuse Commissioner Dan Grossman (Trans. of April 8, 2013 Hearing), at 43:17-44:15 (emphasis added).82 *** In other words, the Secretary presented this evidence to the Commission twice: (1) through Staiert’s oral representation at the April 8, 2013 Commission meeting; and (2) through Staiert’s May 2, 2013 affidavit. Staiert’s testimony is admissible, even if what the investigator told her is hearsay.83 Moreover, the Commission refused the Secretary’s request to question the investigator or Grossman on what Grossman instructed the investigator to include in his report.84

82 83

Id. See, e.g., C.R.E. 803(8) and C.R.E. 807. 84 See 4/8/13 IEC Hearing Transcript (R. 35:2-47:9). Because the transcript is extensive, the Secretary did not copy it into the brief. The Secretary requests that the Court read this excerpt in its entirety.

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In other words, the Commission cannot now complain that the Secretary lacks certain evidence – when it refused the Secretary’s request to obtain such evidence.85 The Commission also argues that “Commissioner Grossman plainly stated that he gave no such instruction.”86 Again, Grossman’s subjective belief – even if true – is plainly irrelevant for purposes of Colorado recusal law; the Commission should have simply considered the factual allegations and determined whether they were sufficient (even if false or misleading) to objectively make a prima facie case of Grossman’s appearance of bias against the Secretary.87 If so, Grossman had to be recused.88 Grossman’s recusal was important because of the need for confidence in the Commission proceedings, particularly in light of the public nature of the proceedings. Third Allegation and Argument of Grossman’s Objective Bias: Third, the Secretary cites to prima facie factual allegations that Grossman potentially misled the Commission and improperly participated in denying the Secretary the right to learn the truth about Grossman’s involvement with the potential politicization of the Secretary’s and his family’s personal security.89 The Commission incorrectly represents to the Court that “[t]he Secretary did not make his remaining arguments regarding Commissioner Grossman’s bias below, and has therefore waived them.”90 The Commission’s claim is false. In fact, the Secretary

85

See Richardson v. Richardson, 236 P.2d 121, 127 (1951) (party cannot complain about a proponent’s lack of evidence, when the party denied the proponent the ability to obtain such evidence). 86 Response, at 31. 87 See Goebel, 830 P.2d at 998-99. 88 See id. 89 See Opening, at 41-42. 90 See Response, at 11.

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raised his argument in his renewed motion to recuse Grossman, submitted to the Commission on May 2, 2013.91 The Commission cannot pretend that it never heard these arguments. Fourth Allegation and Argument of Grossman’s Objective Bias: The Secretary also cites to prima facie factual allegations that Grossman refused to deny evidence that Grossman made sexist and derogatory comments about the Secretary’s deputy, referring to the Deputy Secretary of State as “The Dragon Lady.”92 In response, the Commission states as follows: The Staiert affidavit does not even concern the Secretary directly, and to the extent it may relate to him indirectly, it is based on speculation and hearsay. The transcript fails to show bias, and actually supports Commissioner Grossman’s impartiality.93 A reasonable observer could conclude that Grossman’s derogatory comments to, and hostility toward, the Secretary’s representative, deputy, and legal-team member objectively shows contempt toward the Secretary’s due-process rights and a bias toward the Secretary. Finally, like it did for Marshall, the Commission argues that “Commissioner Smith also stated that . . . Commissioner[] Grossman . . . could be fair and impartial, and the remaining Commissioners concurred.”94 Like Grossman and Marshall, the Commission continued to use the incorrect legal standard to determine recusal.95 It simply does not matter what Smith or the other commissioners subjectively believed about Grossman’s fairness; what matters is whether

91

See 5/2/2013 Renewed and Supplement to the Motion to Recuse Commissioner Dan Grossman Due to the Appearance of Bias (R. 917-929). 92 See Opening, at 42. 93 Response, at 31. 94 Response, at 29. 95 See Goebel, 830 P.2d at 998-99.

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the factual allegations, taken as true, objectively show bias or the appearance of bias.96 They did, just as they did with Marshall, and the Commission committed reversible error by refusing to recuse Grossman.97 The Secretary has cited ample evidence showing Marshall’s and Grossman’s bias. And there can be no doubt of the ongoing appearance of bias. But recitation of the transcript does not fully capture the injustice committed by the Commission. Rather, the Commissioner’s tone and behavior is important to understand, and the Secretary urges the Court to listen to just two tape excerpts that demonstrate the Marshall and Grossman’s hostility and bias: (1) (2) Marshall’s politicization of whether the Secretary had announced his bid for governor;98 and Grossman’s reaction to the Secretary’s allegation that he improperly instructed the Commission’s independent investigator to add to his investigative report, and thus politicize, allegations surrounding the Secretary’s and his family’s personal security following specific and credible threats of sexual violence against the Secretary’s wife and then-four-year-old daughter.99

Separately, the affidavits of Department of State employees Stephen Bouey100 and Andrew Cole101 show an appearance of bias. Accordingly, the Secretary met his prima facie burden for Marshall’s and Grossman’s recusal.102

96 97

See id. See, e.g., People, 560 P.2d at 831-32; Johnson, 674 P.2d at 956-57; Amico, 486 F.3d at 777; Preston, 923 F.2d at 735-36; Potashnick, 609 F.2d at 1115 (reversible error for failure to recuse). 98 Recording of 6/13/2013 IEC Meeting, Comments of Commissioner Rosemary Marshall, CIC_20130613-1137_01ce6819c6fbb9a0, at 5:05-11:58. 99 Recording of 4/8/2013 IEC Meeting, Comments of Chairman Dan Grossman, 04-08-13mtn_realarm.system, at 00:01-16:1. 100 R. 870-871. 101 R. 777-778. 102 See C.R.S. § 24-4-105(3); see also Moody, 159 P.3d at 614.

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The Secretary firmly argues that Commissioners Grossman and Marshall were heavily biased against him. But Colorado law required the recusal of those two commissioners in the underlying case before the Commission and any other matter involving the Secretary because their “impartiality might reasonably be questioned.”103 “[I]t [was] an abuse of discretion [when the two commissioners did] not withdraw from the case, even though . . . [they] believed [the affidavits] are false or that the meaning attributed to them by the [Secretary was] erroneous.”104 The Commission “should not [have] pass[ed] upon the truth or falsity of the facts alleged in [the affidavits].”105 Thus, the Commission committed reversible error in its refusal to recuse Marshall and Grossman.106 C. The Commission’s harmless-error analysis is legally flawed and based upon a factual misrepresentation.

The Secretary argues that the Commission committed reversible error when it voted to deny the Secretary’s many motions to recuse two of the Commission’s five commissioners (Grossman and Marshall) for bias. The Commission responds that any error in the Commission’s refusal to recuse Grossman and Marshall was harmless, as the Commission would still have voted against the Secretary, 2-to-1 on the $117.99 reimbursement and 3-to-0 on all other issues if Grossman and Marshall did not vote.107 But again, the Commission’s legal analysis is based upon a misrepresented fact: The Commission voted 3-to-2 (not 4-to-1) to impose the double penalty. Thus, the double penalty

103 104

See 1 Colo. Code Regs. § 104-2(C)(1)(a) (“shall disqualify”). Goebel, 830 P.2d at 998-99. 105 Id. 106 See, e.g., People, 560 P.2d at 831-32; Johnson, 674 P.2d at 956-57; Amico, 486 F.3d at 777; Preston, 923 F.2d at 735-36; Potashnick, 609 F.2d at 1115 (reversible error for failure to recuse). 107 See Response, at 31-32.

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would have failed under the Commission’s own harmless-error analysis, either 2-to-2 or 1-to-2, if Grossman or Marshall (or both) recused. Moreover, the Commission’s legal analysis is flawed. In making its harmless-error argument, the Commission’s simplistic vote-counting argument ignores the fact that tribunals generally cannot proceed with actually or apparently biased judges, as they taint the proceedings and undermine the appearance of propriety.108 Indeed, the Colorado Supreme Court has long held that: [b]ecause appearances can be as damaging to public confidence in the courts as actual bias or prejudice, a trial judge must scrupulously avoid any appearance of bias or prejudice.109 The Commission’s harmless-error analysis also ignores that the commissioners participated in discussions, had an impact on others’ thinking, voted on what evidence could and could not be introduced, and questioned witnesses, including the Secretary. Limiting the analysis to just simply the final vote ignores 99% of their participation in the proceedings. Finally, Grossman’s and Marshall’s objectively biased participation could have helped convince the other commissioners to vote against the Secretary. Indeed, the Commission’s own response contemplates the “likely possibility” that commissioners influence each other before key votes – apparently even outside of the sunlight of open meetings.110

108

See, e.g., People, 560 P.2d at 831-32; Johnson, 674 P.2d at 956-57; Amico, 486 F.3d at 777; Preston, 923 F.2d at 735-36; Potashnick, 609 F.2d at 1115 (reversible error for failure to recuse). 109 People, 560 P.2d at 833 (citing Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145 (1958)). 110 See Response, at 28-29 (“The Secretary . . . ignores the likely possibility that [Marshall] conferred with other members of the panel before deciding to join the order [denying the motion to dismiss].”).

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3.

The Commission exceeded its jurisdiction by using the term “other standards of conduct” to penalize the Secretary for his expenditures from his annual discretionary fund. A. The Court should not simply defer to the Commission’s unreasonable interpretation of its jurisdiction.

For the proposition that the Commission’s jurisdiction is limited to enforcing the gift ban, lobbying ban, and ban on influence peddling, the Secretary cites Amendment 41’s plain language, the Bluebook language that shows voter intent, the enabling statute’s111 explicit limitation of the Commission’s jurisdiction, and the Colorado Supreme Court’s “confirming” language in the Developmental Pathways112 decision.113 The discretionary fund is not a gift, and the Secretary cannot influence himself.114 In other words, the Commission is the wrong agency – and without power – to determine whether the Secretary properly spent $1,396.89 from his $5,000 discretionary fund in FY2011-12. The Commission sidesteps most of the Secretary’s arguments and attempts to reframe the jurisdictional analysis. First, it merely invokes the ambiguous term “ethics issues” by arguing that “[t]he clear and unambiguous language of both Article XXIX [Amendment 41] and the IEC’s enabling statute [C.R.S. § 24–18.5–101] . . . provide that, in addition to the gift ban, the IEC has jurisdiction over ethics issues arising under other standards of conduct.”115 These phrases are so expansive as to be overly broad and meaningless. Indeed, this was the point of Developmental Pathways.

111 112

C.R.S. § 24–18.5–101. 178 P.3d at 526. 113 See Opening, at 9-14. 114 See id., at 16-18. 115 Response, at 8 (emphasis added).

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Second, the Commission asserts that it “regularly and consistently has exercised jurisdiction over ethics issues arising under standards of conduct other than those contained in Article XXIX.”116 But flawed, illegal behavior in the past is no justification for flawed, illegal behavior against the Secretary. Amendment 41 and its enabling statute specifically preclude the Commission from simply slapping an “ethics” label on any complaint and asserting jurisdiction, when the complaint does not have anything to do with the gift ban, lobbying ban, or ban on influence peddling. In other words, the Commission has “regularly and consistently” ignored its jurisdictional limitations plainly stated in Amendment 41 and the enabling statute. An agency cannot reward itself with more power by “regularly and consistently” ignoring legal limitations placed on its power. Finally, the Commission demands that this Court defer to its legal interpretation, broadly asserting that “[a]ppellate courts . . . defer to an agency’s interpretation of its own enabling statute.”117 Thus, the Commission argues, the Court should simply defer to the Commission’s interpretation.118 But Colorado law, including the Commission’s cited cases, does not support the Commission’s expansive view regarding agency deference. The Colorado Supreme Court has held: “We give considerable weight to an agency’s reasonable interpretation of its own enabling statute, but we are not bound by its legal interpretations.”119 “We defer to an agency’s interpretation in construing constitutional provisions and statutes relevant to its activities, and
116 117

Id. Id., at 7 (citing Specialty Restaurants Corp. v. Nelson, 231 P.3d 393, 397 (Colo. 2010)). 118 See id., at 8-9 (“Deference should be given to an agency’s interpretation in construing constitutional provisions and statutes relevant to its activities.”). 119 Specialty Restaurants Corp. v. Nelson, 231 P.3d 393, 397 (Colo. 2010) (emphasis added) (citation omitted).

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rules the agency has promulgated, but its interpretation is not binding.”120 “When construing a constitutional amendment, courts must ascertain and give effect to the intent of the electorate adopting the amendment. . . . If that intent is not clear from the language of the amendment, courts should construe the amendment in light of the objective sought to be achieved and the mischief sought to be avoided by the amendment.”121 “[D]eference would not be appropriate if the [agency’s] statutory interpretation would defeat the General Assembly’s intent in enacting the statute or is contrary to the plain meaning of the statute.”122 The Commission’s interpretation of its power is unreasonable: it is contrary to the plain language and intent of Amendment 41 and its enabling statute, it erroneously dismisses the Colorado Supreme Court’s decision in Developmental Pathways, it is inconsistent with prior agency interpretation, and it is in no way binding on the Court. Critically, the Commission fails to respond to the Secretary’s argument that the Commission’s enabling statute specifically limits the Commission’s jurisdiction to cases involving “any money, forbearance, forgiveness of indebtedness, gift, or other thing of value given or offered by a person seeking to influence an official act that is performed in the course and scope of the public duties of a public officer.”123 This provision applies to “any complaint filed under article XXIX.”124 The Commission simply ignores this argument, for the simple

120

Colorado Citizens for Ethics in Gov't v. Comm. for Am. Dream, 187 P.3d 1207, 1214 (Colo. App. 2008) (emphasis added). 121 Colorado Citizens for Ethics in Gov’t, 187 P.3d at 1215 (citation omitted). 122 Bd. of Cnty. Comm’rs of Cnty. of San Miguel v. Colorado Pub. Utilities Comm’n, 157 P.3d 1083, 1089 (Colo. 2007). 123 Opening, at 12 (quoting C.R.S. § 24-18.5-101(5) (emphasis added)). 124 C.R.S. § 24-18.5-101(5)(a) (emphasis added).

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reason that it cannot present any coherent legal justification for exceeding its jurisdiction. Accordingly, the Court should not simply defer to the Commission’s assertion of jurisdiction. The Commission also ignores the Colorado Supreme Court’s plain language in Developmental Pathways. There, the Court stated that the enabling statute “confirm[ed] the existence of a nexus between the gift ban provisions and the receipt of gifts in violation of the public trust for private gain.”125 The Commission argues that “the Court reviewed only the constitutionality of the gift ban; it did not address any issues related to the IEC’s jurisdiction.”126 This is wrong; the Court addressed the enabling statute, which expressly limits the Commission’s jurisdiction. That enabling statute applies to “any complaint filed under article XXIX.”127 The Commission has simply chosen to ignore this jurisdictional limitation. The Commission argues that it is not bound by the representations made by Governor Ritter in Developmental Pathway related to the jurisdictional reach of Amendment 41, because the Commission was not in existence at the time.128 But this argument only helps demonstrate why the Court should not give agency deference to the Commission’s overly broad interpretation of its power. The Supreme Court in Developmental Pathways has already ruled that Governor Ritter was a proper representative of the Commission and a proper defendant, thus rejecting the Commission’s attempt to prevent the Court from deciding these issues. Further, Developmental Pathways addressed the Commission’s jurisdiction, and the Commission is bound by the principles of res judicata, just as all litigants. And finally, whether the Governor or the

125 126

Developmental Pathways, 178 P.3d at 528 (emphasis added). Response, at 12. 127 C.R.S. § 24-18.5-101(5)(a) (emphasis added). 128 See Response, 12-13.

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Commission appeared in Developmental Pathways, the fact remains that the agency responsible for Amendment 41 and the enabling statute has interpreted its jurisdiction inconsistently.129 Ultimately, the Commission’s position gives it the right to assert unlimited jurisdiction, because the Commission does not even attempt to supply any limiting principle for its overly broad claims of authority under the “other standards of conduct” language in either Amendment 41 or the enabling statute. Amendment 41, the Bluebook, the enabling statute, and the Colorado Supreme Court’s “confirming” language in Developmental Pathways make it simply unreasonable for the Commission to argue that the voters of Colorado gave it the power to unilaterally decide that it has jurisdiction over every alleged violation of any legal standard – apparently so long as the Commission simply slaps an “ethics” label on it. The Commission has now defined “ethics” to include all accounting standards and all spending regulations. The Court should not simply defer to the Commission’s convoluted, incorrect, and inconsistent legal rationale. Instead, the Court should hold that the Commission exceeded its jurisdiction in penalizing the Secretary for his expenditure of $1,396.89 from his $5,000 annual discretionary fund in FY2011-12, because the Commission’s jurisdiction under Amendment 41 is limited to enforcing the gift ban, lobbying ban, and the ban on influence peddling, as the Colorado Supreme Court in Developmental Pathways held that C.R.S. § 24-18.5-101(5) “confirm[ed].”130

129

See Colorado Citizens for Ethics in Gov’t, 187 P.3d at 1215 (“Here, we reject CCEG’s invitation to defer to the ALJ’s interpretation of the regular business exception because the record shows that at least one other administrative law judge has reached a contrary conclusion.”). 130 Both Colorado Common Cause and CREW have asked to file amicus briefs in this case. Both briefs come to the Commission’s aid and argue in support of the Commission’s overly broad and expansive jurisdiction. Their arguments, in effect, seek to protect their symobotic relationships

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B.

The Commission does not have the power to assert supervisory power over spending by executive branch officers; Colorado law expressly allocates that power among other state entities.

In addition to violating Amendment 41 and the explicit language in the enabling statute by asserting jurisdiction, the Commission also violated the discretionary-fund statute itself by substituting its own judgment for the Secretary’s in interpreting appropriate uses of his annual discretionary fund. The statute grants the Secretary – not the Commission – the ability to spend his annual discretionary fund “for expenditure in pursuance of official business as [the Secretary] sees fit.”131 And even the counterpart132 to the statute on which the Commission hangs the

with the Commission. Indeed, the Commission is the turf on which these special-interest groups play and on which they promote their political agendas; in return, these special-interest groups keep the Commission occupied and relevant. But the jurisdiction of a government agency is not determined by the poltical desires of special-interest groups; rather, enabling authorities specify and limit the jurisdiction of government agencies. Here, enabling authorities are Colo. Const. Art. XXIX (Amendment 41) and C.R.S. § 29-18.5-101 (then enabling statute). Moreover, and stated delicately, Common Cause’s legal position related to the Commission’s jurisdiction has evolved. Indeed, its argument to the Colorado Supreme Court in Developmental Pathways, Common Cause took a more cautious and limited approach in its jurisdictional argument, as opposed to the overly broad jurisdictional argument that Common Cause and CREW now advocate in this case. In Developmental Pathways, Common Cause advised the Supreme Court that Amendment 41 was passed to prohibit “only gifts that violate the public trust.” See Exhibit A (Br. of Amicus Curiae Colorado Common Cause, Developmental Pathways v. Ritter, Case No. 07SA181 (Colorado Supreme Court, filed Sept. 7, 2007). Common Cause then acknowledged that the goal of Amendment 41 “was to stop the use of gifts, trips and meals to curry favor and build relationships with decision makers.” Id., at 11. Common Cause then argued that the inherent limitations within Amendment 41 were designed to avoid an interpretation that “would lead to absurd results and defeat the objectives of the amendment.” Id., at 20. Notwithstanding Common Cause’s contrary argument to the Colorado Supreme Court in 2007, a broad jurisdictional argument is now advanced by Common Cause and CREW. The Commission’s overly broad exercise of jurisdiction in this case, a case having nothing to do with the gift ban or even influence peddling more generally, resulted in an absurd result: The Commission has penalized the Secretary for spending sums from his own discretionary fund for official business as he “sees fit,” as expressly permitted by statute. See C.R.S. § 29-18.5-101. 131 Opening, at 14-16 (quoting C.R.S. § 24-9-105(1)) (emphasis added). 132 C.R.S. § 24-18-103(2)

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Secretary’s “ethical violation”133 contemplates that the Denver District Attorney – not the Commission – enforces any violation, “in addition to any criminal action which may be brought against such public official . . . .”134 The Denver District Attorney considered and declined to bring such criminal action. Yet the Commission found an “ethical violation,” based upon CREW’s same criminal complaint. In a breathtaking rejection of the State Controller’s expertise, the Commission even relied upon the state fiscal rules to find an “ethical violation,” even though the State Controller indisputably testified that the fiscal rules did not apply to the Secretary’s annual discretionary fund. And the Commission found that the Secretary misspent money from his discretionary fund, even though the Colorado Legislative Audit Committee declined any audit.135 The Commission requests from the Court “great deference” when interpreting its jurisdiction, yet the Commission ignores the statutory deference given to the Secretary, the Denver District Attorney, the State Controller, and the Colorado Legislative Audit Committee. The Commission brushed all of these agencies aside and inserted itself under the vague label of “ethics.” C. The Commission improperly found that the Secretary violated a statute, even though that statute creates no legal duty for the Secretary to violate.

Even if the Commission had jurisdiction to penalize the Secretary under C.R.S. § 24-18103(1), the Commission improperly found that the Secretary violated this statute, because that

133 134

C.R.S. § 24-18-103(1). Compare C.R.S. § 24-18-103(1) with C.R.S. § 24-18-103(2). 135 See Agenda and Recording of 1/29/2013 Meeting, Colorado Legislative Audit Committee, available at http://coloradoga.granicus.com/MediaPlayer.php?view_id=29&clip_id=2492 (last visited Jan. 10, 2014).

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statute creates no legal duty for the Secretary to violate.136 The statute, instead, “is merely an aspirational statement; it does not create a right or duty, establish elements of liability, or set forth standards of conduct by which a public official would be put on notice of a potential claim by the IEC.”137 The Commission responds by arguing that the Secretary’s argument is “misleading.”138 But the Commission fails to state how the Secretary’s argument is misleading, how C.R.S. § 2418-103 imposed any legal duty on the Secretary related to expenditures from his annual discretionary fund, or how the Commission even had jurisdiction to penalize the Secretary for (somehow) violating C.R.S. § 24-18-103(1). In fact, the statute in its entirety states the following: (1) The holding of public office or employment is a public trust, created by the confidence which the electorate reposes in the integrity of public officers, members of the general assembly, local government officials, and employees. A public officer, member of the general assembly, local government official, or employee shall carry out his duties for the benefit of the people of the state. (2) A public officer, member of the general assembly, local government official, or employee whose conduct departs from his fiduciary duty is liable to the people of the state as a trustee of property and shall suffer such other liabilities as a private fiduciary would suffer for abuse of his trust. The district attorney of the district where the trust is violated may bring appropriate judicial proceedings on behalf of the people. Any moneys collected in such actions shall be paid to the general fund of the state or local government. Judicial proceedings pursuant to this section shall be in addition to any criminal action which may be brought against such public officer, member of the general assembly, local government official, or employee.139 The Commission found that the Secretary only violated Subsection (1), even though Subsection (1) creates no legal duty for the Secretary to violate. And the Commission argues that
136 137

See Opening, at 19-20. Id., at 20. 138 Response, at 14. 139 C.R.S. § 24-18-103.

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Subsection (2) merely gives the Denver District Attorney “permissive authority to bring appropriate judicial proceedings, not exclusive authority, as the Secretary suggests.” In fact, the district attorney does have exclusive authority, for the simple reason that Subsection (2) does not grant any other agency or person – including the commission – any authority. “May” simply refers to the prosecutorial discretion granted to all prosecutors; the “may” does not mean that other agencies, such as the Commission, also can prosecute a statute. Regardless, the statute clearly does not grant the Commission any authority (permissive, exclusive, or otherwise) to enforce Subsection (2). And Amendment 41, the enabling statute, the Bluebook, and Developmental Pathways fail to give any notice to the Secretary that the Commission could simply grab such power under Subsection (2), under the constitutionally vague “other standards of conduct” language. 4. The Commission fails to respond to the Secretary’s other arguments that the Commission violated his due-process rights to fair notice of the legal allegations against him and a fair hearing on those allegations. A. The Secretary received no fair notice that he risked running afoul of Amendment 41 and the enabling statute by using his discretionary fund.

Even if the Commission has jurisdiction, the Secretary argues that he could not have known that the Commission would assert jurisdiction and penalize him for the manner in which he spent $1,396.89 from his $5,000 annual discretionary fund in FY2011-12, because there is no reasonable indication of such Commission power in the plain language of Amendment 41, the voters’ intent as shown by the Bluebook, the explicit limitation of jurisdiction in the enabling statute, the Colorado Supreme Court’s “confirming” this in Developmental Pathways (based upon Governor Ritter’s representation that Amendment 41 applies only to cases of influence

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peddling, which the Commission now contradicts), and even the Commission’s own prior actions. To the extent that Amendment 41 and the enabling statute’s phrase “other standards of conduct” extends the Commission’s jurisdiction beyond influence peddling, “other standards of conduct” is unconstitutionally vague, both facially and as applied to the Secretary. Simply put, even if the Commission’s jurisdiction is as broad as it claims, the plain language of the discretionary-fund statute fails to reasonably put the Secretary on notice that the Commission has the power to second-guess and penalize him for his expenditures.140.And the plain language of C.R.S. § 24-18-103(1), the aspirational statement that the Commission held that the Secretary (somehow) violated, certainly did not reasonably provide the Secretary with any notice that he could (a) violate Subsection (1) (which contains no legal duty); or (b) face a penalty by the Commission, when Subsection (2) expressly gives the Denver District Attorney the power to enforce the broader statute scheme. The Commission responds by simply ignoring these arguments, instead arguing that “the Secretary appears to ignore that he is a public official subject to specific ‘Standards of Conduct’ and a ‘Code of Ethics’ set forth by statute.”141 This is a red-herring argument. The issue is not whether the Secretary is subject to ethical standards. Instead, the issue is whether the Secretary could reasonably have known that the Commission had supervisory jurisdiction over his discretionary fund, based on a completely unprecedented assertion of jurisdiction over

140

See Opening, at 30-35 (citing C.R.S. § 24-9-105(1) (emphasis added) (“for expenditure in pursuance of official business as [the Secretary] sees fit”)). 141 Response, at 21-22.

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discretionary expenditures under the vague “other standards of conduct” in Amendment 41 and the enabling statute. The Commission’s argument unreasonably demands that the Secretary should have read the statutory phrase “as each elected official sees fit” to mean “subject to other standards of conduct, as interpreted by the Commission.” This is simply not fair notice, in violation of the Secretary’s due-process rights. B. The Commission never provided the Secretary with pre-hearing notice of the legal allegations that he faced, and the Commission now falsely represents to this Court that the Secretary “never made any formal request[] for a more definite statement or something similar.”

The Commission violated the Secretary’s due-process rights to fair notice and fair hearing by refusing to tell the Secretary the legal allegations he faced, before his hearing, so he could properly defend himself at the hearing.142 The Commission simply cited to five legal provisions and the state fiscal rules in their entirety (86 pages) – never explaining how the Secretary allegedly violated these or any other legal standard.143 The Commission responds that, before the hearing, “the parties were notified of the potential statutory rules that would be considered by the IEC.”144 The legal standard is not to notify a litigant of “potential” statutes and rules. Rather, the Commission has a legal duty to identify the actual statutes and rules it claims were violated – and how the Secretary allegedly violated those legal duties. Indeed, the Commission does not state that “the parties were notified of the legal allegations that would be considered by the IEC” – because, despite the Secretary’s

142 143

See Opening, at 35-37. See id. 144 Response, at 2-3 (emphasis added) (citing five statutory provisions and the state fiscal rules in their entirety).

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repeated requests, the Commission never told the Secretary before his hearing what law he allegedly violated and how he allegedly violated that law. Moreover, the Commission represents the following to the Court: Although the Secretary states that he asked the IEC to identify the charges against him, he does not provide any citations to the record, nor does the record reveal any formal requests for a more definite statement or something similar.145 As discussed above, the Commission’s representation to the Court is patently false; the Secretary made numerous and repeated requests – including before the Court at the preliminary-injunction hearing – for the Commission to provide pre-hearing notice to the Secretary of the legal allegations he faced. The Commission, through counsel, even assured the Court that the Commission would provide the Secretary pre-hearing notice of the legal allegations that he faced. This never happened. The prehearing order’s shotgun-styled and numerous disjointed legal references – including a broad and vague reference to the state fiscal rules in their entirety and without any explanation of how the Secretary allegedly violated them – does not fairly apprise the Secretary of the allegations he faced. Rather than identify specific legal allegations, the Commission simply “threw the book” at him. C. The Commission misleads this Court about the Secretary’s ability to call key witnesses.

The Commission violated the Secretary’s right to a fair hearing by arbitrarily refusing to allow him to call key witnesses to his defense. This includes an accountant expert on the subject of government expenditures, who could have testified about the propriety of the Secretary’s spending. And it includes other current and former Colorado officials, for the purpose of

145

Response, at 23 (emphasis added).

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showing that the Secretary’s spending was in line with how other Colorado agency officials used their discretionary fund.146 Rather than addressing the substance of the argument, the Commission instead makes misleading procedural arguments. First, the Commission suggests that the Secretary could have called these witnesses, stating that the “Secretary fails to cite to the record where the court ruled he was precluded from calling them. A refusal to issue a subpoena is not the same as a refusal to allow testimony. To the contrary, the record shows that the IEC authorized the Secretary to issue subpoenas to former secretaries of state and members of his office.”147 This is simply gamesmanship, as the Commission specifically denied the Secretary the ability to present his accounting expert and the Commission refused to issue subpoenas for the other witnesses who the Secretary could not secure voluntarily. Indeed, the very purpose of requesting a subpoena is to legally secure witnesses who a party cannot secure voluntarily. For example, the Secretary has no power to compel other statewide officials to testify. But they have useful testimony regarding how their agencies interpret the discretionary-fund statute. The Commission abused its discretion by refusing to issue subpoenas for relevant witnesses to the Secretary’s defense. Second, the Commission argues that the Secretary’s witnesses are not relevant.148 This claim is impossible to defend. For example, the Commission stated that the Secretary may have violated accounting standards. So, the Secretary sought to produce an expert on accounting

146 147

See Opening, at 38-39. Response Br, at 26. 148 See id.

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standards. It belies logic that an expert on governmental accounting has nothing relevant to say about government accounting standards. Third, the Commission argues that even if the Commission impermissibly denied the Secretary his ability to call witnesses, the Secretary cannot show any prejudice.149 The Secretary intended to call witnesses to provide evidence of how other agency officials have interpreted their authority to use their discretionary funds. As the Secretary explained to the Commission, the testimony would have provided key evidence on how the Secretary’s discretionary expenditures were in line with other agency official’s interpretation of what it means to spend their discretionary fund on “official business.” Also, the accounting expert would have testified that he saw no accounting issue with the Secretary’s use of discretionary funds for “official business.”150 The heart of the Commission’s ruling, and the very reason for its penalty, is directly related to the definition of “official business.” In other words, the Commission’s arbitrary exclusion of evidence of what “official business” means eliminated much of the Secretary’s case on this dispositive legal issue. Grossman and Marshall led the charge in denying the Secretary his ability to call these key witnesses.151 One example is Kevin Collins, the Secretary’s proffered expert in state and local government accounting. The Secretary proffered that Mr. Collins would provide general

149 150

See Response, at 26. See, e.g., The Secretary’s Legal Brief Regarding the Probative Value of Opinion Testimony by Auditing Expert Kevin F. Collins Related to the Propriety of the Secretary’s Use of Certain State Funds, submitted on June 7, 2013 (R. 1289-1294). 151 See 5-23-13-mtg-on-subpoenas.WMA (1 of 2 of tape recording of 5/23/2013 IEC meeting on witnesses and subpoenas); 5-23-13-mtg-on-subpoenas, pt 2.WMA (2 of 2); R. Transcript, at 24647 (transcript related to the Commission’s denial of the Secretary’s request to call an accounting expert); see also CIC_20130607-1429_01ce638b70c2ed70, at 32:32-34:02 (IEC’s largely inaudible tape recording of same).

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background on state government accounting and also testify that the Secretary’s use of his discretionary fund did not raise any accounting or audit issues. The Secretary stated that the Commission’s denial of his ability to call Mr. Collins would “severely hamper” his defense. While the tape recording of the May 23, 2013 prehearing conference shows that Commissioners Matt Smith, Sally Hopper, and Bill Pinkham were initially receptive to the Secretary’s calling Mr. Collins,152 Grossman and Marshall successfully convinced their fellow commissioners on the June 7, 2013 hearing to exclude Mr. Collins’s testimony.153 Grossman is an attorney. He presumably understood the relevancy of these key witnesses who the Secretary requested to call. Grossman vocally opposed the Secretary’s ability to call these witnesses, for the flimsiest of reasons. Grossman’s leadership in this and every other matter of consequence simply highlights how his biased participation poisoned the Commission’s well and led to the Commission’s denial of the Secretary’s right to a fair hearing. Indeed, even the Commission’s own response contemplates the “likely possibility” that Grossman influenced the other commissioners on these key evidentiary decisions.154 Admittedly, in a hearing as fundamentally unfair as this one, it may be that there was no evidence that would have altered the Commission’s pre-determined outcome. The arbitrary

152

See 5-23-13-mtg-on-subpoenas.WMA (1 of 2 of tape recording of 5/23/2013 IEC meeting on witnesses and subpoenas); 5-23-13-mtg-on-subpoenas, pt 2.WMA (2 of 2); R. Transcript, at 24647 (transcript related to the Commission’s denial of the Secretary’s request to call an accounting expert); see also CIC_20130607-1429_01ce638b70c2ed70, at 32:32-34:02 (IEC’s largely inaudible tape recording of same). 153 R. Transcript, at 246-47 (transcript related to the Commission’s denial of the Secretary’s request to call an accounting expert); see also CIC_20130607-1429_01ce638b70c2ed70, at 32:32-34:02 (IEC’s largely inaudible tape recording of same). 154 See Response, at 28-29 (“The Secretary . . . ignores the likely possibility that [Marshall] conferred with other members of the panel before deciding to join the order [denying the motion to dismiss].”).

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exclusion of this evidence, however, demonstrates the Commission’s bias and shocking unwillingness to even entertain the Secretary’s legal theory. D. The Commission fails to respond to the Secretary’s legal argument that the Commission assumed an improper prosecutorial role by penalizing the Secretary after finding he violated legal duties separate from the criminal statutes cited in CREW’s criminal complaint.

The Commission assumed an improper prosecutorial role by penalizing the Secretary after finding he violated legal duties separate from the criminal statutes cited in CREW’s criminal complaint.155 The Colorado Supreme Court has held that “counsel who has played [a prosecutorial] role in the proceedings should take no part in the final deliberations of the board, in order to avoid any appearance of impropriety or unfairness.”156 And the Court later distinguished between a prosecutorial role (brings charges) and an investigative role (“investigate[s] the charges brought to the [agency’s] attention”).157 The Commission improperly assumed both the role of prosecutor and judge, as it found legal violations separate from CREW’s criminal complaint. The Commission responds, arguing that [t]his case is unlike DeKoevend and Weissman. The Secretary does not argue that a third party improperly influenced the IEC’s deliberations. Rather, he claims the IEC assumed an improper prosecutorial role by essentially doing its job.158 This, again, is a red-herring argument. The Secretary’s argument is that while DeKoevend and Weissman permit the Commission to serve as both the investigator (investigate claims brought to its attention by complainants, such as CREW) and judge (decide the claims),

155 156

See Response, at 42-44. Weissman v. Bd. of Ed. of Jefferson Cnty. Sch. Dist. No. R-1, 547 P.2d 1267, 1276 (Colo. 1976). 157 See N. Colorado Med. Ctr., Inc. v. Nicholas, 27 P.3d 828, 844 (Colo. 2001). 158 Response, at 32.

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DeKoevend and Weissman prevent the Commission from serving as both the prosecutor (bring its own claims) and judge (decide claims). The Commission impermissibly did the latter, as the Commission advanced “potential” violations of legal duties separate from the criminal statutes cited in CREW’s criminal complaint. It then found the Secretary in violation of the same charges that it brought. 5. All of the evidence demonstrates that the Secretary properly spent his discretionary funds, and the Commission fails to cite to any evidence of how the Secretary violated any legal duty.

The Commission arbitrarily ignored the hearing evidence, all of which showed that the Secretary’s expenditures were legal, appropriate, and in line with past agency actions.159 This evidence included testimony from the Department’s chief of staff, the Department’s chief financial officer, the State Controller, the Commission’s own investigator, the Department’s retired veteran deputy secretary, and the Secretary himself.160 The Commission heard no evidence to the contrary, and no evidence supports the Commission’s convoluted legal analysis and conclusion that the Secretary violated C.R.S. § 24-18-103(1) -- even if the Commission had jurisdiction and even if that provision (somehow) created a legal duty for the Secretary to violate.161 In its response, the Commission cites a litany of largely undisputed facts that it found.162 The Commission makes the vague and conclusory statement that “[t]he record supports the IEC’s conclusion that the Secretary violated his ethical obligations” related to $1,278.90 that the Secretary spent to attend the CLE and the reimbursement of $117.99 in expenses with a
159 160

See Opening, at 20-30. See id. 161 See id. 162 See Response, at 16-20.

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memorandum instead of receipts.163 The Commission states that “[h]ere the evidence amply supports the IEC’s factual findings.”164 The Commission continued: “Notably absent from the Opening Brief is any challenge to these facts.”165 The Commission misses the mark. The Secretary largely never disputed the factual allegations against him; he readily admitted certain facts in his first substantive pleading (his response) to the Commission more than a year ago. For example, he generally agreed that he had spent his discretionary funds largely as factually alleged.166 But the Commission needs to prove more than the mere fact that the Secretary spent funds in the way he generally agrees he spent them. Rather, the Commission must prove that the spending violated a legal duty. There was no evidence of a legal duty, and there was no evidence that the Secretary ever violated any legal duty. The evidence overwhelmingly shows that the Secretary’s actions were in line with past practices. The evidence overwhelmingly shows that the State Controller viewed the Secretary’s actions to be appropriate and proper. Testimony from the Department of State’s chief financial officer shows that the Secretary’s expenditures were proper. And the evidence overwhelmingly showed that the legal conference covered election-law matters in depth, and that having knowledge of election law and practices forms a core part of the state’s chief election officer’s duties. Ultimately, the Commission continues its play upon ambiguities and avoids articulating a specific legal duty that the Secretary violated. Just as the Commission never told the Secretary

163 164

See id., at 16 (CLE); see also id., at 18 (receipts). Id. (emphasis added). 165 Id. (emphasis added). 166 See Response, R. 231-732 (the Secretary’s December 20, 2012 response to CREW’s complaint).

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the legal allegations that he faced prior to his hearing, in its response, the Commission merely incants the fact that the Secretary spent funds in a certain manner, and that somehow that spending was not “ethical.” The Commission must prove the existence of a legal duty. It cannot. And the Commission must prove that the Secretary violated a legal duty. Again, it cannot. The Commission cannot even articulate a duty under C.R.S. § 24-18-103(1), even if the Commission – instead of the Denver District Attorney – had the power to enforce such a duty. 6. The Commission violated the Secretary’s First Amendment rights to speech and assembly by utilizing a vague and overbroad standard and penalizing the Secretary for using his discretionary fund to attend a state-approved CLE simply because a Republican organization sponsored the CLE.

Finally, the Secretary generally argues that the Commission chilled and violated First Amendment rights, both facially and as-applied to him, when the Commission utilized the overly broad and unconstitutionally vague language of “other standards of conduct” in both Amendment 41 and the enabling statute to penalize the Secretary for his attendance at a continuing-legal education (CLE) program accredited by the Colorado Supreme Court, simply because a Republican organization sponsored the CLE. First, the Commission responds that: The Secretary failed to raise his First Amendment “as applied” challenges in the administrative proceedings below. . . . [T]he Secretary’s failure to raise his “as applied” First Amendment challenges before the IEC kept the IEC from making factual determinations that would have addressed the issues raised for the first time before this Court. Accordingly, the Secretary did not exhaust his administrative remedies or preserve this issue for judicial review, and this Court should not consider it now.167 But the Secretary specifically attempted to raise with the Commission a First Amendment challenge – yet the Commission literally cut off the discussion in mid-sentence:

167

Response, at 34-35.

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[DEPUTY SECRETARY OF STATE SUZANNE STAIERT]: And then the problem is then we don’t see a way that we can continue to exercise our First Amendment rights to speech and association because we cannot figure out what standards we’re judged upon. So I see your quandary, but I hope that you see mine. We cannot continue to operate under standards that are standardless. We cannot – [COMMISSIONER MATT SMITH]: I thought (inaudible). Okay. We are going to be real careful that we don’t get into (inaudible) here and everything else. I don’t want to (inaudible) the matter that’s in front of us. [CHAIRMAN DAN GROSSMAN]: So anyway my recommendation is that we defer action on this position statement pending the resolution of the complaint [in front of the Court now], but there’s not much (inaudible) commission, so (inaudible).168 Any further attempt would have been futile, as the Secretary learned with his numerous and repeated requests for the Commission to provide him fair notice of the legal allegations that he faced. Moreover, the Commission incorrectly frames the Secretary’s First Amendment arguments. The Secretary does not argue that he has a First Amendment right to spend state funds. The argument, instead, is that when the Secretary has broad discretion to spend funds, the Commission chills and violates his and others’ First Amendment rights by penalizing the Secretary – under an overly broad, vague, undefined, arbitrary, and evolving standard – for the manner in which he lawfully spends those state funds, simply because the Commission found that event the Secretary attended happened to be “political.” Conclusion Reasonable minds may differ as to whether certain expenditures are better than others. Even the Secretary acknowledged this, when he paid back the RNLA portion of the funds to get

168

R. Transcript of 3/4/2013 IEC Meeting, at 20:4-21:13.

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the issue behind him. But that does not mean that any of these expenditures were illegal, unethical, or even inappropriate. Regardless, this was not a decision for the Commission to make; the Commission improperly substituted its own judgment for that of the Colorado legislature, the State Controller, and the Secretary. Even if the Commission did have jurisdiction over the Secretary’s statutory discretionary fund, the Commission’s process was illegal, unfair, and wholly lacking in evidence. And as the State Controller clearly testified, the state fiscal rules – which served as the legal basis for the Commission’s finding – do not even apply to the Secretary’s statutory discretionary fund. The Commission heard no evidence to the contrary. This case is about more than the appropriateness of $1,396.89 in discretionary expenditures by one statewide elected official; this case is about preserving the rule of law and appropriate checks-and-balances in government. The voters of Colorado elected the Secretary to do his job, within the bounds of the law and as he sees fit; the voters of Colorado certainly did not establish the Commission to second-guess every expenditure he makes. And in this secondguessing, the Commission exceeded its power, ignored the evidence, and violated the Secretary’s due-process and First Amendment rights. The Secretary respectfully requests that this Court set aside the Commission’s finding and penalty and effectively rein in a state agency that operates under the apparent belief that it has limitless jurisdiction over any and all potential violations of any legal standard, based upon the vague language of “other standards of conduct” in Amendment 41 and its enabling statute.

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DATED this 10th day of January, 2014.

Respectfully submitted, CO-COUNSEL FOR THE PLAINTIFF AND SPECIAL ASSISTANT ATTORNEYS GENERAL FOR THE STATE OF COLORADO /s/ Michael R. Davis David A. Lane, #16422 KILLMER, LANE & NEWMAN, LLP The Odd Fellows Hall 1543 Champa Street, Suite 400 Denver, Colorado 80202 Telephone: (303) 571-1000 Fax: (303) 571-1001 [email protected] Robert J. Bruce, #17742 RJB LAWYER, LLC 1543 Champa Street, Suite 400 Denver, Colorado 80202 Telephone: (303) 573-5498 [email protected] Michael R. Davis, #39788 LAW OFFICE OF MICHAEL R. DAVIS, LLC 3301 West Clyde Place Denver, Colorado 80211 Telephone: (303) 325-7843 Fax: (303) 723-8679 [email protected]

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CERTIFICATE OF SERVICE I certify that on this 10th day of January, 2014, I electronically served via ICCES or sent via email a true and complete copy of the REPLY BRIEF OF SECRETARY OF STATE SCOTT E. GESSLER to: Lisa Brenner Freimann, First Assistant Attorney General Russell B. Klein, First Assistant Attorney General Joel W. Kiesey, Assistant Attorney General Office of the Attorney General, State of Colorado 1300 Broadway, 8th Floor Denver, Colorado 80203 Telephone: (720) 508-6385 [email protected] [email protected] [email protected] Respectfully submitted, /s/ Michael R. Davis_________________________ Michael R. Davis

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