See link below for history of this case in the U.S. District Court for the District of Columbia.
The NAM appealed the district court's ruling to the U.S. Court of Appeals for the D.C. Circuit. We asked for and received an order from the D.C. Circuit to expedite its review of our challenge, as new and different reports are required at the end of each calendar quarter.
The NAM emphasized that review by the court of appeals is de novo, meaning the court should not give any deference to the district judge's ruling. Our argument focused on the heavy burden the government bears in trying to justify the constitutionality of a statute that infringes upon First Amendment rights. Courts give such restrictive statutes strict scrutiny, and the government's justification for imposing a limitation on speech must be compelling. In addition, the statute must be narrowly crafted and must effectively advance the interest it purports to, but the government has not met this burden. The statute is also unconstitutionally vague, both in its requirement that associations divine the intent of its members who participate, and in its requirement that associations determine what constitutes active participation sufficient to trigger reporting.
An amicus brief in support of the NAM was filed by Wisconsin Manufacturers & Commerce, the WMC Issues Mobilization Council, the Iowa Association of Business and Industry, and the National Paint & Coatings Association. These groups argued that organizations have a First Amendment right to engage in advocacy and political speech, and that Wisconsin businesses have been threatened with retaliation when their identities are disclosed. The threat of peril from the disclosure of association membership is real, and "no one should assume that politically unpopular opinions can be expressed without triggering reprisal, particularly when those expressing controversial opinions are in the public spotlight through compulsory disclosure laws." The brief suggested that disfavored speech is increasingly met "not only with an opposing viewpoint but also efforts to intimidate the organization sponsoring the disfavored speech."
Actual examples were cited, and include political blacklisting, demands for financial support from public officials, and economic retaliation. Wisconsin businesses have been threatened with boycotts after a policy campaign by the WMC Issues Mobilization Council involving the public positions and actions of individual candidates for the Wisconsin Supreme Court. Members were subjected to anonymous telephone harassment and various boycotts were threatened and implemented. Ironically, some of the groups that oppose business issue advocacy are funded by an anonymous group of contributors who, understandably, choose not to identify themselves, and who are not required to be disclosed if they engage in substantial lobbying at the federal level. Anonymous support of public debate from a variety of diverse voices has been consistently protected by the Supreme Court, in part to protect such supporters from public hostility and economic reprisal.
The NAM's reply brief offered strong arguments against the defenses raised by the government defendants.
On Sept. 8, 2009, the D.C. Circuit affirmed the lower court's decision upholding Section 207 of the statute. It ruled that there is a "vital national interest" in knowing who is putting up the money to engage in lobbying, in that Congress needs to evaluate pressures and protect itself. However, the Harriss ruling on which the court relied was a very narrow ruling with respect to disclosure of activities relating to direct lobbying of members of Congress, not an expansive ruling allowing a wide-ranging inquiry into the organizations that participate through their trade associations in background, research, preparation or coordination of lobbying by that organization’s own registered lobbyists.
The court also found that the justification for this law (to disclose contributors to "stealth coalitions") was not dispositive in the constitutional analysis, because the law applies more broadly than that. It deferred to Congress on the justification for the law ("good government requires greater transparency"), relying on the Harriss case but not providing any further rationale.
The court also approved of the law even though it is not the best fit for its purposes, and found that it is acceptable because it is less restrictive than regulating lobbying directly. It did not give much weight to the fears of companies that have been harassed and boycotted for being members of a trade association, and thought that the statute was clear enough with respect to the meaning of "actively participates." After all, only civil fines apply (up to $200,000), unless the government can prove that violations are committed "knowingly and corruptly."
The NAM is disappointed in the outcome and will continue to work to protect the confidentiality of organizations that participate in our lobbying activities.