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The 7th Circuit Court of Appeals vacated a lower court’s ruling that denied a preliminary injunction for the Indiana Right to Life Victory Fund and a media company against two provisions of Indiana law dealing with campaign finance restrictions.
In its opinion, the appellate court ruled that Indiana’s prohibition on corporate contributions to super PACs cannot be upheld on corruption-prevention grounds because that interest does not extend to such independent expenditures.
The Indiana Right to Life Victory Fund and Sarkes Rarzian, Inc.’s had requested a preliminary injunction in the Indiana Southern District Court against state law that they read to prohibit corporate contributions earmarked for independent expenditures.
The 7th Circuit remanded the case with instructions to enter a preliminary injunction barring enforcement of Indiana’s campaign finance restrictions against either the fund or Sarkes Tarzian.
According to court records, Sarkes Tarzian, Inc. is an Indiana-based television and radio company that wanted to make a $10,000 donation to the Indiana Right to Life Victory Fund, a super PAC.
Unlike ordinary political action committees, which accept contributions and then, in turn, give money directly to candidates, party committees, or ballot-initiative movements, super PACs spend the money themselves to advocate for or against a candidate, party, or initiative.
Sarkes Tarzian and the Fund invoked 42 U.S.C § 1983 in a challenge to two provisions of Indiana law (Ind. Code §§ 3-9- 2-4 & 3-9-2-5) that they read to prohibit corporate contributions earmarked for independent expenditures.
The district court denied their request for a preliminary injunction.
Although the court viewed the challenged provisions as likely unconstitutional under the reasoning in Citizens United v. FEC, 558 U.S. 310 (2010), it found no credible threat that Indiana officials would enforce those provisions to limit a company like Sarkes Tarzian from contributing to a super PAC like the fund.
The 7th Circuit, in its opinion Thursday, stated that the state had asked the court to dismiss the action for lack of subject matter jurisdiction.
The appellate court rejected that argument and found that Sarkes Tarzian and the fund did have standing to seek an injunction.
“The Indiana Election Code, we now know, prohibits independent expenditures like the earmarked $10,000 contribution that Sarkes Tarzian planned to make to the Fund. See Ind. Code § 3-9-2-5. The Fund has credibly alleged that the statute poses a threat of enforcement latent in the statute’s existence and traceable to its enforcement,” the 7th Circuit stated.
The appellate court noted that the state had vowed not to enforce the unlawful campaign finance restrictions against the fund, adding that “all an injunction would do is bind the defendants to that promise.”
“Compare the absence of any concrete harm to the defendants with the chill that the risk of enforcement might place on the political activities of the Fund and its donors were an injunction not issued. In the end, all factors point in favor of issuing the injunction sought by the Fund,” the 7th Circuit concluded.
Indiana Lawyer reached out to Indiana Right to Life for comment, but did not get a response from the group by IL’s deadline Friday.
The case is Indiana Right to Life Victory Fund and Sarkes Tarzian, Incorporated v. Diego Morales, et al., 22-1562.
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