STATE OF COLORADO

OFFICE OF ADMINISTRATIVE COURTS

th

1525 Sherman Street, 4 Floor, Denver, Colorado 80203

COLORADO ETHICS WATCH,

Complainant,

COURT USE ONLY

v.

CASE NUMBER:

CITIZENS UNITED,
Respondent.

OS 2015-0011

FINAL DECISION GRANTING JUDGMENT ON THE PLEADINGS

Complainant, Colorado Ethics Watch (CEW), alleges that Respondent, Citizens
United, violated Colorados fair campaign practice law by failing to file a required
electioneering communications report with the Secretary of State. As required by law,
CEW filed its complaint with the Secretary of State (Secretary) and the Secretary
forwarded the complaint to the Office of Administrative Courts for hearing and decision.
The complaint is scheduled to be heard on September 24, 2015. However, Citizens
United has filed a motion for judgment on the pleadings, which CEW opposes. This
decision grants that motion.
Case Summary
During the run-up to the 2014 general election, Citizens United produced a 30minute movie entitled Rocky Mountain Heist that unambiguously referred to certain
elected Colorado officials running for office. Citizens Uniteds intention was to distribute
the movie for release in Colorado within the 60 days preceding the election.
Colorado Constitution Article XXVIII is the primary source of Colorados fair
campaign practice law.
Per Section 2(7)(a) of that law, communications that
unambiguously refer to a candidate, and are broadcast to the electorate within the 60
days preceding a general election, are considered to be electioneering
communications. Colo. Const. art. XXVIII, 2(7)(a). Any person who spends $1,000
or more on such communications must report that spending to the Secretary, and also
report the name and address of any person who has contributed more than $250 for the
purpose of that communication. Colo. Const. art. XXVIII, 6. Failure to report subjects
the person making the communication to monetary penalties. Colo. Const. art. XXVIII,
9(2)(a) and 10(2)(a).
On April 17, 2014, Citizens United sought, from the Secretary, a declaratory
order that it was exempt from the reporting requirement pursuant to a news
media/press exemption implied by Section 2(7)(b). Colo. Const. art. XXVIII, 2(7)(b).

That section excludes news articles, editorial endorsements, opinion or commentary

writings printed in a periodical, or aired by a broadcast facility, not owned or controlled
by a candidate or political party, from the definition of electioneering communication. Id.
On June 5, 2014, the Secretary issued a Declaratory Order denying Citizens Uniteds
request for exemption.
Rather than appeal the Declaratory Order, Citizens United filed suit in federal
district court challenging the law as unconstitutional both on its face and as applied to
Citizens United. Citizens United sought a preliminary injunction barring the Secretary
from enforcing the law against it. On September 22, 2014, the district court denied
injunctive relief and Citizens United appealed to the Tenth Circuit Court of Appeals. On
October 14, 2014, following an expedited hearing, the Tenth Circuit issued an order
reversing the district court decision on the grounds that Citizens United was
constitutionally entitled to be treated the same as any other exempt media. It therefore
found that enforcement of the law was unconstitutional as applied to Citizens United, to
the extent it required Citizens United to report spending on the production and
distribution of Rocky Mountain Heist.1 The court, however, found that Citizens United
was still obligated to report its advertising expenses for Rocky Mountain Heist, if other
exempt media facilities were required to do so.2 The matter was returned to the district
court to issue appropriate injunctive relief.
On October 15, 2014, Citizens United asked the Secretary for an advisory
opinion as to whether its advertising for Rocky Mountain Heist would also be exempt
under Colorado law. On October 16, 2014, the Secretary responded that, historically,
media facilities making exempt communications have not disclosed money spent on
advertising for such communications. Spending on advertising was considered to be
within the regular course and scope of the media facilitys business, and thus, exempt
pursuant to Article XXVIII, Section 2(7)(b)(III). The Secretary further opined that, [a]fter
reviewing your ads, it seems the same exemption would apply to Citizens United.
CEW Compl. Ex. 4. Armed with this letter, Citizens United proceeded with its plans to
advertise and distribute Rocky Mountain Heist.
On April 27, 2015, CEW filed a complaint with the Secretary alleging that,
notwithstanding the Secretarys Advisory Opinion, Citizens United violated Article
XXVIII, Section 6 by failing to report its advertising expenses for Rocky Mountain Heist.
Article XXVIII, Section 9(2)(a) permits any person to file a complaint of alleged violation
of the fair campaign practice law, and requires the Secretary to forward that complaint
to an administrative law judge (ALJ) for hearing and final decision. The hearing is
scheduled for September 24, 2015.
After CEW filed its administrative complaint, Citizens United and the Secretary
stipulated to an Order of Final Judgment, which was issued by the district court on June
10, 2015. That order was accompanied by a Permanent Injunction barring the
1

On November 12, 2014 the court published the opinion with minor revisions, Citizens United v. Gessler,
773 F.3d 200, 216 (10th Cir. 2014).
2
Id. at 217-18.

Secretary and all persons under the jurisdiction, the control or supervision of the
Secretary from enforcing the electioneering communication reporting requirements with
respect to Citizens Uniteds production of Rocky Mountain Heist and its related
advertising. Citizens United Mot., Attch. B.
Based upon the resolution of the federal case, Citizens United now seeks an
order granting judgment upon the pleadings and dismissal of the administrative
complaint pursuant to Rule 12(c) of the Colorado Rules of Civil Procedure. For reasons
explained below, the ALJ grants that relief.
Discussion
Legal Standard for Judgment on the Pleadings
The Colorado Rules of Civil Procedure allow any party to move for judgment on
the pleadings. C.R.C.P. 12(c). A court should grant the motion if, based on the
pleadings, the movant is entitled to judgment as a matter of law. City & County of
Denver v. Qwest Corp., 18 P.3d 748, 754 (Colo. 2001) (citing Burns Intl Sec. Servs.
Inc. v. Intl Union, United Plant Guard Workers of Am., 47 F.3d 14, 16 (2d Cir. 1995)).
However, motions for judgment on the pleadings are viewed with disfavor and a court
must view the pleadings in the light most favorable to the nonmoving party. Colo.
Crim. Justice Reform Coal. v. Ortiz, 121 P.3d 288, 294 (Colo. App. 2005) (citing Dunlap
v. Colo. Springs Cablevision, Inc., 829 P.2d 1286, 1291 (Colo. 1992)).
Binding Effect of the Injunction
Citizens United suggests that the ALJ and the Office of Administrative Courts
(OAC) are under the jurisdiction or supervision of the Secretary, and therefore, are
directly bound by the federal district court injunction. This argument is rejected.
Although the federal court injunction binds the Secretary and all persons under the
Secretarys jurisdiction, control, or supervision, neither the ALJ nor the OAC fall within
those categories. The OAC is an administrative tribunal, housed within the Department
of Personnel, a separate state agency ( 24-30-101 to 103, C.R.S.), and therefore is not
subject to the Secretarys jurisdiction.
Moreover, although the law requires that fair campaign practice complaints be
filed with the Secretary, the Secretary is required to refer such complaints to an ALJ for
hearing and decision. Colo. Const. art. XXVIII, 9(2)(a) (The secretary of state shall
refer the complaint to an administrative law judge) (emphasis added). The obligation to
refer the complaint to an ALJ is mandatory; the Secretary has no discretion in the
matter. Furthermore, the ALJs decision is final and subject to review only by the court
of appeals. Id. The Secretary may seek to enforce the decision (Id.), but has no right of
review, and thus, no control over the ALJs decision.
Citizens United points out that the OACs initial Notice of Hearing was captioned
Before the Secretary of State. To the extent that Citizens United infers from this that
the administrative hearing is under the supervision of the Secretary, the inference is
rejected. The words Before the Secretary of State were inadvertently copied from the
3

caption used by CEW when it filed its complaint with the Secretary. This clerical error
was corrected in all subsequent notices issued by the OAC by replacing Secretary of
State with Office of Administrative Courts.
Because neither the OAC nor the ALJ are subject to the Secretarys jurisdiction,
control, or supervision, the Permanent Injunction is not directly binding on the ALJ or
OAC.
Issue Preclusion and the Doctrine of Parens Patriae
Citizens United also argues that because the federal courts found that the state
electioneering communication law cannot be constitutionally applied to Citizens Uniteds
production and advertising of Rocky Mountain Heist, the federal litigation necessarily
precludes CEWs administrative complaint.
The doctrine of collateral estoppel, or issue preclusion, provides that a courts
final decision on an issue actually litigated and necessarily decided in a previous lawsuit
is conclusive of that issue in a subsequent proceeding. Rantz v. Kaufman, 109 P.3d
132, 138 (Colo. 2005). The doctrine is intended to relieve parties of the cost and
vexation of multiple lawsuits, conserve judicial resources, and prevents inconsistent
decisions, thus, encouraging reliance on adjudication. Bebo Constr. Co. v. Mattox &
OBrien, P.C., 990 P.2d 78, 84 (Colo. 1999). Collateral estoppel may be applied in
administrative proceedings. Umberfield v. Sch. Dist. No. 11, 522 P.2d 730, 732 (Colo.
1974); Williams v. Indus. Claim Appeals Office, 862 P.2d 1007, 1008 (Colo. App. 1993).
The elements of collateral estoppel are well established in Colorado. Collateral
estoppel bars relitigation of an issue if:
(1) The issue precluded is identical to an issue actually litigated and necessarily
adjudicated in the prior proceeding;
(2) The party against whom estoppel was sought was a party to or was in privity
with a party to the prior proceeding;
(3) There was a final judgment on the merits in the prior proceeding;
(4) The party against whom the doctrine is asserted had a full and fair opportunity
to litigate the issues in the prior adjudication.
Bebo Construction Co., 990 P.2d at 84-85 (emphasis added); Indus. Commn v. Moffat
County Sch. Dist. RE No. 1, 732 P.2d 616, 619-20 (Colo. 1987).
CEW argues that its administrative complaint is not subject to preclusion
because it was not a party to the federal lawsuit. Citizens United, however, contends
that CEW is bound because it stands in privity with the Secretary. The case law
supports Citizens Uniteds argument.
In Sierra Club v. Two Elk Generation Partners, Ltd. Pship, 646 F.3d 1258, 1261
(10th Cir. 2011), the court applied issue preclusion to bar a federal lawsuit by Sierra
Club against Two Elk after the Wyoming Department of Environmental Quality (DEQ)
entered a settlement agreement with Two Elk resolving the issue. In rejecting Sierra
4

Clubs argument that it was not bound by the settlement agreement because it was not
a party to that agreement, the court applied the doctrine of parens patriae. The doctrine
of parens patriae refers to the states right to prevent or repair harm to its "quasisovereign" interests." Id. at 1268. When a state litigates common public rights [under
the doctrine of parens patriae], the citizens of that state are represented by the state
and bound by the judgment. Id. (quoting Satsky v. Paramount Commc'ns, Inc., 7 F.3d
1464, 1469 (10th Cir.1993));see also City of Tacoma v. Taxpayers of Tacoma, 357 U.S.
320, 341-42 (1958) (government litigation precludes relitigation by individuals who
assert no more than a general public interest); Atchinson, Topeka & Santa Fe Ry. v. Bd.
of County Commrs, 95 Colo. 435, 441-42, 37 P.2d 761, 764 (Colo. 1934) (a judgment
against a county or its legal representatives, in a matter of general interest to all the
people, as, for example, one respecting the levy and collection of a tax, is binding, not
only on the county and its official representatives named as defendants, but also upon
all taxpayers of the county though not named as defendants in the case.)3
In the present case, CEW is seeking to protect the same general public interest
that the Secretary sought to protect in the federal litigation; namely, the full and timely
disclosure of . . . funding of electioneering communications. See Colo. Const. art.
XXVIII, 1, Purposes and findings. Although, in Colorado, the enforcement of
Colorados campaign finance laws is left primarily to private parties (see Colo. Ethics
Watch v. Senate Majority Fund, 2012 CO 12, 10 n. 2), the fact remains that the
Secretary does have independent authority to enforce the campaign finance laws and to
issue declaratory orders regarding the applicability of those laws. That authority is
found in both the Colorado Constitution and Colorado Revised Statutes. See Colo.
Const. art. XXVIII, 10(2); 24-4-105(11), C.R.S.
Because the Secretary has the authority to protect the public interest by
enforcing the fair campaign practice laws, its interest in the federal litigation was
identical to CEWs interest in the administrative litigation. That being the case, the
doctrine of parens patriae applies. Thus, though it was not named as a party in the
federal litigation, CEW is in privity with the Secretary and element 2 of the test for issue
preclusion is therefore satisfied. Because there is no real dispute that elements 1, 3,
and 4 are also satisfied, CEW is bound by the outcome of the federal litigation and its
complaint must be dismissed.4
Decision
CEWs complaint is precluded by the outcome of the federal litigation, and
therefore, the complaint is dismissed. The hearing scheduled for September 24, 2015
3

Atchinson noted that a consent judgment obtained by collusion might result in setting aside of the
judgment. However, there is no allegation in this case that the Secretary colluded with Citizens United in
the federal litigation.
4
Citizens United also argues that the OAC and ALJ are precluded from hearing CEWs complaint
because they are officers of the same government as the Secretary of State. Sunshine Anthracite Coal
Co. v. Adkins, 310 U.S. 381, 402-03 (1937) ([t]here is privity between officers of the same government.)
In light of the ALJs conclusion that CEWs complaint is precluded by the doctrines of issue preclusion
and parens patriae, the ALJ need not address this contention.

is vacated. This decision is subject to review by the Colorado Court of Appeals,

pursuant to 24-4-106(11), C.R.S. and Colo. Const. art. XXVIII, 9(2)(a).
Done and Signed
August 25, 2015

_______________________________
ROBERT N. SPENCER
Administrative Law Judge

CERTIFICATE OF SERVICE
I certify that a true and correct copy of this FINAL DECISION GRANTING
JUDGMENT ON THE PLEADINGS was served via electronic transmission to:
Luis Toro, Esq.
Margaret Perl, Esq.
Colorado Ethics Watch
[email protected]
[email protected]
John D.W. Partridge, Esq.
Lucas C. Townsend, Esq.
Amir C. Tayrani, Esq.
Matthew D. McGill, Esq.
Gibson Dunn & Crutcher, LLP
[email protected]
[email protected]
[email protected]
[email protected]
and by first class mail to
Suzanne Staiert
Deputy Secretary of State
1700 Broadway, Suite 270
Denver, CO 80290
on this 26th day of August, 2015

Court Clerk
6