ALJDEC decisions subject to certification as final

13F-CF20120001-MCAO · Maricopa County Attorney's Office · 2013-03-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

ISSUE This matter comes before the tribunal on Appellant Kathleen Winn’s and Appellant Business Leaders for Arizona’s Motion to Dismiss, which Appellant Tom Horne and Appellant Tom Horne for Attorney General joined.[1] RULING Because the Secretary of State was statutorily required to refer this matter to the Attorney General for civil enforcement under A.R.S. § 16- 924(A), the Secretary of State’s referral to the Maricopa County Attorney’s Office was not authorized and the Maricopa County Attorney’s Office lacked authority to issue the Order Requiring Compliance, the subject of the instant matter. Consequently, this appeal should be dismissed. FINDINGS OF FACT 1. The Maricopa County Attorney’s Office worked with the Federal Bureau of Investigations (“FBI”) in conducting a criminal investigation of the alleged coordination between Tom Horne for Attorney General and Business Leaders for Arizona. 2. On September 18, 2012, the Maricopa County Attorney’s Office referred the matter to the Arizona Secretary of State for further action related to civil enforcement based on its investigation with the FBI. In making the referral, the Maricopa County Attorney offered the services of the Maricopa County Attorney’s Office with respect to a civil enforcement action in the matter if the Secretary of State’s Office determined reasonable cause existed that a violation of Arizona campaign finance laws occurred. 3. On September 20, 2012, the Secretary of State issued a Reasonable Cause Notice stating that it had found reasonable cause existed to believe that Tom Horne, Business Leaders for Arizona, and Kathleen Winn had acted in violation of the Arizona campaign finance laws.[2] Relying on a session law, Laws 212, Chapter 361, Section 25, the Secretary of State referred the matter to the Maricopa County Attorney’s Office for enforcement action. 4. On October 11, 2012, the Maricopa County Attorney’s Office issued an Order Requiring Compliance. Tom Horne and Tom Horne for Attorney General were ordered to amend their 2010 Post- General Election Report and refund all individual and political party contributions that exceeded the contribution limits. Kathleen Winn and Business Leaders for Arizona were ordered to amend their Amended 2010 Post-General Election Report and refund all corporate contributions that exceeded the contribution limits. 5. Appellants filed the instant appeal to the Office of Administrative Hearings. 6. Kathleen Winn and Business Leaders for Arizona filed a Motion to Dismiss based on a lack of jurisdiction, which Tom Horne and Tom Horne for Attorney General joined, and the Maricopa County Attorney’s Office filed a response objecting to the dismissal of this matter. CONCLUSIONS OF LAW 1. Arizona statutes outline the method of civil enforcement in campaign finance laws. Specifically, A.R.S. § 16-924(A) provides: Unless another penalty is specifically prescribed in this title, if the filing officer for campaign finance reports designated pursuant to section 16-916, subsection A has reasonable cause to believe that a person is violating any provision of this title, except for violations of chapter 6, article 2, the secretary of state shall notify the attorney general for a violation regarding a statewide office . . . . The attorney general, . . . as appropriate, may serve on the person an order requiring compliance with that provision. The order shall state with reasonable particularity the nature of the violation and shall require compliance within twenty days from the date of issuance of the order. The alleged violator has twenty days from the date of issuance of the order to request a hearing pursuant to title 41, chapter 6.

(Emphasis added). Further, A.R.S. § 16-1021 provides: In any election for state office, members of the legislature, justices of the supreme court, judges of the court of appeals or statewide initiative or referendum the attorney general may enforce the provisions of this title through civil and criminal actions.

(Emphasis added). 2. The parties acknowledge that in a typical case involving civil enforcement of campaign finance laws, the statutes would require the Secretary of State to notify the Attorney General of a violation. The parties disagree as to the effect of the obvious conflict in the instant matter. 3. The Maricopa County Attorney’s Office argued that, because of the obvious conflict, the Attorney General’s Office “could not advise the Secretary of State in any matter related to the Tom Horne for Attorney General campaign.”[3] The Maricopa County Attorney’s Office further argued that the Secretary of State was authorized under A.R.S. § 41-192(E) and a session law to refer the matter to counsel other than the Attorney General for civil enforcement. 4. A.R.S. § 41-192(E) provides: If the attorney general determines that he is disqualified from providing judicial or quasi-judicial legal representation or legal services on behalf of any state agency in relation to any matter, the attorney general shall give written notification to the state agency affected. If the agency has received written notification from the attorney general that the attorney general is disqualified from providing judicial or quasi-judicial legal representation or legal services in relation to any particular matter, the state agency is authorized to make expenditures and incur indebtedness to employ attorneys to provide the representation or services.

5. The plain language of A.R.S. § 41-192(E) requires that the Attorney General make a determination of a conflict and notify the agency affected prior to the agency being authorized to hire independent counsel. The Maricopa County Attorney’s Office argued, however, that the Attorney General was not required to make a finding of a conflict under A.R.S. § 41-192(E) before the Secretary of State could refer the matter to independent counsel for civil enforcement based on a session law that provides: Notwithstanding section 41-192, Arizona Revised Statutes, the secretary of state may hire independent counsel in place of the attorney general through December 31, 2014.

Laws 212, Chapter 361, Section 25. 6. The Maricopa County Attorney’s Office concluded that in the face of the obvious conflict and the authority granted to the Secretary of State through the session law, the Secretary of State properly referred the matter to the Maricopa County Attorney’s Office for civil enforcement. 7. Appellants argued that the authority cited above does not authorize the Secretary of State to refer the matter to the Maricopa County Attorney’s Office for civil enforcement because the Attorney General does not act as “counsel” for the Secretary of State in the civil enforcement of campaign finance laws and does not provide “judicial or quasi-judicial legal representation or legal services” for the Secretary of State. A.R.S. § 41-192(E). Appellants maintained that under the campaign finance laws, once the Secretary of State notifies the Attorney General of its reasonable cause determination, the Attorney General acts independently as to the civil enforcement.

8. Appellants’ position is supported by the plain language of the statutes, which provide that after the Secretary of State notifies the Attorney General of a violation, the Attorney General “may serve on the person an order requiring compliance” and the Attorney General “may enforce the provisions of this title through civil and criminal actions.” A.R.S. § 16-924(A) (emphasis added) and A.R.S. § 16-1021 (emphasis added). 9. The Administrative Law Judge does not find any inference in A.R.S. § 16-924(A) or A.R.S. § 16-1021 that the Attorney General represents the Secretary of State in the classic attorney-client relationship. Rather, each entity is charged with separate duties in the enforcement process. 10. The Administrative Law Judge concludes that the Attorney General does not provide any legal representation or legal services to the Secretary of State within the provisions of A.R.S. § 41- 192(E) when discharging its duties under A.R.S. § 16-924(A) or A.R.S. § 16-1021. Accordingly, the Administrative Law Judge determines that neither A.R.S. § 41-192(E) nor the session law grants the Secretary of State the authority to refer the matter to independent counsel, such as the Maricopa County Attorney’s Office, for civil enforcement. 11. The Maricopa County Attorney’s Office also argued the Attorney General’s prior determination of a conflict regarding the subject matter involved in this matter granted the Secretary of State the authority to refer the matter to the Maricopa County Attorney’s Office for civil enforcement. In making its argument, the Maricopa County Attorney’s Office relied on an April 16, 2012 letter in which the Attorney General’s Office appointed outside counsel “for the purpose of advising and representing the [Secretary of State] in matters concerning public records requests for documents concerning Tom Horne’s campaign for the office of Arizona Attorney General and other political committees that may allegedly be involved in supporting Mr. Horne’s campaign.”[4] The referral also indicated that the representation would continue while the matter was “pending either in arbitration or before a court of law including any appeals.”[5] 12. Although the Attorney General’s Office determined a conflict existed and made a referral to outside counsel, that referral was for representation in the classic attorney-client relationship as the outside counsel would advise and represent the Secretary of State during the proceedings. As previously addressed, the role of the Attorney General in civil enforcement proceedings is not one of representation. Therefore, the acknowledgement of a conflict as to providing representation to the Secretary of State during the investigation phase did not grant the Secretary of State authority to refer the matter to the Maricopa County Attorney’s Office for the civil enforcement phase. 13. The Maricopa County Attorney’s Office also argued it had independent authority to bring an enforcement action against Appellants as outlined in A.R.S. § 16-905. In particular, the Maricopa County Attorney’s Office referenced A.R.S. § 16-905(K), which provides: Any qualified elector may file a sworn complaint with the attorney general or the county attorney of the county in which a violation of this section is believed to have occurred, and the attorney general or the county attorney shall investigate the complaint for possible action.

(Emphasis added). The county attorney is then authorized under A.R.S. § 16- 905(L) “to institute an action within forty-five working days after receiving a complaint under subsection K of this section . . . .” 14. The Maricopa County Attorney’s Office argued it had the authority to bring an enforcement action under A.R.S. § 16- 905(K) based on a Search Warrant Affidavit signed by Mark Stribling, Commander of the Investigation Division of the Maricopa County Attorney’s Office, that was filed with the Maricopa County Superior Court. The Administrative Law Judge concludes that the Search Warrant Affidavit is not the equivalent of a sworn complaint filed by a qualified elector and the Maricopa County Attorney’s Office did not present any evidence that any qualified elector had filed a sworn complaint with the County Attorney. 15. Because the Secretary of State did not have the statutory authority to refer the matter to the Maricopa County Attorney’s Office for civil enforcement, the Maricopa County Attorney’s Office did not have legal authority to issue the Order Requiring Compliance. Thus, as a matter of law, the Order Requiring Compliance is void ab initio, which requires dismissal of this matter. 16. As a result of this finding, all pending motions before this tribunal are rendered moot. RECOMMENDED ORDER Based upon the foregoing, this matter is dismissed.

In the event the Maricopa County Attorney’s Office fails to accept, reject, or modify the Administrative Law Judge Decision as provided in A.R.S. § 41-1092.08 and the Director of the Office of Administrative Hearings certifies the decision, the effective date of the Order will be five days from the date of that certification.

Done this day, March 19, 2013.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

Bill Montgomery, Maricopa County Attorney Maricopa County Attorney's Office

----------------------- [1] The term “Appellants” as used in this order refers collectively to Appellant Tom Horne, Appellant Tom Horne for Attorney General, Appellant Kathleen Winn, and Appellant Business Leaders for Arizona. [2] Neither party raised any arguments as to the failure to include Tom Horne for Attorney General in the Reasonable Cause Notice. [3] Respondent Maricopa County Attorney Office’s Response to Appellants’ Motion to Dismiss (“Response”) 2. [4] Response Attachment 1 (emphasis added). [5] Id.

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