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Legal wrangling over the alleged illegal solicitation and expenditure of almost $2 million in corporate money to fund advertising on candidates in the 2002 Texas state legislative races is underway in state and federal courts. On Dec. 24, the Texas Association of Business filed a federal suit in Austin against 17 defeated candidates who haven’t yet sued the organization for running the issue ads prior to the November elections without disclosing who paid for them. TAB and its president, Bill Hammond, are the defendants in two suits filed on Nov. 22 in Austin state courts by four Democrats — state Rep. Ann Kitchen and James Sylvester, both of Austin, state Rep. Debra Danburg of Houston and Danny Duncan of Commerce, Texas — who lost state House races. The defeated candidates alleged in Kitchen, et al. v. Texas Association of Business, et al. and in Sylvester v. Texas Association of Business, et al. that the business group violated Chapter 253 of the Texas Election Code by illegally using corporate campaign contributions to fund ads for its chosen Republican candidates. The defeated candidates further alleged in the suits that TAB violated Chapter 254 of the Election Code by not reporting who made the contributions. Under Election Code � 253.131, a person who knowingly makes or accepts a contribution in violation of the code is civilly liable to the opposed candidates for up to twice the value of the contribution. The business group is asking U.S. District Judge Sam Sparks in Texas Association of Business et al. v. Badnarik, et al. to declare that TAB has a free speech right to advertise candidates’ records on public issues without disclosing who donated money for the ads as long as the ads are prepared independently and don’t expressly advocate for or against a candidate’s election. “We view this matter as a federal issue of constitutionally protected free speech,” says Andy Taylor, a former first assistant state attorney general who represents TAB and Hammond. “They’re struggling,” Randall Buck Wood, Sylvester’s attorney, says of TAB’s decision to file for declaratory relief. Wood, a partner in Austin’s Ray, Wood & Bonilla, says the federal suit won’t have any impact on the state litigation because of the Younger doctrine. In 1971, the U.S. Supreme Court held in Younger v. Harris that a federal court should not enjoin a state criminal prosecution begun prior to the institution of the federal suit, except in unusual circumstances. Wood says the doctrine applies in criminal and civil cases. Taylor, a partner in the Houston office of Locke Liddell & Sapp, says the Younger doctrine doesn’t apply because TAB sued the defeated candidates who are potential plaintiffs but who have not yet sued the business group. Joe Crews, an attorney for Kitchen, Danburg and Duncan, says the reason TAB didn’t sue his clients is because they already have state court jurisdiction in the case. Crews, a partner in Austin’s Ivy, Crews & Elliott, says TAB doesn’t want the issue decided in state court. “This is a pretty blatant example of forum-shopping,” Crews alleges. Taylor says it “makes sense” for TAB to go to the federal court system, which already has dealt with the issue. In an April 5 decision, the 5th U.S. Circuit Court of Appeals held that public education television commercials aired by a business-oriented group in connection with the 2000 elections for seats on the Mississippi Supreme Court were not subject to regulation under the laws of that state. “We hold that a state may regulate a political advertisement only if the advertisement advocates in express terms the election or defeat of a candidate,” Judge E. Grady Jolly wrote for the court in Chamber of Commerce of the United States of America v. Moore, et al. Mississippi officials had argued that the chamber’s advertisements were virtually identical to the candidates’ own advertisements — except that the chamber’s advertisements omitted the phrase “vote for” the featured candidate at the end of each ad. Because the chamber’s ads do not contain “explicit wording exhorting viewers to take specific electoral action for or against the featured candidates,” the ads do not constitute express advocacy, Jolly said in the opinion. Judge Robert B. Parker, who recently retired from the 5th Circuit, and U.S. District Judge Richard Mills of the Central District of Illinois, sitting by designation, joined Jolly in the opinion. The U.S. Supreme Court denied Mississippi officials’ application for a writ of certiorari in the case on Nov. 12. Taylor says the 5th Circuit’s decision in the Mississippi case doesn’t force a state court in Texas to rule that way. But Taylor says that whatever decision the federal court in Austin reaches in TAB’s suit for declaratory relief will likely be “mirrored” by the state court. CART BEFORE THE HORSE? In its suit against the other defeated legislative candidates, TAB alleges that it prepared the print advertisements sent to registered voters to explain the defendant candidates’ position on particular issues. The ads were prepared without consultation with or cooperation from any individual candidate and didn’t contain words of express election advocacy, such as “vote for” or “vote against.” “Basically, they’re trying to drive a truck through what they believe is a loophole in the law,” alleges Kitchen, an Austin attorney who is one of the plaintiffs in the state suit. If TAB’s action is allowed to stand, Kitchen says, it will wipe out the protection afforded the public under the state’s election laws. She calls TAB’s solicitation of about $1.9 million in corporate funds to finance political ads “unprecedented.” “That’s hogwash,” Taylor alleges, noting that the 5th Circuit decision deals with the same type of expenditures. Wood alleges that TAB filed the federal suit to try to block discovery in the state court case. “They really can’t stand to disclose who gave the money,” he alleges. Taylor contends that the candidates who sued TAB have “put the cart before the horse.” He alleges they want to learn the source of TAB’s funding before the court decides whether the state can compel the group to reveal those sources. TAB also filed a counterclaim in state court, alleging that the four legislative candidates who sued the association brought groundless and frivolous claims in bad faith for the purpose of harassment. In that suit, TAB asks that the candidates be required to pay its attorney fees. The business group asked the federal judge to expedite a decision on its complaint because the four candidates who filed the state suit alleged that TAB violated Texas election laws. TAB noted in the federal suit that Common Cause of Texas and other groups asked Travis County District Attorney Ronnie Earle in a Dec. 10 letter to conduct a formal investigation. Rosemary Lehmberg, first assistant district attorney, says the district attorney’s office has received “numerous complaints” about TAB during the 2002 elections. “We are gathering information to determine whether we will initiate a formal investigation,” Lehmberg says.

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