Minnesota Chamber of Commerce v. Choi

Background

The Minnesota Chamber of Commerce, a nonprofit membership organization representing more than 6,000 Minnesota businesses, challenged amendments to Minnesota Statutes § 211B.15. The amendments were scheduled to take effect on January 1, 2024, and prohibited certain “foreign-influenced corporations” from making political contributions and independent expenditures in Minnesota elections. The definition could apply when one foreign investor owned at least one percent of a corporation, when foreign investors collectively owned at least five percent, or when a foreign investor participated in the corporation’s political decision-making.

The challenged provisions prohibited covered corporations and limited liability companies from spending money to support or oppose candidates or ballot questions and from making certain contributions. They also required certifications after some political spending and imposed civil and criminal penalties. The Chamber asserted First Amendment and federal-preemption claims and moved for a preliminary injunction barring enforcement of subdivisions 4a and 4b of § 211B.15.

Standing

Before addressing the merits, the court considered whether the Chamber had standing to sue. The court found that declarations from chief executive officers of Chamber-member corporations plausibly showed that the statute would injure those members by preventing them from making election-related expenditures. The Chamber’s effort to protect First Amendment interests was related to its organizational mission, and the requested declaratory and injunctive relief did not require the individual members’ participation.

First Amendment analysis

The court held that the Chamber was likely to prevail on its First Amendment challenge. It recognized that preventing foreign influence in Minnesota elections is a compelling governmental interest in the abstract. But restrictions on political speech must be narrowly tailored to that interest. The court applied the heightened review assumed by the Campaign Finance and Public Disclosure Board and concluded that the provisions would fail both strict scrutiny and the more deferential “closely drawn” standard applicable to political contributions.

The court found that the provisions were not sufficiently connected to the identified harm. The Board offered possible ways a one-percent foreign shareholder could influence a corporation, but it did not provide evidence that minority foreign shareholders had actually influenced corporations’ election spending in Minnesota or elsewhere. The court also found the law overinclusive because it could prohibit a domestic corporation’s political speech even when a foreign shareholder was a passive investor with no control over election spending.

The provisions were also underinclusive. They applied to corporations and limited liability companies but not to labor unions, partnerships, nonprofits, cooperatives, or other organizations that foreign citizens might use to participate in Minnesota elections. The court identified additional problems in the statute’s treatment of a foreign investor’s location, changes in ownership, and foreign board members who might direct election spending without holding an ownership interest.

Finally, the court concluded that the Board had not shown that banning corporations’ political speech was the least restrictive way to prevent foreign influence. The court pointed to federal rules focused on foreign nationals’ participation in political decision-making, as well as possible disclosure, disclaimer, or certification requirements, as less speech-restrictive alternatives.

Federal-preemption claims

The Chamber also argued that the Federal Election Campaign Act displaced the Minnesota provisions under the Supremacy Clause. The court concluded that the Chamber was unlikely to succeed on those claims. The court interpreted the challenged Minnesota provisions as applying to state elections rather than federal elections, so the Federal Election Campaign Act’s express preemption provision did not apply. The court also rejected the Chamber’s conflict-preemption and field-preemption theories, finding that federal law did not establish a comprehensive scheme that prevented Minnesota from imposing stricter rules for its own elections.

Preliminary-injunction factors and order

The court found that the remaining preliminary-injunction factors supported relief. The alleged loss of First Amendment freedoms constituted irreparable harm, and the Chamber’s five-month delay in seeking relief was not comparable to the lengthy delays in cases where delay undermined claims of urgency. Because the Chamber was likely to succeed on its First Amendment claim, the balance of harms and public interest also favored protecting constitutional speech rights.

The court granted the Chamber’s motion for a preliminary injunction. It enjoined John Choi, in his official capacity, and the Minnesota Campaign Finance and Public Disclosure Board members, in their official capacities, from enforcing the specified foreign-influenced-corporation provisions: subdivisions 1(b), 1(d), 1(e), 4a, and 4b; the reference to subdivision 4a in subdivision 7b(2); and related rules and regulations. The defendants were also enjoined from pursuing civil or criminal liability for alleged violations of those provisions occurring during the injunction’s term. The court allowed the Chamber to seek leave to amend its complaint if new developments justified amendment. Judge Eric C. Tostrud did not enter a final merits judgment declaring the statute unconstitutional.