Former W.Va. Democratic Party chairman challenges candidate financing program

By Jessica M. Karmasek and Chris Dickerson | Jul 19, 2012







CHARLESTON - The former chairman of the West Virginia Democratic Party is suing the secretary of state and members of the State Election Commission in federal court, saying the matching funds provision of the Supreme Court's public campaign financing pilot program is unconstitutional.

Attorney Michael Callaghan filed a 17-page complaint Wednesday in the U.S. District Court for the Southern District of West Virginia.

West Virginia Secretary of State Natalie Tennant, who serves as a member of the election commission, along with Gary A. Collias, William N. Renzelli and Robert Rupp, were named as defendants.

As members of the election commission, Tennant, Collias, Renzelli and Rupp are responsible for administering the state Supreme Court of Appeals Public Campaign Financing Pilot Program and the taxpayer monies making up the fund.

In an emergency meeting held Tuesday, the commission voted 2-2 on a motion to disburse funds to Republican candidate Allen Loughry. Collias and Renzelli voted no, while Tennant and Rupp voted to disburse the money.

Loughry is the only candidate in this year's Supreme Court race to opt into the public financing pilot program, which state lawmakers passed in an attempt to reduce the influence of special interest money.

About the pilot program

The West Virginia Supreme Court of Appeals Public Campaign Financing Pilot Program was established in 2010 as a pilot program for candidates seeking a seat on the state's high court.

This year, voters will elect two of the Court's five justices to 12-year terms.

Candidates who choose to participate receive $350,000 for a contested general election.

In addition, the act provides that if either a non-participating candidate, a person conducting an independent expenditure or a combination thereof spend more than $420,000, the participating candidate is eligible to receive dollar-for-dollar contributions of taxpayer dollars of the sums expended in excess of $350,000 up to an additional $700,000.

Callaghan's lawsuit

Callaghan, a partner at Charleston law firm Neely and Callaghan, claims that the pilot program violates the First and Fourteenth amendments of the U.S. Constitution by "unduly impinging upon protected political speech and association" as set forth in the U.S. Supreme Court's holding in Arizona Free Enterprise Club's Freedom Club PAC v. Bennett.

Specifically, he argues that the matching funds provision of the act is unconstitutional.

"The Bennett Court specifically held that providing public funds to match dollar-for-dollar the campaign expenditures of privately financed candidates and third-parties conducting independent expenditures imposes a substantial burden on the speech of privately financed candidates and third-party contributors by penalizing privately financed candidates and third-parties dollar-for-dollar based on their speech," he explains.

Callaghan, who notes in his complaint that he opposes the use of taxpayer money to finance elections, says he wishes to make contributions to the two non-participating candidates nominated by the Democratic Party -- in this case, current Justice Robin Jean Davis and Letitia "Tish" Chafin.

However, because the contributions would "trigger" matching funds to one of the opposing candidates -- Loughry -- he said he will not do so.

"As a direct and proximate result of the act's matching funds provision, plaintiff's willingness to engage in protected political speech has been chilled," Callaghan alleges.

As for relief, he is seeking to have the provision declared unconstitutional and to have enforcement of it permanently enjoined.

"This issue should be resolved promptly so that plaintiff and those similarly situated will not be chilled in their free expression and association, and instead will remain free to engage in constitutionally-protected political expression in the upcoming election," Callaghan writes.

This year's race

Eight candidates for the state Supreme Court sought nomination in the May 8 primary.

Loughry, a Supreme Court law clerk, and circuit judge John Yoder received the GOP's nominations in an uncontested primary.

Incumbent Davis and Chafin, the managing partner of the H. Truman Chafin Law Firm in Williamson with her husband, state Sen. Truman Chafin, received the Democratic Party's nominations after receiving the two highest vote totals of six candidates.

Loughry, the only candidate who sought to participate in the pilot program, raised $36,395 to qualify for the taxpayer subsidies provided by the program.

Once he was certified as a nominee, the election commission authorized the distribution of $350,000 in public funds to Loughry.

However, the contested Democratic primary resulted in expenditures in excess of $350,000 by the two nominees.

The SEC's role

Following the U.S. Surpreme Court's 2011 decision in Bennett, the State Election Commission sought an opinion by West Virginia Attorney General Darrell McGraw regarding the constitutionality of the matching funds provision.

In his July 28, 2011 response, McGraw concluded that the provision could not survive the strict scrutiny analysis mandated by Bennett.

Soon after, Tennant announced she intended to follow the attorney general's opinion and not implement the matching funds provision.

However, in June, Loughry appeared at a regularly scheduled meeting of the commission and requested that it take a position on whether it would fully implement the matching funds provision. The commission refused to take a position.

A day later, a disclosure provision was implemented through the promulgation of a reporting form.

The non-participating candidates were notified by email of the new form and the requirement that it be filed by July 6.

The form provided to the candidates by the secretary of state's election division required disclosure only when candidates expended or committed $420,000, the trigger for the additional payments.

Earlier this month, Davis filed the form provided to the non-participating candidates. Her filing showed expenditures of $494,471.

On Tuesday, an emergency meeting of the commission was held.

The commission voted to acknowledge that Davis had expended sufficient sums to trigger the matching funds provisions under the act. It then proceeded to vote on a motion to authorize the release of matching funds to Loughry.

The motion failed on a tie vote of the four members.

Following the vote, Rupp, who serves as the commission's chairman, requested that Gov. Earl Ray Tomblin fill the vacancy on the commission to prevent future voting ties.

GOP response

The West Virginia Republican Party on Wednesday condemned Callaghan's lawsuit.

"It's not a surprise to see donors to personal injury lawyer Tish Chafin try to take away rights and deny campaign funds from an honest man like Allen Loughry," state GOP chair Conrad Lucas said in a statement.

"This law exists to ensure fair elections and to allow candidates a fair shot at communicating with the voters, even when their opponents can spend millions of trial lawyer dollars."

He added, "This is a new height of hypocrisy by the trial bar, trying to stop a bill that had the support of former Gov. Manchin, Gov. Tomblin, Chafin's millionaire state senator spouse and nearly all Democrats in the House of Delegates."

Lucas contends that Loughry is being "targeted" because he followed the law.

"It's not a surprise to see Democrat officials and candidates challenge a law they supported in the past, now that it might help a Republican," Lucas said.

"Tish Chafin is free to spend as much of her millionaire husband's fortune promoting her anti-business, pro-lawsuit, pro-Obama message as she wants. But she has no business trying to muzzle and de-fund an honorable candidate like Allen Loughry."

On Wednesday, Loughry the question isn't whether someone agrees with the pilot program or not.

"The law already is in place," he said. "The law hasn't been challenged, and the State Election Commission has a duty to follow the law.

"The triggering amounts have been met, and the law says that they shall provide the additional funding within two days of those triggering amounts being met."

"So, right now, they're actually in violation of state law right now."

As of Wednesday evening, Loughry said he hadn't seen a copy of Callaghan's suit.

"But I welcome the chance to state our case in state or federal court," he said. "I want this issue resolved as quickly as possible. I want to get back to spending my time traveling the state to meet voters and tell them about my candidacy and my qualification to be a justice on the West Virginia Supreme Court."

Callaghan's attorney, Anthony J. Majestro, of Charleston law firm Powell and Majestro PLLC, pointed out the irony of the GOP's response.

Majestro also serves as legal counsel to Chafin's campaign.

"I find it amusing that the Republicans are claiming that our lawsuit violates the First Amendment. It is the Republicans who have conclusively established the legal basis for the unconstitutionality of the West Virginia act," he said Thursday.

"Five Republican appointed justices of the Supreme Court of the United States ruled that matching funds provisions like the ones in the West Virginia law impinged upon core First Amendment rights and were therefore unconstitutional. The case was brought by Arizona Republican political committees," he said of Bennett.

"In addition, the successful challenges to the North Carolina law that was used as the model for West Virginia were brought by conservative political action committees who were represented by the national Republican lawyer of the year."

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