Appeals court throws out suit testing ‘Stand By Your Ad’

But ruling widens definition of who much be identified in ads

cjarvis@newsobserver.comNovember 22, 2012 

  • National ad disclosure mirrors North Carolina Thanks to bipartisan campaign reform legislation Congress enacted in 2002, candidates for federal office appear at the end of their campaign ads to take credit for them. U.S. Rep. David Price was a leading proponent of the legislation, and wrote a “Stand By Your Ad” amendment to the bill, which was modeled after North Carolina’s law. The federal law, which applies to campaigns for federal office, requires candidates to appear in and claim responsibility for their political ads on the air. Price is currently pushing an new bill, dubbed “Stand By Every Ad,” which would expand the disclosure to super PACs and other entities by requiring their highest-ranking official to appear and the top five donors to the ad to be listed. It would also require the CEO or highest official in corporations or unions to appear.

— As money increasingly floods its political campaigns, North Carolina is figuring out how to navigate the shifting ways that money can buy influence.

A lawsuit testing the strength of the state’s Stand By Your Ad law, which requires that political TV and radio ads disclose who is paying for them, was thrown out by the N.C. Court of Appeals this week. But the ruling did widen the definition of who must be identified in the advertisements.

The lawsuit challenged the state Republican Party’s decision in 2010 to buy political ads for a candidate for state Senate, who then claimed to have paid for the ads through a campaign committee without disclosing the outside support. The judges ruled the Democratic incumbent had effectively done the same thing.

Melissa Price Kromm, director of N.C. Voters for Clean Elections, said the ruling will ultimately help the state sort out how to ensure full disclosure in campaign finance.

“This is a stepping stone to the concept of Stand by Your Ad,” she said Wednesday. “It’s a step in the right direction. Every cycle, we see new loopholes being used. We’re trying to understand it – figure out how it works, how do we fix it, how do we have clean elections.”

It was the first time the law, enacted in 1999, has been tested in court. The judges noted that Stand By Your Ad, which was the inspiration for a federal law introduced by U.S. Rep. David Price, is unlike any other state’s election law because the government can’t enforce it through criminal or civil penalties.

The only remedy for a violation is for a candidate to sue for the amount of money the opposing candidate spent on the illegal ads. That amount can be tripled if the candidate who sues can also prove the other side was put on notice that the ads were in violation of state law.

So the penalty is steep in a race where several hundred thousands of dollars were spent on political ads, as they were in this case.

Two years ago, Democrats and, especially, Republicans poured a lot of money into state legislative races, paying off for the GOP with enough victories to take over the General Assembly.

Republicans had targeted several key seats, including that of three-term incumbent Sen. Joe Queen, a Democrat from Waynesville. After a war of TV ads – almost entirely funded by state political party money on both sides – Queen lost to Ralph Hise, a community college faculty member from Spruce Pines.

Soon after the election, Queen’s campaign committee filed suit against Hise’s committee and the N.C. Republican Executive Committee, saying Hise’s commercials should have identified the GOP as the sole, or at least joint, sponsor of the ads. Queen sought triple damages. A Haywood County judge dismissed the suit in December, and Queen’s attorneys appealed.

Queen’s committee argued that Hise’s ads should have disclosed the GOP money because the Republican Party had sent its money directly to the ad company. Previously, it had been the practice of both parties to send their money to campaign committees.

But the appellate court judges noted that the Democratic money was only filtered through the campaign committee briefly – usually only for several hours, and once only for 11 minutes. So, the judges ruled, there was little difference; both candidates had failed to disclose the support from outside parties.

The appeals court, in a unanimous opinion written by Judge Donna Stroud and signed by Judge Rick Elmore and Judge Cheri Beasley on Tuesday, said Queen couldn’t sue because his campaign hadn’t fully disclosed the N.C. Democratic Party funding for his ads, either.

Only a candidate who follows the law can prevail against a candidate who doesn’t, the judges said. But, given ambiguities in the law – which doesn’t fully define the meaning of “sponsor” or whether purchasing an ad includes just the production or also the air time – neither candidate in this case can be blamed, they said.

“It is not surprising that plaintiff and defendant would in good faith come to slightly different understandings of the requirements of the statute,” the ruling says, adding the judges don’t imply that either intentionally violated the law.

Hise’s campaign also argued that even if its ads had violated the law, that statute was unconstitutional on free speech and due process grounds. But the judges didn’t address those issues.

The court attempted to clear up some of the law’s ambiguity by concluding that anyone who pays for a political TV or radio ad – whether it’s the time that it is aired or the cost of production – must be identified in a disclaimer.

Queen’s attorneys, John R. Wallace and Joseph A. Newsome of Raleigh, said in a statement that the state Board of Elections had never questioned the way that both parties had complied with the Stand By Your Ad Act.

“Now, the Court of Appeals has found that both parties have apparently been misreading the act for years,” they said, adding that the ruling itself was unclear in places.

“Significant questions remain regarding the required disclosures which now must be placed on advertisements covered by the Stand By Your Ad Act. The historical practices of both parties and their candidates will be significantly changed as a result.”

The attorneys said they are reviewing the opinion with their client and haven’t decided whether to ask for clarification or to appeal.

A lawyer for Hise’s committee, Thomas A. Farr of Raleigh, said Hise won without even having to prove the constitutional issues the defense raised. “It was a very well-reasoned opinion by the court,” Farr said.

Queen was elected to a seat in the House in the general election earlier this month, and Hise was re-elected to his Senate seat.

Jarvis: 919-829-4576

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