STATE OF
|
8-6326-17585-CV |
OFFICE OF ADMINISTRATIVE
HEARINGS
|
Sheryl Hill,
Complainant, vs. Tom
and Cindy Notch, Citizens for Common Sense, and Wake Up Westonka, Respondents. |
ORDER OF
DISMISSAL |
On October 23, 2006, a probable cause
hearing under Minnesota Statutes § 211B.34 was held by telephone conference
call before Administrative Law Judge Eric L. Lipman to consider a complaint
filed by Sheryl Hill on October 17, 2006.
The record with respect to the probable cause hearing closed following
the receipt of Respondents’ post-hearing submission on October 25, 2006.
Sheryl Hill
(Complainant),
Based on the record and all of the proceedings in
this matter, and for the reasons set forth in the Memorandum below, the
Administrative Law Judge finds that there is no probable cause to believe that
the Respondents violated Minnesota Statutes §§ 211A.02 and 211B.06.
ORDER
IT
IS ORDERED:
That there is no probable cause to
believe that Respondents violated Minnesota Statutes §§ 211A.02 and 211B.06 as
alleged in the Complaint, and therefore the Complaint is DISMISSED.
Dated: October 27, 2006 s/Eric L. Lipman
__________________________
ERIC
L. LIPMAN
Administrative
Law Judge
Tape recorded (two tapes).
NOTICE OF
RECONSIDERATION RIGHTS
Minnesota
Statutes § 211B.34, subdivision 3, provides that the Complainant has the right
to seek reconsideration of this decision on the record by the Chief
Administrative Law Judge. A petition for
reconsideration must be filed with the Office of Administrative Hearings within two business days after this
dismissal.
If the Chief Administrative Law Judge
determines that the assigned Administrative Law Judge made a clear error of law
and grants the petition, the Chief Administrative Law Judge will schedule the
complaint for an evidentiary hearing under Minnesota Statutes § 211B.35 within
five business days after granting the petition.
MEMORANDUM
The Complaint concerns the operating levy and long-term bond ballot
questions for the
On October 17, 2006, the Complainant filed a Complaint against the Respondents alleging 47 violations of the Fair Campaign Practices and Financial Reporting Acts (Minnesota Statutes, Chapters 211A and 211B). In an Order dated October 20, 2006, the Administrative Law Judge dismissed all but four of the allegations. The remaining allegations are addressed below.
Allegation 4
The CCS website includes a page of information regarding the school district’s proposed bond referendum (Ballot Question 2). Included on this page is a chart that projects the minimum tax impact of the bond measure at different amounts of property value. According to the figures presented by CCS, if the school district’s proposed $57,985,000 bond is approved, over the 24 year life of the bond, the minimum tax impact on a home valued at $150,000 will be $3,620.
A scanned copy of the website page at issue follows below:
The Complainant alleges that the calculations that appear under the heading “What will it cost me?” are incorrect and render the material false in violation of Minnesota Statutes § 211B.06. The Complainant maintains that Respondents’ figures over-inflate the property tax impact of the proposed bond. According to figures developed by the school district’s consultant, Ehlers and Associates, Inc., the school district projects that that the estimated annual tax impact of the proposed bond is $107 a year for a home valued at $150,000, or $2,568 over the life of the 24-year bond. The gap between the Respondent’s calculation of $3,620 in tax impact, and the $2,568 in tax impact that the Complainant believes will result, spurred this claim.
The Respondents assert that they likewise used Ehlers and
Associates’ figures to support their tax impact projections. The Respondents submitted as an attachment to
their Pre-Hearing Submission an annotated chart prepared by Ehlers and
Associates that shows the projected taxes for capital projects by year for the
Allegation 10
The CCS website also has a page
of information concerning the proposed levy referendum (Ballot Question 1). A scanned copy of this webpage appears below:
The Complainant, Ms. Hill,
also argues that the calculations which appear under the heading “What will the
2006 Proposed LEVY cost me?” are incorrect and render the material false in
violation of Minnesota Statutes § 211B.06.
The Complainant maintains that CCS figures over-inflate the property tax
impact of the proposed 10-year levy. The
Complainant asserts that, according to figures from Ehlers and Associates, the
tax impact of the proposed levy on a home valued at $150,000 would be $430 over
a 10- year period, and not $915 as claimed by the Respondents.
In reply, Respondents point
out that the proposed levy seeks to increase the school district’s referendum
revenue to $480 for every pupil in the District – a level which exceeds the current
state referendum cap. Believing that the
Minnesota Legislature will soon “raise the caps” and authorize local school
districts to levy up to these higher amounts, the Respondents calculated the
tax impact of Ballot Question 1 as including the maximum funding levels authorized,
plus inflation. Respondents assume that
On October 25,
2006, following the probable cause hearing, Respondent Tom Notch submitted a
revised tax impact chart for Ballot Question 1.
In his post-hearing filing, Mr. Notch states that upon further
discussion with Gary Olsen, of Ehlers and Associates, after the hearing, he
concluded that a revision of the CCS chart was necessary. Believing that the earlier chart did not apply
the correct inflation ratio cap adjustment factors, Mr. Notch states that CCS’
website had overstated the tax impact of the proposed levy by 29 percent. Mr. Notch asserts that the true tax impact of
the proposed levy would be $707 over a period of 10 years – not $915. Mr. Notch states further that he has made these
corrections to the CCS website and attached a copy of the corrected page to his
post-hearing submission. Thus, while the
gap between the Complainant’s estimated tax impact for Ballot Question 1, and
the figure announced by Respondents, has narrowed since the probable cause
hearing, a $707 impact over 10 years is still greater than the $430 impact
claimed by the Complainant.
Legal Standards Under the Fair Campaign Practices Act:
Minnesota Statutes § 211B.06 prohibits the preparation and dissemination of false campaign material. In order to be found to have violated this section, two requirements must be met: (1) A person must intentionally participate in the preparation or dissemination of false campaign material; and (2) the person developing or disseminating the material must know that the item is false, or act with reckless disregard as to whether it is false.
As to the first element of the statute, the test is
objective:
As to the second element of the statute – namely, Respondents’ awareness surrounding the claims they made on the CCS website – the test is subjective: At a hearing on the merits of the Complaint, the Complainant would need to prove by clear and convincing evidence that the Respondents “in fact entertained serious doubts” as to the truth of the publication or acted “with a high degree of awareness” of its probable falsity.[4] Otherwise, her claim against the Respondents would fail.
Probable Cause Analysis:
Following a probable cause
hearing, the task of the Presiding Judge is to answer an important
question: Given the facts in the record,
it is fair and reasonable to require the respondent to go to hearing on the
merits?[5] A further hearing on the merits is
appropriate if there are sufficient facts in the record to believe that a
violation of law that is alleged in the complaint has occurred.[6] There are sufficient facts if the Presiding Judge
is satisfied that the evidence in the record, including reliable hearsay, would
preclude the granting of a motion for a directed verdict in a like civil case.[7]
After considering
all of the evidence in the record, and the arguments of the parties at the
probable cause hearing, the Administrative Law Judge concludes that the
Complainant has failed to present sufficient facts to support her claims.
With respect
to Allegation 4, the 24-year capital bonding measure, the Complainant, Ms.
Hill, has not submitted any evidence that demonstrates that the CCS
calculations of future tax impact are demonstrably false. What she does offer is that the CCS figures
are over-inclusive of the school district’s level of indebtedness, at odds with
the Ehlers and Associates tax impact calculations, and not separately
verifiable.[8] These are critiques of Respondents’
methodology; not proof that their claims about the future tax impact are false.
Her claim, thus fails the “objective
test” of section 211B.06.
Allegation 4
likewise fails the “subjective test” of the statute. Even if one were to share Ms. Hill’s view that
the CCS tax impact projection is overly pessimistic about future actions of the
School Board, or potential housing growth within the Westonka School District,[9]
this would not support a finding that Respondents either knew their
calculations were false, or communicated them with reckless disregard as to
whether they were false. Gloomy,
incomplete, or not – the Notches have a First Amendment right to disseminate
the calculations that they have developed in good faith. The Minnesota Supreme Court instructs that
the cure for any shortcomings that Ms. Hill sees in the CCS analysis is for her
and others to join the public debate.[10] Allegation 4 is dismissed.
Similarly,
Allegation 10 fails the “subjective test” of the statute. The burden is on the Complainant to put
forward some evidence that the Respondents knew the information was false or
communicated the information while subjectively believing it was false. Notwithstanding the fact that the Notches
concede that the calculations originally posted on the CCS website as to the
impact of approving Ballot Question 1, were not correct, there is nothing in
the record that supports a finding that the Respondents knew their claim was
false when they disseminated this projection, or that it was communicated with
reckless disregard as to whether it was false.
Instead, all of the evidence in the record points to a contrary
conclusion. The Respondents took pains
to source the calculations featured on the CCS website, by providing internet
hyperlinks to documents from the State Auditor’s Office, the Department of
Education, and the Minnesota Legislature.
Moreover, the unrebutted testimony was that Mr. Notch made serial and
extended inquiries of the school district’s consultant, Ehlers and Associates,
so as to fact-check the CCS analysis. The
fact that the Respondents miscalculated the tax impact of the operating levy, standing
alone, is not enough to support a claim that they violated section
211B.06. Allegation 10 is dismissed.
Allegations
44 and 46
The
Complainant alleges that the Respondents have received cash and in-kind
donations valued at over $750 and have violated Minnesota Statutes § 211A.02 by
failing to file the required financial report.
To support this allegation, the Complainant points out that Cindy Notch
stated in an email that a “pile of donation checks are paper clipped together
on [her] desk.” In addition, an October
3, 2006, article about the Westonka bond election that appeared in the Star Tribune[11]
stated that CCS had “verbal support and money from about 300 residents.” The Complainant also points out that on the CCS
website, the Respondents thank persons and companies for donating banners, and
for helping with research and the website.
The Complainant further states in her Complaint that she builds websites
for small businesses and non-profits and that she estimates that the
“Wakeupwestonka” website to be valued at several thousand dollars based upon
the “number of pages, programming time, server rental, network connection,
maintenance etc.” Finally, the
Complainant points out that the large vinyl banners urging people to “vote no”
on the school bond issue “are not cheap.”
The
Respondents testified that as of October 7, 2006, CCS has received 8 checks
totaling $615 in donations. In addition,
the Respondents state that CCS has received in-kind donations of recycled boat
canopy vinyl and vinyl lettering for making banners at a cost of $21.04. Thus, according to the Respondents, the total
amount of cash and in-kind donations CCS has received is $636.04. The Respondents also assert that they have
spent a total of $361.86 for website training, website hosting expenses, domain
name renewal and one newspaper advertisement.
Despite falling below the $750 threshold for both contributions and
expenditures, Respondents filed a campaign financial report documenting these
amounts on October 21, 2006.[12] Finally, the Respondents testified that supporters
of CCS have volunteered their time to help set up the website and to conduct
research.
Legal
Standards
Minnesota Statutes § 211A.02, subdivision 1 requires a “committee” that receives contributions or makes disbursements of more than $750 in a calendar year to submit an initial report with the filing officer within 14 days after the committee receives or makes disbursements of over $750. A “Committee” is defined, in part, as an association or persons acting together to promote or defeat a ballot question.[13] CCS meets this definition.
After
considering all of the evidence in the record and the arguments of the parties
at the probable cause hearing, the Administrative Law Judge concludes that the
Complainant has failed to present sufficient facts to support her claim that
the Respondents failed to timely file a financial report in violation of Minnesota
Statutes § 211A.02.
Much of the
dispute as to the timeliness of CCS’ financial reporting, centers around the
proper accounting of certain banners bearing anti-levy messages.[14] The Respondents contend that the “in-kind
donation” of used boat canvas, and a used car banner, that were later repainted
and lettered by them for use in the anti-levy campaign, had no monetary value.[15] Ms. Hill contends that the correct value of
the “in-kind” donation is either the purchase price of a commercially available
replacement banner, or alternatively, the surplus price of used boat canvas.[16]
The Administrative
Law Judge concludes that the law does not require the accounting for the
banners as if they were commercially purchased.[17] Secondly, even if a surplus canvas price were
used to calculate the value of the in-kind donation, Ms. Hill has not shown that
CCS would have received $750 in “contributions”[18]
prior to its October 21 filing.
Similarly, Ms.
Hill’s assertion that the reasonable rental value of computer software and equipment
which was purchased by, and is still owned by, the Notches, but used in their anti-initiative
activities, must be attributed as “in-kind” contributions to CCS, is unavailing. The Administrative Law Judge concludes that
while the Minnesota Legislature could have created such an attribution rule for
personal property,[19]
no such requirement now exists in Chapter 211A.[20]
Lastly, Ms.
Hill argues that the reasonable costs of CCS research and website development
should be attributed to the $750 in-kind donation threshold under Minnesota
Statutes § 211A.02. The only evidence in
the record is that these services were performed by CCS volunteers.[21] The donations of time or services provided by
an individual without compensation are not “contributions” within the meaning
of Minnesota Statutes § 211A.[22]
Absent some
evidence that CCS’ financial reporting is false, the record does not support
finding probable cause that a violation of Minnesota Statutes § 211A.02 has occurred. Allegations 44 and 46 are dismissed.
E. L. L.