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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK NEW YORK PROGRESS AND PROTECTION PAC, Plaintiff, - against JAMES A. WALSH, in his official capacity as Co-Chair of the New York State Board of Elections, et al., Defendants, - and ERIC T. SCHNEIDERMAN, Attorney General of the State of New York, Intervenor-Defendant. No. 13 Civ. 6769 (PAC) ORAL ARGUMENT REQUESTED

MEMORANDUM OF LAW OF THE ATTORNEY GENERAL OF THE STATE OF NEW YORK AND COMISSIONERS JAMES A. WALSH, DOUGLAS A. KELLNER, AND GREGORY P. PETERSON IN OPPOSITION TO PLAINTIFFS MOTION FOR SUMMARY JUDGMENT

JOHN M. SCHWARTZ JANE GOLDBERG JOSHUA PEPPER EVA DIETZ Assistant Attorneys General BRIAN A. SUTHERLAND Assistant Solicitor General of counsel

ERIC T. SCHNEIDERMAN Attorney General State of New York 120 Broadway New York, New York 10271 March 17, 2014

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TABLE OF CONTENTS Page TABLE OF AUTHORITIES .......................................................................................................... ii PRELIMINARY STATEMENT .....................................................................................................1 STATEMENT OF FACTS ..............................................................................................................3 A.New Yorks Limit on Contributions to Political Committees ........................................3 B.The Rise of Federal Super PACs as De Facto Party or Candidate Committees .............4 C.The Vulnerability of New York to Super PACs .............................................................7 D.New York Progress and Protection PAC ........................................................................7 ARGUMENT ...................................................................................................................................9 I. CONTRIBUTION LIMITS ARE CONSISTENTLY UPHELD AS APPROPRIATE MEASURES TO GUARD AGAINST RISKS OF CORRUPTION AND THE APPEARANCE OF CORRUPTION IN GOVERNMENT. ...............................................9 THE CONSTITUTION DOES NOT REQUIRE A CARVE-OUT FROM NEW YORKS CONTRIBUTION LIMIT FOR CONTRIBUTIONS TO SUPER PACS. ........11 A.Plaintiffs Reliance on Citizens United Is Misplaced Because That Decision Does Not Address a Contribution Limit........................................................................12 B.Plaintiff Is Incorrect in Arguing That Allowing Unlimited Contributions to Super PACs Would Present No Risk of Corruption or the Appearance of Corruption. ....................................................................................................................14 1. The Super PAC carve-out sought by plaintiff would lead operatives to organize Super PACs in New York to simulate candidate or party committees as closely as possible. .........................................................................14 2. Large contributions to Super PACs create a substantial risk of corruption because they have significant value to candidates. ................................................16 3. Limits on contributions to Super PACs are also an appropriate means to guard against the risk that Super PACs will coordinate with candidates or political parties. ......................................................................................................18

II.

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TABLE OF CONTENTS (contd) Page 4. The public would perceive large contributions to Super PACs as corruption of the democratic process. ....................................................................21 C. The Circuit-Level Opinions Cited By NYPPP Are Inapposite or Unpersuasive. .........22 CONCLUSION ..............................................................................................................................25

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TABLE OF AUTHORITIES Cases Page(s)

Ala. Democratic Conf. v. Attorney General, No. 11-16040, 2013 U.S. App. Lexis 19330 (11th Cir. Sept. 19, 2013) .................................21 Biediger v. Quinnipiac Univ., 691 F.3d 85 (2d Cir. 2012).......................................................................................................23 Buckley v. Valeo, 424 U.S. 1 (1976) ...................................................................................... 1, 9-12, 14, 17-18, 21 Cal. Med. Assn v. FEC, 453 U.S. 182 (1981) .............................................................................................................9, 12 Citizens United v. FEC, 558 U.S. 310 (2010) .........................................................................................................2, 9, 12 DiLaura v. Power Auth. of N.Y., 982 F.2d 73 (2d Cir. 1992).......................................................................................................23 Emilys List v. FEC, 581 F.3d 1 (D.C. Cir. 2009) ...............................................................................................23, 25 FEC v. Beaumont, 539 U.S. 146 (2003) .............................................................................................................9, 12 FEC v. Colo. Republican Fed. Campaign Comm., 533 U.S. 431 (2001) .....................................................................................................11, 19, 25 McConnell v. FEC, 540 U.S. 93 (2003) ............................................................................................... 4, 9, 12, 18-21 New York Progress & Prot. PAC v. Walsh, 733 F.3d 483 (2d Cir. 2013).....................................................................................................22 Nixon v. Shrink Mo. Govt PAC, 528 U.S. 377 (2000) .......................................................................................................9, 10, 21 North Carolina Right to Life, Inc. v. Leake, 525 F.3d 274 (4th Cir. 2008) .............................................................................................23, 24 Ognibene v. Parkes, 671 F.3d 174 (2d Cir. 2011).......................................................................10, 12, 18, 21, 24, 25 Randall v. Sorrell, 548 U.S. 230 (2006) .............................................................................................................9, 10 iii

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TABLE OF AUTHORITIES Cases Page(s)

Republican Natl Comm. v. FEC, 698 F. Supp. 2d 150 (D.D.C. 2010), affd without op., 130 S. Ct. 3543 (2010) ......................18 Republican Party of N.M. v. King, 741 F.3d 1089 (10th Cir. 2013) ...............................................................................................23 SpeechNow.org v. FEC, 599 F.3d 686 (D.C. Cir. 2010) .............................................................................................4, 23 Stop This Insanity, Inc. Employee Leadership Fund v. FEC, 902 F. Supp. 2d 23 (D.D.C. 2012) ...........................................................................................21 Statutes N.Y. Election Law 14-100 .....................................................................................................................................3 14-112 .....................................................................................................................................3 14-114 ...............................................................................................................................3, 18 14-126 .....................................................................................................................................3 Miscellaneous Authorities FEC Advisory Op. 2010-09 (July 22, 2010) ....................................................................................4 FEC Advisory Op. 2010-11 (July 22, 2010) ....................................................................................4 New York State Board of Elections, Op. No. 3 (Apr. 25, 1994) .....................................................3 Richard Briffault, Super PACs, 96 Minn. L. Rev. 1644 (2012) ......................................................4

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PRELIMINARY STATEMENT To guard against corruption and the appearance of corruption in government, New York has for decades limited the amounts that individuals may contribute to political committees advocating for the election or defeat of candidates for state or local office. Plaintiff New York Progress and Protection PAC (NYPPP) asserts that the First Amendment compels this Court to carve out an exception to New Yorks contribution limits for so-called Super PACspolitical committees that claim independence from candidates and make expenditures for such express advocacy. NYPPP accepts that the First Amendment generally allows limits on political contributions, but argues that contributions to Super PACs are so different from other kinds of contributions that they may not constitutionally be limited. The bright line that NYPPP attempts to draw between contributions to Super PACs and other political contributions is both unrealistic and inconsistent with Supreme Court precedents upholding contribution limits, including limits on contributions to political committees, as preventive measures to guard against the risk of corruption and the appearance of corruption. Starting with Buckley v. Valeo, 424 U.S. 1 (1976), and continuing through the present day, the Supreme Court has sharply distinguished between expenditures to pay directly for the dissemination of ones own political speech and contributions to fund anothers political speech. The Courts categorically different treatment of contributions versus expenditures turns on (1) the fact that contribution limits are only marginal restrictions on First Amendment rights, whereas expenditure limits are direct speech restrictions, and (2) contributions are more likely to be exchanged for political favors than are expenditures. The Supreme Court and Second Circuit have thus consistently upheld limits on contributions, while almost always striking down limits on expenditures.

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NYPPP asserts that the acknowledged risk of corruption arising from unlimited contributions generally is entirely absent when the unlimited contribution flows from an individual to a Super PAC. But its assertion does not accord with reality. As experience in the federal system has shown, when Super PACs are permitted to receive unlimited contributions to promote a candidates election, candidates and political parties will quickly come to rely on the formation of such committees to take advantage of that source of unlimited funding. Federal Super PACs have often been organized to promote a single candidate and run by former campaign aides of that candidate; and candidates know who donates to their Super PACs and have made clear that they appreciate those donations. Experience therefore does not support NYPPPs contention that contributions to Super PACs raise no risk of corruption or the appearance of corruption. NYPPP claims that the need for a Super PAC carve-out to New Yorks contribution limit follows inexorably from decades of Supreme Court precedent. Pl.s Mem. of Law in Support of Its Mot. for Summary Judgment (Mem.) at 2. But NYPPP relies principally on just one Supreme Court decisionCitizens United v. FEC, 558 U.S. 310 (2010)which does not control the issue here. In Citizens United, the Supreme Court struck down a federal ban on independent expenditures by corporations. This case, by contrast, does not involve an expenditure limit. Rather, this case addresses a contribution limit, and that distinction makes an enormous difference. There is no basis for NYPPPs attempt to characterize donations to it as if they were direct expenditures to fund speech by the donating party. Accordingly, and for additional reasons stated below, this Court should deny NYPPPs motion for summary judgment and enter judgment for the defendants.

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STATEMENT OF FACTS A. New Yorks Limit on Contributions to Political Committees

New York law limits the amount that an individual may contribute to a political committee during a calendar year. N.Y. Election Law 14-114. New York defines political committee to include any corporation, committee, political club or group operating to aid or to promote the success or defeat of a political party or principle, ballot proposal, or candidate for office. Id. 14-100(1). New York law distinguishes between authorized political committees, which are designated by a candidate to take part in his or her election efforts, and unauthorized political committees, which have not been so designated by any candidate. Id. 14-112. Contributions to authorized and unauthorized political committees are subject to New Yorks aggregate contribution limit. See Bd. of Elections, Op. No. 3 (Apr. 25, 1994) (ECF No. 21-3). An individual may make contributions of up to $150,000 per year in connection with the nomination or election of candidates, and a committee may not accept contributions that would violate applicable limits. Id. 14-114(8), 14-126.1 A contribution to an unauthorized political committee is not treated as a contribution to a candidate, i.e., an individual may contribute the statutory maximum to a candidate and also contribute to an unauthorized committee supporting the candidate, so long as the individual donor stays within the aggregate limit. NYPPP contends that this contribution limit is unconstitutional as applied to unauthorized committees that make The parties disagree as to whether Election Law 14-114 permits an individual to make a contribution of $150,000 (the aggregate limit) to an unauthorized committee that supports a single candidate, or whether the contest-specific limits in that statute instead apply to such a contribution. But the Court need not resolve that question of state law. NYPPP raises a federal constitutional challenge only to the $150,000 aggregate limit. In any event, New Yorks law is constitutional whether the applicable contribution limit is $150,000 or a lower amount, and defendants arguments are even stronger if, as NYPPP contends, New York law permits contributions of $150,000 to a single-candidate committee.
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only independent expenditures to advocate directly for the election or defeat of a candidate or candidates for office. In other words, NYPPP wants to bring Super PACs to New York. B. The Rise of Federal Super PACs as De Facto Party or Candidate Committees

The term Super PAC refers to an entity that (1) engages in express advocacy on behalf of or in opposition to candidates; (2) claims independence from political parties and candidates; and (3) may receive unlimited contributions. See Richard Briffault, Super PACs, 96 Minn. L. Rev. 1644, 1646-47 (2012). The evolution of the Super PAC as a central component of modern federal campaigns is a relatively recent phenomenon in its specifics, but it follows a familiar pattern in the broader sense that wealthy individuals have long found ways to secure political favors in exchange for large contributions. See McConnell v. FEC, 540 U.S. 93, 115-20 (2003) (reviewing history); Expert Declaration of Clyde Wilcox (Wilcox Decl.) 5-7. At the federal level, Super PACs are the product of the D.C. Circuits declaratory ruling in SpeechNow.org v. FEC, 599 F.3d 686 (D.C. Cir. 2010), and subsequent FEC advisory opinions. See FEC Advisory Op. 2010-09 (July 22, 2010); FEC Advisory Op. 2010-11 (July 22, 2010). With a new legal framework in place well before the 2012 election cycle began, political party networks and candidates campaigns positioned Super PACs to leverage unlimited contributions on behalf of candidates. See Wilcox Decl. 9. In short, candidates and their affiliated partisan networks deployed Super PACs as de facto party and candidate committees. See id. 9, 12-18. The candidate- and party-centered Super PACs that emerged at the federal level were a direct response to a system of legal rules restricting contributions to political parties and candidates but allowing unlimited contributions to committees that support those same parties and candidates. Organizing Super PACs and staffing them with high-ranking political operatives quickly became imperative in most competitive federal elections, because such Super PACs are 4

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an invaluable weapon for campaigns. As one spokesperson for President Obamas campaign put it, Were not going to bring a butter knife to a gun fight. See Declaration of Taylor Lincoln (Lincoln Decl.), Ex. A at 21. Recent research in political science shows that advertising by Super PACs is particularly effective for the purpose of attacking a candidates opponent, in part because it allows candidates to disclaim responsibility for negative messages. Wilcox Decl. 14(d), 16(d). Campaign operatives have long recognized this point; one explained that A group like ours could lie through its teeth, and the candidate it helps stays clean. Id. 14(d). Because Super PACs operated by the candidates allies can provide critical assistance to the candidate, contributions to a Super PAC are valuable to the candidate and his or her campaign. Wilcox 12, 15-16; Menges Tr. 34:7-35:17.2 A review of the biggest-spending Super PACs in 2012 provides overwhelming evidence that political parties and candidates have used these committees as de facto party and candidate committees. After SpeechNow.org, party leaders and allies of the candidates simply assumed control positions at Super PACsthe very same people that lead the political parties and counsel the candidates also lead a substantial number of Super PACs. See Lincoln Decl. 7, Ex. A at 9, 20-33, 39-49. For example, the highest-spending Super PAC supporting Mitt Romney in 2012 was led by the general counsel and political director of Romneys 2008 campaign, among others. Similarly, the highest-spending Super PAC supporting President Obama in 2012 was operated by veterans of the Obama White House. See id., Ex. A at 20-23. The Super PACs for presidential candidates Rick Perry and Newt Gingrich were also operated by former aides. See Wilcox Decl.

The transcripts cited herein are attached to the Declaration of Joshua Pepper, Esq., submitted herewith (Pepper Decl.), as Exhibits 1-7.

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9(d). These are only a few prominent examples; numerous other Super PACs were operated by close allies of candidates and elected officials. See Lincoln Decl., Ex. A at 23-33, 39-49. From the perspective of donors, candidates, and the media, the line separating many Super PACs from authorized candidate committees is barely visible, if it is visible at all. Candidates appear at Super PAC fundraisers and tell donors which Super PACs to support, leaving no question which Super PACs are unofficially authorized by the candidate or the party. See Wilcox Decl. 9(c). The candidates maintain only the slimmest pretense that donations to such Super PACs are not donations to them. Indeed, in at least one instance, Romney characterized a contribution to his Super PAC as a donation to me. Id. 17(d). Candidates explicitly raise money for Super PACs within legal limits, as when U.S. Senator David Vitter offered to go alligator hunting with individuals who contribute $5,000 to his Super PAC, id. 9(i), and do so implicitly whenever they appear at Super PAC events or signal to donors which Super PACs to support, id. 8(a), 17(b)-(d). The fact that candidates solicit donations for Super PACs (directly or indirectly) further demonstrates that they value them, just as they value direct contributions. See Menges Tr. 34:7-35:17. In 2012, over fifty percent of Super PACs spending more than $100,000 were devoted to a single candidate, and others were closely affiliated with a political party. Lincoln Decl. 5 (table). Together, these groups devoted solely to improving the electoral fortunes of particular candidates and parties spent over $476 million, or 74.4 percent of all spending by Super PACs. Id. Super PACs sponsored more ads than the political parties in 2012 senate races and the presidential general election, and sponsored more ads in the 2012 presidential primaries than the political parties and candidates combined, see Declaration of Michael Franz (Franz Decl.) 7. These trends are likely to continue in 2014 and so long as the courts and FEC permit unlimited

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contributions to political committees for express advocacy, and campaigns and their agents labor to erase the boundary separating authorized committees and Super PACs entirely. See Wilcox Decl. 9(g); Franz Decl. 8. C. The Vulnerability of New York to Super PACs

Today, New Yorks generally applicable contribution limits prevent unauthorized committees from receiving unlimited contributions. But there can be little question that, if New Yorks limits were removed, the political parties and their candidates would quickly take advantage of such a shift in rules in order to leverage sources of unlimited funds. See Wilcox Decl. 4(a), 5-11. Those who would control the political agenda in New York already test the limits of the States campaign finance laws, and evidence abounds that special interests seek to purchase such control in Albany by making large donations, a problem that would worsen if they were allowed to make unlimited contributions to Super PACs. See Commission to Investigate Public Corruption, Preliminary Report 29-38 (Dec. 2, 2013), attached as Ex. 34 to Pepper Decl. D. New York Progress and Protection PAC

Craig Engle, the registered treasurer and only officer of NYPPP, is an attorney and partner at the law firm of Arent Fox, located in Washington, D.C., and has worked on behalf of Super PACs and campaigns as an attorney and political consultant. Engle Tr. 16-17; Engle Decl. 6. Engle formed NYPPP for the purpose of challenging New Yorks aggregate contribution limit. Engle Tr. 56:19-57:4, 140:24-141:25; Torchinsky Tr. 40:10-13. NYPPP sought only donations that would exceed New Yorks applicable contribution limits. Engle and another campaign finance lawyer, Jason Torchinsky, approached a prominent donor named Shaun McCutcheon and asked him for a donation of greater than $150,000. Torchinsky Tr. 50:21-51:4; Engle Tr. 139:12-140:2; McCutcheon Tr. 23:7-11; Engle Decl. 20; 7

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Pepper Decl., Ex. 28. McCutcheon agreed to donate $200,000 to NYPPP. McCutcheon Tr. 21. NYPPP ultimately raised $230,000 in contributions before the New York City mayoral election: $200,000 from billionaire David Koch, $20,000 from McCutcheon, and $10,000 from hedge fund manager Sean Fieler. Engle Tr. 74:14-75:15; Pepper Decl., Ex. 9. Engle, as NYPPPs treasurer and only officer, decides how to spend NYPPPs funds, and he decided to produce a Spanish-language television ad in support of New York City mayoral candidate Joe Lhota, for broadcast by a network targeting Hispanic viewers. Engle Tr. 110-112; Weitzner Tr. 23-24, 31, 135-136. Engle chose Jamestown Associates (Jamestown), a political consulting firm, to produce the ad for NYPPP. Engle Decl. 11. Engle directed Jamestowns production of the ad and participated in forming its content. Weitzner Tr. 28:19-25, 131:5-22; Pepper Decl., Ex. 21. Before placing the ad buys, Jamestown checked to see what ads the Lhota campaign was buying. Weitzner Tr. 27:11-24. NYPPPs donors had no input into the content or timing of its messages. Engle Decl. 11. Indeed, McCutcheon did not even ask anyone about how NYPPP had used his contribution. McCutcheon Tr. 86:9-87:8. Prominent political consultants, lawyers, campaign operatives, and advertising vendors form a small, tight-knit community. Menges Tr. 20:16-21:3. Those ties are evident in this very case, even though NYPPP was formed for the purpose of litigation and presumably would seek to minimize the visibility of those connections. For example, NYPPP has direct relationships with Lhotas campaign staff. Engle and Torchinsky have both known Jeffrey Buley, counsel to the Lhota campaign, for many years. Engle Tr. 119:21-120:12; Torchinsky Tr. 130:15-20. And Torchinsky has known Lhotas advisor Jake Menges since 2007. Torchinsky Tr. 129:11-15. Also, Engle was treasurer for a Super PAC that supported the senate candidacy of Connie Mack of Florida, and Menges advised the same committee. Engle Tr. 17:15-18:2; Menges Tr. 15:2-

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17:2. And the firm that NYPPP hired to create its ad in support of LhotaJamestownalso has close relationships with members of Lhotas campaign, including Menges and Lhotas head fundraiser, Jason Weingartner. Weitzner Tr. 10:6-7, 85:11-25, 88:22-24, 90:14-96:8, 126:9-24; Menges Tr. 11:9-23, 54:19-23, 59:2-25, 70:8-86:4, 92:9-98:8, 106:20-107:2; Weingartner Tr. 32:5-33, 107:10-108:2, 108:25-109:25. Since the 2013 New York City mayoral election, McCutcheon has continued to donate to NYPPP in fulfillment of his $200,000 pledge (McCutcheon Tr. 97), but the entity has otherwise ceased receiving or spending money. Pepper Decl., Exs. 24, 25, 26. NYPPP currently has no plans to support any candidates in upcoming elections, and Engle does not anticipate that NYPPP will continue to function once this lawsuit is resolved. Pepper Decl., Exs. 24, 25, 26. ARGUMENT I. CONTRIBUTION LIMITS ARE CONSISTENTLY UPHELD AS APPROPRIATE MEASURES TO GUARD AGAINST RISKS OF CORRUPTION AND THE APPEARANCE OF CORRUPTION IN GOVERNMENT. The Supreme Courts First Amendment doctrine distinguishes sharply between (a) limits on contributions to promote the election or defeat of a candidate and (b) limits on expenditures for those purposes. Contribution limits are subject to relatively complaisant constitutional review, FEC v. Beaumont, 539 U.S. 146, 161 (2003), and they are consistently upheld under such review, see id.; McConnell, 540 U.S. 133-154; Nixon v. Shrink Mo. Govt PAC, 528 U.S. 377, 397 (2000); Cal. Med. Assn v. FEC, 453 U.S. 182, 201 (1981); Buckley, 424 U.S. at 38. By contrast, expenditure limits are subject to strict scrutiny, and they are typically struck down as unconstitutional, Citizens United, 558 U.S. at 365; Randall v. Sorrell, 548 U.S. 230, 246 (2006) (plurality opinion); Buckley, 424 U.S. at 51.

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The respective frameworks for review differ greatly because a contribution limit entails only a marginal restriction upon the contributors ability to engage in free communication, whereas an expenditure limit substantially curtails a persons freedom to make significant use of the most effective modes of communication. Buckley, 424 U.S. at 19-21. Contributions themselves have only minimal expressive value, and the transformation of contributions into political debate involves speech by someone other than the contributorthe recipient of the contribution. Id. at 21. Moreover, a contribution limit does not in any way infringe the contributors freedom to discuss candidates and issues, and it does not reduce the total amount of money potentially available to promote political expression. Id. at 21-22. Because contribution limits are only marginal restrictions on speech, they are permissible as long as they are closely drawn to address a sufficiently important state interest. Ognibene v. Parkes, 671 F.3d 174, 183 (2d Cir. 2011). A court applying this standard owes special deference to legislative determinations regarding campaign contribution restrictions. Id. (citing cases). When a plaintiff sues based on a claimed right to receive contributions, a contribution limit must be upheld unless it is so low as to prevent the recipient from amassing the resources necessary for effective advocacy. Randall, 548 U.S. at 247 (plurality op.) (quoting Buckley, 424 U.S. at 21); Nixon, 528 U.S. at 397 (same). Plaintiff can engage in effective advocacy without receiving unlimited contributions, and any contrary contention would be inconsistent with precedents such as Buckley, California Medical Association, Nixon, and McConnell upholding contribution limits far lower than the $150,000 aggregate contribution limit challenged here. The Supreme Courts cases upholding contribution limits establish two more critical principles. First, contribution limits by their nature are prophylactic: they aim to prevent, in

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advance, a risk of corruption and the appearance of corruption that is presented by large contributions, even though large contributions may not actually lead to corruption in most cases. See Buckley, 424 U.S. at 29 (assuming for the sake of argument that most large contributors do not seek improper influence over a candidates position or an officeholders action). Second, and relatedly, one of the legitimate purposes of contribution limits is to guard against circumvention of other valid limitssomething that is often difficult to detect and combat directly. See, e.g., FEC v. Colo. Republican Fed. Campaign Comm., 533 U.S. 431, 462 (2001). As shown below, under these principles, New Yorks $150,000 aggregate contribution limit is constitutional as applied to contributions to Super PACs. II. THE CONSTITUTION DOES NOT REQUIRE A CARVE-OUT FROM NEW YORKS CONTRIBUTION LIMIT FOR CONTRIBUTIONS TO SUPER PACS. New Yorks contribution limits, which have stood for over thirty years, leave NYPPP free to make unlimited expenditures for express advocacy (and issue advocacy), and to receive large (but not unlimited) contributions, and leave all individuals and corporations, including prospective donors to NYPPP, free to spend as much as they would like to fund their own political speech directly. See supra at 10. Plaintiff nonetheless argues that the First Amendment compels this Court to carve out a permanent exception to New Yorks law that would enable it to accept unlimited donations of millions of dollars for the purpose of influencing elections. But NYPPPs arguments ignore the numerous precedents from the Supreme Court upholding contribution limits under the First Amendment. The Court has never recognized any right to make unlimited contributions for political purposes, and for good reason. A substantial risk exists that a donor who makes very large contributions will receive special favors in exchange for the contribution, i.e., a risk of quid pro quo corruption. And even if such contributions did not give rise to quid pro quo corruption, the donors who make them 11

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indisputably obtain undue influence over elected officials. The States important interests in deterring both forms of corruption and the appearance thereof outweigh NYPPPs marginal interest in receiving unlimited contributions. A. Plaintiffs Reliance on Citizens United Is Misplaced Because That Decision Does Not Address a Contribution Limit.

NYPPPs primary argument is that the Supreme Court already decided in Citizens United that donations to independent expenditure groups, as a matter of law, do not create any cognizable risk of . . . corruption. Mem. at 11 (emphasis in original); see id. at 12-13. But Citizens United struck down a federal ban on independent expenditures by corporations; it did not strike down any contribution limit. 558 U.S. at 365. To the contrary, Citizens United reaffirm[ed] existing precedent on the propriety of contribution limits. Ognibene, 671 F.3d at 183. Indeed, Citizens United explicitly notes that contribution limits are preventative and have been an accepted means to prevent quid pro quo corruption, even though very few contributions may lead to such corruption. 558 U.S. at 357, 359 (emphasis added). Thus, while rejecting the notion that restrictions on expenditures may be justified on prophylactic grounds, the Supreme Court reaffirmed that contribution limits are appropriate prophylactic measures. Because the Supreme Court carefully preserved the distinction between expenditures and contributions in Citizens United, there is no basis for reading that decision as overturning prior case law concerning contribution limits. See Ognibene, 671 F.3d at 184 & n.10. The numerous holdings sustaining limits on contributions to political committees as constitutional therefore remain good law. See, e.g., McConnell, 540 U.S. 133-154; Cal. Med. Assn, 453 U.S. at 201; Buckley, 424 U.S. at 38; see also Beaumont, 539 U.S. at 161-63 (upholding ban on corporate contributions).

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In an effort to bring this case within the holding of Citizens United and avoid the precedents upholding contribution limits, NYPPP argues that donations to Super PACs should be seen as expenditures, not as contributions. NYPPP argues that donations to it are, in effect, expenditures to pay for speech with a specific message. Mem. at 10. But this is not true, as the record here demonstrates. Plaintiffs treasurer, Craig Engle, controls the specific messages that NYPPP pays to broadcast; donors have no control over the message or even any input. See supra at 8. Donors typically seek an outcomee.g., the election or defeat of a particular candidate, see McCutcheon Tr. 87:3-5 (You know, if they dont elect some conservatives, Ill quit donating to them), or political favors, or both. Their purpose is not to speak, or even to express symbolic association with a candidate (see Mem. at 10). Their purpose is instead to give money that will enable the candidates former staff or allies or other operatives to persuade voters using whatever speech that the operativesnot the donordeem best suited to help the candidate win the election. See McCutcheon Tr. 86:19-87:8. Here, for example, NYPPP contributor Shaun McCutcheon has said that he regularly contributes to campaigns throughout the United States because he believes that developing strong conservative leaders at the local level ultimately helps strengthen the Republican Party and produces more conservative policies at the national level. Declaration of Shaun McCutcheon (McCutcheon Decl.) 4 (ECF No. 6). But the Spanish-language advertisement broadcast by NYPPP to support Joe Lhota in the New York City mayoral race did not mention strengthening the Republican Party or producing conservative policies here in New York or nationallythe advertisement did not even say that Lhota was a Republican. Pepper Decl., Ex. 35. As McCutcheon explained: [H]ow they [NYPPP] run the thing is up to them and how they spend the money is up to them. Its a donation. McCutcheon Tr. 86:19-87:8.

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Consequently, here, as in Buckley, the transformation of contributions into political debate involves speech by someone other than the contributor. Buckley, 424 U.S. at 21. NYPPP disregards Buckley in arguing that donations to NYPPP should be seen as expenditures, not contributions, because they will eventually pay for someone elses speech. It was the fact that contributions lead to speech by someone other than the contributor that led the Court to conclude in Buckley that limits on contributions are only marginal restrictions on speech, and therefore should be subject to more deferential constitutional review. NYPPP in essence seeks to eliminate the Supreme Courts well-established distinction between contributions and independent expenditures, which no court but the Supreme Court may do. B. Plaintiff Is Incorrect in Arguing That Allowing Unlimited Contributions to Super PACs Would Present No Risk of Corruption or the Appearance of Corruption.3 1. The Super PAC carve-out sought by plaintiff would lead operatives to organize Super PACs in New York to simulate candidate or party committees as closely as possible.

Experience and political science show that where political committees are permitted to receive unlimited contributions, political parties, candidates, and donors will find a way to use these committees as vehicles for exchanging donations for political favors. See Wilcox Decl. 5-11. In the case of Super PACs, campaign professionals and political party leaders have organized these special-purpose entities to replicate the characteristics of candidate and party committees as closely as possible, without triggering the loss of formal Super PAC status. See id. 9, 12-18; Lincoln Decl., Ex. A at 20-33, 39-49.

Commissioners Walsh and Peterson do not join in Point II.B of this brief.

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The 2012 election cycle at the federal level demonstrated how quickly political parties and candidates adapted to the SpeechNow.org ruling and moved key operatives into position to receive unlimited contributions as directors of Super PACs. See Wilcox Decl. 9. Similarly, early evidence from States in which limits were recently lifted strongly suggests that Super PACs will dominate spending on campaigns in those States in future elections. See id. 10. The preliminary results of an in-depth investigation into New Yorks existing campaign finance practices confirms that a pay-to-play culture is already present; it would become much worse if unlimited funds for express advocacy were allowed to flow into the hands of elected officials closest allies and campaign operatives. See supra at 7; Wilcox Decl. 10(g)-(i), 11. The Super PACs that would form in New York in the aftermath of an order lifting contribution limits would closely resemble authorized political party and candidate committees, as many of their federal counterparts do. Specifically, a significant number of state Super PACs would likely be operated by high-ranking or important members of a political party, and would have very close ties to candidates for election. Such Super PACs would not need to be formed until support for a particular candidate within the party coalesces and a strategy for electing that person has been developed, and candidates and their aides would encourage contributions to the Super PAC or Super PACs that form to support them. After these steps occur, party leaders both formal and informalwould sort out who works within the formal campaign structure and who collects unlimited donations as part of a nominally independent Super PAC staffed by persons who counseled or worked for the candidate or party before forming the candidates or partys Super PAC. These Super PACs would exist outside of the political party or the candidates campaign apparatus in name only. See Wilcox Decl. 4(a), 11, 12.

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2.

Large contributions to Super PACs create a substantial risk of corruption because they have significant value to candidates.

Carving out contributions to Super PACs from New Yorks aggregate contribution limit would create a substantial risk of corruption. NYPPPs attempt to draw a bright line between contributions to Super PACs and contributions to candidates or political parties does not withstand scrutiny as a practical matter. A potential for corruption arises when a person makes a contribution that has substantial value to a candidate. Contributions to surrogate campaign entitieswhich is what many Super PACs arehave tremendous value to candidates, because those entities have insider knowledge and specialized expertise that can be deployed in support of the candidate, and because the candidates have ample means of signaling their encouragement to donors to contribute to those Super PACs. From the point of view of both the donor and the candidate, there is little difference between giving money to the candidates former staff operating a Super PAC to support the candidate and giving money to his or her current staff at an authorized committee. Both groups likely have inside information about the candidates goals and strategy, and have the professional experience needed to translate that inside information into effective political messages that complement the candidates own campaign (usually, by broadcasting attack ads). Thus, a singlecandidate Super PACs messages will be as effective as or even more effective than the candidates own messages. See Wilcox Decl. 14(d). And as a result, donations that finance advertisements broadcast by the candidates surrogate campaign staff (in the temporary employ of a Super PAC) have significant value to the candidate and corrupting potentialthe same or nearly the same corrupting potential as direct contributions. See id. 12-18. Ignoring the close relationships between many Super PACs and candidates, plaintiff argues (Mem. at 2, 13) that because the State cannot limit independent expenditures, it 16

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necessarily cannot limit contributions to an entity that makes only independent expenditures. But this argument rests on flawed assumptionsit incorrectly assumes that the risk of corruption is the same regardless of how independent expenditures are funded and wrongly reasons from this false premise that the consequences of striking down contribution limits are the same as the consequences of striking down expenditure limits. Contrary to these assumptions, allowing unlimited contributions to political committees creates opportunities for corruption that are radically different from those created by allowing unlimited expenditures. A large donors own independent expenditures are unlikely to have value to the candidate because, like Shaun McCutcheon, most donors lack the time and the expertise to broadcast an effective message that assists the candidate. See McCutcheon Decl. 6. Such expenditures may well provide little assistance to the candidates campaign, Buckley, 424 U.S. at 47, and thus create far less potential for corruption. But contributing the money to a Super PAC changes the dynamics dramatically: a donors money becomes far more valuable to the candidate when the donor can place it in the hands of the candidates trusted advisors, who are campaign professionals operating a Super PAC. And whatever value may be lost because the candidate cannot directly supervise his allies advertising efforts during the campaign is partly or wholly offset by the fact that the Super PAC can broadcast attack ads for the candidate, without attaching the candidates name to the attack. See Wilcox Decl. 14(d). Moreover, McConnell forecloses NYPPPs argument that a State cannot have a constitutionally-sufficient interest in restricting contributions to a committee unless the committee coordinates its expenditures with the candidate. There, the Court relied on the close relationship between federal officeholders and the national parties as the basis for its ruling upholding limits and explicitly rejected the argument that the government had no interest in

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limiting contributions to committees unless the committees were coordinating expenditures with candidates. See 540 U.S. at 152-55. This holding remains good law. See Ognibene, 671 F.3d at 184 & n.10; Republican Natl Comm. v. FEC, 698 F. Supp. 2d 150, 159 (D.D.C. 2010) (threejudge court), affd without op., 130 S. Ct. 3543 (2010). Thus, the State has an interest in limiting the risks of corruption that are inherent in a system permitting unlimited financial contributions. Buckley, 424 U.S. at 28. That this interest may not be strong enough to justify restrictions on independent expenditures is irrelevant because the challenged law places no restrictions on independent expenditures. Nor is NYPPP correct in asserting (Mem. at 3, 13) that the only conceivable purpose served by the contribution limit here is to reduce independent expenditures. The challenged contribution limit does not regulate the amount of money that NYPPP may spend on express advocacy. See N.Y. Election Law 14-114(8). NYPPP may make unlimited independent expenditures. The overall effect of the [States] contribution ceilings is merely to require . . . political committees to raise funds from a greater number of persons and to compel people who would otherwise contribute amounts greater than the statutory limits to expend such funds on direct political expression, rather than to reduce the total amount of money potentially available to promote political expression. Buckley, 424 U.S. at 21-22. 3. Limits on contributions to Super PACs are also an appropriate means to guard against the risk that Super PACs will coordinate with candidates or political parties.

NYPPP contends (Mem. at 13) that corruption cannot occur in the absence of coordination between a Super PAC and a candidate, but this argument makes no sense in light of the facts developed here. See supra at 4-9. The Super PAC is not the entity that seeks political favors from the candidate; rather, in many cases, it is the de facto agent of the candidate. In any 18

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event, the absence of coordination is significant only when evaluating a restriction on independent expenditures, but this case is about the risks of allowing unlimited contributions to entities that closely resemble party and candidate committees. But even if NYPPP were correct that coordination (however defined) is essential to the presence of any risk of corruption or its appearance, this would not lead to the conclusion that plaintiff seeks here. The inevitable tendency of Super PACs to replicate candidate or party committees raises the risk that they will cross the line of actual coordination, direct or indirect, and thereby become vehicles to circumvent limits on direct contributions to candidates or political parties. And this anti-circumvention interest would be sufficient ground to reject the carve-out from New Yorks prophylactic contribution limits that NYPPP seeks. The Supreme Court has noted that the entire history of campaign finance regulation teaches the hard lesson of circumvention, McConnell, 540 U.S. at 165, and has recognized that in the context of actual political campaigns, circumvention is often very hard to trace and difficult to identify[] and directly combat. Colo. Republican Fed. Campaign Comm., 533 U.S. at 462; see also Wilcox Decl. 17(b)-(c). Because direct enforcement is hard, prophylactic rules may appropriately be used to eliminate or reduce opportunities for circumvention of core campaign finance restrictions. Allowing Super PACs to accept unlimited contributions would create substantial opportunities for donors and campaign officials to circumvent limits on contributions to candidates and political parties, whose validity plaintiff does not challenge here. NYPPP presupposes that the sole method that the Constitution permits for policing this risk is to create rules against coordination that cover the range of circumstances presented in actual political campaigns; to engage in individualized enforcement of such coordination rules after the fact on a

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committee-by-committee basis; and then to recharacterize contributions to a committee as direct contributions to the candidate in cases where coordination is proven. But no constitutional principle says that this is the only valid regulatory approach, and NYPPPs argument ignores the substantial precedent upholding contribution limits as prophylactic measures. Counting contributions to unauthorized committees, along with contributions to candidates and parties, towards New Yorks $150,000 aggregate contribution limit serves a valid anti-circumvention purpose that supplements the development and enforcement of rules deeming coordinated expenditures to be direct contributions to candidates. See Wilcox Decl. 4, 5, 11, 17(b)-(d), 18. However the concept is defined, coordination between Super PACs and campaigns is easy to achieve, but extremely difficult for government bodies to identify and detect in particular cases and then to prove in individualized enforcement actions. Coordination may be accomplished with gestures or conversations that no regulator could detect. See McConnell, 540 U.S. at 221. Committees themselves often resist government review of information disclosing their activities and the content of conversations relating to the committees operation. And even if gestures and communications by committee operators were somehow observed directly by government regulators, their meaning may depend on contextual information that would either be unavailable to regulators or enormously expensive and intrusive to reconstruct for the purposes of enforcement actions. Regulating coordination directly, on a committee-bycommittee basis, does not sufficiently guard against the risk that Super PACs will become vehicles to circumvent limits on contributions to candidates and parties. The basic principle that a government may enact contribution limits as a prophylactic measure intended to reduce the risk of corruption has long been recognized. Buckley upheld the challenged contribution limits, including an aggregate limit of $25,000 in total contributions

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annually, after assuming that most large contributors do not seek improper influence over a candidates position or an officeholders action. 424 U.S. at 29. Here, too, defendants need not show that all or most Super PACs would coordinate with candidates. Rather, it is sufficient to show that there is a sufficient risk of such circumvention to warrant the modest restriction posed by New Yorks aggregate contribution limit. See McConnell, 540 U.S. at 153-58; Ala. Democratic Conf. v. Attorney General, No. 11-16040, 2013 U.S. App. Lexis 19330, at *13 (11th Cir. Sept. 19, 2013); see also Stop This Insanity, Inc. Employee Leadership Fund v. FEC, 902 F. Supp. 2d 23, 38 (D.D.C. 2012) (If express advocacy for particular federal candidates were to lose its independence (either in reality or appearance), it stands to reason that the doctrine carefully crafted in Citizens United and SpeechNow would begin to tumble back to Earth.). 4. The public would perceive large contributions to Super PACs as corruption of the democratic process.

The State has an important interest in deterring the appearance of corruption as well as actual corruption. See Buckley, 424 U.S. at 27. This interest exists even where there is no actual corruption, because the perception of corruption, or of opportunities for corruption, threatens the publics faith in democracy. Ognibene, 671 F.3d at 186 (citing cases). And when citizens believe that their representatives give priority to Super PAC donors over ordinary voters, citizens may disengage from politics altogether, abandoning the field to those who may seek to use government to serve their own special interests. But [d]emocracy works only if the people have faith in those who govern. Nixon, 528 U.S. at 390 (quotation marks omitted)). The perception of corruption causes real damage to the operation of government, making it less effective for all. For the reasons stated above, even if very large contributions to committees operated by the candidates former aides, family members, best friends, and longtime political allies did not

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create a substantial risk of actual corruption (and they do), such contributions surely create a perception of corruption, or of opportunities for corruption. To conclude otherwise is to assume that a candidates family member or former campaign aide is no more likely to share information with the candidate than anyone else and that ambitious political operatives are independent of the powerful figuresboth politicians and major donorswho hold the keys to their professional futures. None of these assumptions comport with reality, and polling results confirm that the public does not accept them. See Wilcox Decl. 19 (citing polls). Allowing unlimited contributions can only magnify public perception that moneyed interests control the legislative and executive agenda and corrode public trust in government. The State has a strong interest in preventing this result with limits on contributions to political committees. C. The Circuit-Level Opinions Cited By NYPPP Are Inapposite or Unpersuasive.

Plaintiffs have introduced no evidence to refute the propositions that, if they prevail, Super PACs are likely to emerge in New York that resemble party or candidate committees in key respects; that donors would make very large contributions to such Super PACs in exchange for legislative or executive action or inaction; that single-candidate or party-affiliated Super PACs may well coordinate with candidates; and ultimately, in light of these facts, that large donations to such Super PACs would pose a risk of corruption or the appearance of corruption. NYPPP relies solely on case law. But the cases it cites are not controlling here. NYPPP wrongly contends (Mem. at 4, 8, 11-12) that the Second Circuit has already decided the principal legal questions at issue in this case. The panel explicitly declined to express an opinion on the ultimate outcome of the case. New York Progress & Prot. PAC v. Walsh, 733 F.3d 483, 487 (2d Cir. 2013). The sole question before the panel was whether NYPPP was entitled to a preliminary injunction, and its answer to that question does not preclude the parties 22

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in any way from litigating the merits of the case. DiLaura v. Power Auth. of N.Y., 982 F.2d 73, 77 (2d Cir. 1992) (quotation marks omitted, emphasis added); see Biediger v. Quinnipiac Univ., 691 F.3d 85, 107 (2d Cir. 2012) (findings of fact and conclusions of law made by a court granting a preliminary injunction are not binding (quotation marks omitted, emphasis added)). Thus, while the panels opinion explains why it believed that the plaintiff had a likelihood of success on the merits, that explanation is provisional. Nothing in the panels opinion is binding on the merits. Nor are the out-of-circuit decisions striking down far lower limits as applied to contributions to Super PACs persuasive. Most courts to address the question presented here have erroneously viewed Citizens United as controlling.4 See, e.g., Republican Party of N.M. v. King, 741 F.3d 1089, 1096 (10th Cir. 2013) (Citizens United governs the outcome in this case.); SpeechNow.org, 599 F.3d at 689 (Citizens United resolves this appeal). But as discussed above, Citizens United is a case about restrictions on independent expenditures, not a case about contribution limits. In any event, whatever the view of other circuits, the Second Circuit has expressly held in a merits opinion that Citizens United does not abrogate the holdings and reasoning of McConnell and other cases with respect to contribution limits. See Ognibene, 671 F.3d at 183-84 & n.10. Judicial opinion as to the issue here is not as unanimous as plaintiff suggests. See Mem. at 14. Before Citizens United, one circuit judge concluded that the First Amendment does not require an exception to contribution limits for committees that make only independent expenditures, see North Carolina Right to Life, Inc. v. Leake, 525 F.3d 274, 332-37 (4th Cir. 2008) (Michael, J., dissenting), and another expressed grave doubts that the First Amendment could be interpreted to require such an exception in light of McConnelleven while criticizing that decision, see Emilys List v. FEC, 581 F.3d 1, 25-40 (D.C. Cir. 2009) (Brown, J., concurring in part). The latter judge later joined the en banc panel in SpeechNow.org after Citizens United was issued, which is further evidencein addition to the opinion itselfthat the D.C. Circuit viewed Citizens United as decisive.
4

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Two courts enjoined the application of contribution limits to political committees before Citizens United, but these courts made other errors. In North Carolina Right to Life, Inc. v. Leake, a two-judge majority began its analysis as defendants do: by observing that the strength of the states interest in preventing corruption is highly correlated to the nature of the contributions recipient. 525 F.3d 274, 291 (4th Cir. 2008). And it acknowledged that some organizations are so closely tied to candidates that the [Supreme] Court has deemed it constitutional for states to apply contribution limits to them. Id. at 292. But the panel majority concluded that political parties are different from political committees on the ground that the former group, but not the latter, selects candidates for election, determines who will sit on legislative committees, elects congressional leadership, and has more power to affect legislation than any special interest group. See id. at 292-93 (citing McConnell, 540 U.S. at 188); see also Emilys List v. FEC, 581 F.3d 1, 13-15 (D.C. Cir. 2009). What these courts failed to anticipate is that, if political committees were allowed to receive unlimited contributions, while political parties were not, the committees would begin to assume key attributes of a political party or candidate committee in ways that essentially re-created the very corruption risk that limits on contributions to such committees were designed to prevent. At the federal level, the change in rules wrought by SpeechNow.org and other decisions has led political networks to shift power outside the formal party structure in order to take advantage of unlimited fundraising by Super PACs. See Wilcox Decl. 8-11. Courts that have concluded that the First Amendment distinguishes between authorized and unauthorized political committees simply failed to consider how easy it is for political operatives to walk across the line separating the two in order to collected unlimited donations. See Wilcox Decl. 8(c), 9, 17(a)-(b).

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In Emilys List v. FEC, the majority observed that, [u]nlike the political parties examined in McConnell, there is no record evidence that non-profit entities have sold access to federal candidates and officeholders in exchange for large contributions. 581 F.3d at 14. In this case, however, defendants have identified such evidence at the federal level as to Super PACs. See Wilcox Decl. 18 (noting, inter alia, statement that donors would be able to meet White House and Cabinet officials at Super PAC fundraiser); Lincoln Decl., Ex. A, at 20-27, 39-47 (quoting statements connecting donations to access). In any event, because of New Yorks contribution limits, Super PACs are not now a feature of campaign finance or political party dynamics at the state level, and thus the question is whether experience under the present law confirms a serious threat of abuse, not whether record evidence of such abuse already exists. Colo. Republican Fed. Campaign Comm., 533 U.S. at 457; see Ognibene, 671 F.3d at 188 (There is no reason to require the legislature to experience the very problem it fears before taking appropriate prophylactic measures.). The evidence presented by defendants here plainly confirms that the threat addressed by New York law is both real and serious and precludes summary judgment for NYPPP.

CONCLUSION The Court should deny plaintiffs motion for summary judgment and enter judgment for the defendants.

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Dated: March 17, 2014 New York, New York ERIC T. SCHNEIDERMAN Attorney General State of New York By: /s/ Joshua Pepper Joshua Pepper Assistant Attorney General 120 Broadway New York, NY 10271 joshua.pepper@ag.ny.gov JOHN M. SCHWARTZ JANE GOLDBERG JOSHUA PEPPER EVA DIETZ Assistant Attorneys General BRIAN A. SUTHERLAND Assistant Solicitor General Of counsel

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