Federal judge halts Minnesota DFL’s ‘unconstitutional’ campaign finance law

The Chamber's lawsuit challenges a provision of the "Democracy for the People Act" that bars businesses with minimal foreign-based ownership from making political contributions.

Rep. Harry Niska, R-Ramsey, during a debate on the provision in April, said he believed the foreign-based corporation provision to be unconstitutional. (Minnesota House Info/YouTube)

A federal district judge in St. Paul on Wednesday put the brakes on a campaign finance law set to take effect next month that would bar businesses in Minnesota with minimal investment from foreign-based persons or entities from contributing to political campaigns.

The Minnesota Chamber of Commerce filed the lawsuit in June, a little more than a month after Gov. Tim Walz signed HF3 into law.

“The challenged provisions — which are scheduled take effect January 1, 2024 — would forbid some (but not all) business organizations with foreign ownership from exercising their First Amendment free-speech rights in connection with elections for state and local public office and ballot questions in Minnesota,” U.S. District Court Judge Eric Tostrud wrote in an opinion Wednesday that granted the Chamber’s request for a preliminary injunction to prevent the law from taking effect on Jan. 1.

“These free-speech prohibitions have teeth in the form of criminal and civil consequences,” Tostrud wrote in his 34-page ruling. “Important here, the extent of foreign ownership necessary to trigger the statute’s prohibitions is not great: a foreign ownership interest of as little as one percent may qualify.”

Tostrud’s ruling also said that because the Campaign Finance Board (as a defendant) “failed to identify evidence that minority foreign shareholders regularly (or ever) exercise influence or control over corporations’ political expenditures, the challenged provisions … sweep far too broadly.”

A judge typically grants a preliminary injunction in cases in which they believe the plaintiff will prevail based on the merits of the claim.

The chamber filed the lawsuit on behalf of its members, which amounts to about 6,300 businesses that employ more than a half million people across Minnesota. It named the Minnesota Campaign Finance and Public Disclosure Board and Ramsey County Attorney John Choi as defendants. Choi was named as a defendant because, as top prosecutor in the Minnesota legislature’s home county, he is responsible for enforcing state law.

“This is an important decision by the court in preventing this flawed law from becoming a reality,” said Doug Loon, president for the Minnesota Chamber of Commerce. “This law is an unconstitutional impingement on the free speech rights of the Minnesota business community. With this injunction in place, businesses can continue to exercise their ability — as ‘people’ in the eyes of the law — to participate in the democratic process without the fear of being prosecuted.”

Republican legislators warned provision was unconstitutional

The lawsuit challenges a provision contained within HF3 — which DFL sponsors coined the “Democracy for the People Act” — that effectively prohibits companies that have even minimal investment from foreign-based individuals or entities from making political contributions in Minnesota. The DFL-controlled legislature passed the legislation in April and Gov. Tim Walz signed it into law in May.

While state and federal law already prohibit foreign individuals from contributing to political campaigns, the new provision goes much further: it bars businesses from donating to elections if even 1 percent of its ownership is tied to a single foreign investor or if 5 percent of its ownership is tied to two or more foreign investors in aggregate.

In April, Republicans who voted against the overall legislation argued the provision governing corporate political speech intently did not include the same restrictions on foreign-influenced nonprofit organizations. One such organization is the Center for American Progress, which actually crafted model legislation that mirrors the provision outlined in the lawsuit. The Center for American Progress actually submitted written testimony in support of the provision when it was heard in a Minnesota House Elections Committee in January.

Rep. Harry Niska, R-Ramsey, who, during a debate on the provision in April, said he believed the foreign-based corporation provision to be unconstitutional, told Alpha News on Thursday he was pleased with the judge’s order.

“I’m relieved that another judge has pumped the brakes on the Minnesota Democrats’ unconstitutional agenda,” said Niska, an attorney who specializes in constitutional law.

“This ruling does a good job applying established First Amendment principles to protect the free speech rights of everyone equally, including groups like corporations or unions.”

“We tried to explain to Democrats (during the legislative session) that this law would be challenged and struck down, but they barreled forward anyways, wasting time and money that could be better spent on solving actual problems,” Niska added.

DFLers say judge’s opinion ‘supercharges’ Citizen United ruling

DFL sponsors of the provision in the House dismissed those claims and argued the provision was narrowly tailored, contrary to the judge’s opinion. It’s not yet known if Attorney General Keith Ellison will appeal the ruling.

Rep. Emma Greenman speaks on the House floor in April. (Minnesota House Info/YouTube)

Rep. Emma Greenman, DFL-Minneapolis, who carried HF3 and argued in favor of the “foreign-influenced corporation” prohibition language on the floor, said Tostrud’s decision “supercharges the Citizens United principle that corporations — even foreign ones — can spend whatever they want to influence elections & there’s nothing voters can do about it.

“This is a terrible decision by a court that is more concerned about protecting the unlimited spending power of foreign-influenced corporations in our elections than the actual power of American voters to determine the future of our democracy,” said Greenman, an attorney who specializes in voting laws, in a social media post on Thursday.

Other legal experts said they were unsurprised to learn that Judge Tostrud granted the preliminary injunction request.

“There was plenty of warning to (the legislature) about this one too, especially by Peggy Scott and Harry Niska,” said attorney James Dickey of the Twin Cities-based Upper Midwest Law Center. “Injunctions happen when you govern from an activist wish list and ignore the Constitution.”

Rep. Cedrick Frazier, DFL-New Hope, who helped push the legislation, maintained that despite the judge’s ruling, the provision at issue “isn’t about ‘free speech.’”

“It’s about corporations fearing the loss of power to influence policy,” Frazier said in a statement Thursday. “Their goal is ever increasing profits. Those profits don’t trickle down to workers, so we will keep advocating to ensure actual people influence worker centered policies.”


Hank Long

Hank Long is a journalism and communications professional whose writing career includes coverage of the Minnesota legislature, city and county governments and the commercial real estate industry. Hank received his undergraduate degree at the University of Minnesota, where he studied journalism, and his law degree at the University of St. Thomas. The Minnesota native lives in the Twin Cities with his wife and four children. His dream is to be around when the Vikings win the Super Bowl.