Under existing law, a person who is 18 years of age or older may circulate an initiative, referendum, or recall petition. Existing law requires an initiative petition to contain specified language advising the public of its right to ask whether the person circulating the petition is a paid signature gatherer or a volunteer.

This bill would provide that it is a misdemeanor for a person to pay or to receive money or any other thing of value based on the number of signatures obtained on a state or local initiative, referendum, or recall petition, and it would prescribe civil and criminal penalties for this crime. By creating a new crime, the bill would impose a state-mandated local program.

Existing law, The False Claims Act, provides that a person who commits any one of several enumerated acts relating to the submission to the state or a political subdivision of the state a false claim for money, property, or services, as specified, shall be liable to the state or political subdivision for certain damages and for a civil penalty, as specified. Existing law authorizes the Attorney General to bring a civil action for damages resulting from fraudulent claims against the state or a political subdivision, and it also authorizes an individual person to bring this type of claim and to share in the recovery.

This bill would create a similar scheme to permit both the Attorney General and a person to bring a civil claim under this section, and for the person bringing the action to share in the recovery.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Under existing law, a person who is 18 years of age or older may circulate an initiative, referendum, or recall petition. Existing law requires an initiative petition to contain specified language advising the public of its right to ask whether the person circulating the petition is a paid signature gatherer or a volunteer.

This bill would provide that it is a misdemeanor for a person to pay or to receive money or any other thing of value based on the number of signatures obtained on a state or local initiative, referendum, or recall petition, and it would prescribe civil and criminal penalties for this crime. By creating a new crime, the bill would impose a state-mandated local program.

Existing law, The False Claims Act, provides that a person who commits any one of several enumerated acts relating to the submission to the state or a political subdivision of the state a false claim for money, property, or services, as specified, shall be liable to the state or political subdivision for certain damages and for a civil penalty, as specified. Existing law authorizes the Attorney General to bring a civil action for damages resulting from fraudulent claims against the state or a political subdivision, and it also authorizes an individual person to bring this type of claim and to share in the recovery.

This bill would create a similar scheme to permit both the Attorney General and a person to bring a civil claim under this section, and for the person bringing the action to share in the recovery.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

 THIRD READING  

Bill No: SB 1394

Author:

:

Vote:

SENATE ELECTIONS & C.A. COMMITTEE: 4-0, 4/3/18

AYES: Stern, Allen, Hertzberg, Leyva

NO VOTE RECORDED: Anderson

SENATE JUDICIARY COMMITTEE: 5-2, 4/17/18

AYES: Jackson, Hertzberg, Monning, Stern, Wieckowski

NOES: Moorlach, Anderson

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/25/18

AYES: Lara, Beall, Bradford, Hill, Wiener

NOES: Bates, Nielsen

SUBJECT:

SOURCE: Author

DIGEST:

This bill makes it unlawful for a person to pay or to receive money or any other thing of value based on the number of signatures obtained on a state or local initiative, referendum, or recall petition.

ANALYSIS:

Existing law:

1. Requires a state or local initiative petition to contain the following notice in 12-point type before the portion of the petition for voters' signatures:

NOTICE TO THE PUBLIC

THIS PETITION MAY BE CIRCULATED BY A PAID SIGNATURE GATHERER OR A VOLUNTEER. YOU HAVE THE RIGHT TO ASK.

1. Makes it a misdemeanor for a person to do any of the following:
   
   1. While circulating a state or local initiative, referendum, or recall petition, intentionally misrepresent or intentionally make a false statement concerning the contents, purport, or effect of the petition to any person who signs or is requested to sign the petition.
      
   2. Willfully and knowingly circulate, publish, or exhibit any false statement or misrepresentation concerning the contents, purport, or effect of a state or local initiative, referendum, or recall petition for the purpose of obtaining any signature to, or persuading or influencing any person to sign, that petition.
      
   3. While circulating a state or local initiative petition, intentionally make a false statement in response to an inquiry by a voter as to whether the circulator is paid or a volunteer.
      
2. Provides that a person, company, organization, company official, or other organizational officer in charge of a person who circulates an initiative, referendum, or recall petition who knowingly directs an affiant to make a false affidavit or who knows or reasonably should know that an affiant has made a false affidavit concerning an initiative, referendum, or recall petition or the signatures appended thereto is punishable by a fine not exceeding $5,000, by imprisonment in a county jail not exceeding one year, or by both the fine and imprisonment.
   
3. Provides that upon conviction of specified prohibited conduct related to the circulation of petitions, a court may order as a condition of probation that the convicted person be prohibited from receiving money or other valuable consideration for gathering signatures on an initiative, referendum, or recall petition.

This bill:

1. Provides that it is unlawful for a person to pay money or any other thing of value based on the number of signatures obtained on a state or local initiative, referendum, or recall petition.
   
2. Provides that anyone who violates this prohibition is guilty of a misdemeanor punishable by a fine equal to the greater of $25,000 or $50 times the number of signatures gathered, or by imprisonment in a county jail not to exceed one year, or by both that fine and imprisonment.
3. Provides that the Attorney General may bring a civil action against a person for violation of this prohibition.
   
4. Provides that a person may bring a civil action for a violation of this prohibition to recover the fines described above, as follows:
5. The person bringing the action shall be referred to as the qui tam plaintiff.
6. Once filed, the action may be dismissed only with the written consent of the court and the Attorney General, taking into account the best interests of the parties involved and the public purposes behind this prohibition. A claim for a violation of this prohibition shall not be waived or released by any private person, except if the action is part of a court approved settlement.
7. On the same day as the complaint is filed the qui tam plaintiff shall serve by mail with “return receipt requested” the Attorney General with a copy of the complaint and a written disclosure of substantially all material evidence and information the person possesses.
8. Within 60 days after receiving a complaint and written disclosure of material evidence and information alleging violations of this prohibition, the Attorney General may elect to intervene and proceed with the action.
9. Provides that if the Attorney General initiates an action or assumes control of an action initiated by a qui tam plaintiff, the office of the Attorney General shall receive a fixed 33 percent of the proceeds of the action or settlement of the claim, which shall be used to support its ongoing investigation and prosecution of fraud.
   
10. Provides that if a qui tam plaintiff initiates an action he or she shall receive at least 17 percent, but not more than 50 percent, of the proceeds of the action or settlement of the claim, depending on the extent to which the qui tam plaintiff substantially contributed to the prosecution of the action.
    
11. Provides that the portion of the recovery not distributed as described above shall be paid to the Secretary of State for the purpose of supporting voter registration efforts.
    
12. Provides that if the state, through the Attorney General, or the qui tam plaintiff, prevails in or settles an action under this bill, the qui tam plaintiff shall receive an amount for reasonable expenses that the court finds to have been necessarily incurred, plus reasonable costs and attorney’s fees. All expenses, costs, and fees shall be awarded against the defendant and under no circumstances shall they be the responsibility of the state.
    
13. Provides that if the Attorney General does not proceed with the action and the qui tam plaintiff conducts the action, the court may award to the defendant its reasonable attorneys’ fees and expenses against the party that proceeded with the action if the defendant prevails in the action and the court finds that the claim was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.
    
14. Provides that a qui tam plaintiff shall be entitled to all relief necessary to make him or her whole, if that qui tam plaintiff is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of his or her employment because of lawful acts done by him or her, or associated others, in furtherance of an action under this bill or other efforts to stop one or more violations of this prohibition.
    
15. Provides that if a person brings such an action no other person may bring a related action based on the facts underlying the pending action.
    
16. States that the provisions of this bill do not prohibit the payment for signature gathering not based, either directly or indirectly, on the number of signatures obtained on a state or local initiative, referendum, or recall petition.
    
17. Provides that the Legislature hereby finds and declares that the communication of accurate information by signature gatherers is important to the integrity of the elections process and states that the intent of this bill is to prohibit the compensation of signature gatherers in a manner that gives signature gatherers an incentive to deceive voters in order to obtain their signatures.

Background

Initiative, Referendum, and Recall & Other States. According to information from the National Conference on State Legislatures (NCSL), at least five states (Arizona, Montana, North Dakota, Oregon, and South Dakota) limit the ability of initiative or referendum proponents to pay signature gatherers on a per-signature basis. One state (Nebraska) recently repealed a state law that prohibited petition circulators from being paid on a per-signature basis, while another state (Wyoming) recently repealed a state law that restricted initiative proponents from paying signature gatherers on a per-signature basis while continuing to ban payments on a per-signature basis for referendum petitions. Laws to ban per-signature payments in at least six other states (Colorado, Idaho, Maine, Mississippi, Ohio, and Washington) have been invalidated by courts. Alaska does not ban payments that are made on a per-signature basis, but prohibits any such payment that is greater than $1 per signature.

In 1988, the United States Supreme Court ruled that a Colorado prohibition against the use of paid circulators for initiative petitions violated the First Amendment's right of free speech. Writing for a unanimous court, Justice Stevens noted that "[t]he State's interest in protecting the integrity of the initiative process does not justify the prohibition because the State has failed to demonstrate that it is necessary to burden appellees' ability to communicate their message in order to meet its concerns" (Meyer v. Grant (1988), 486 U.S. 414). In 1999, the United States Supreme Court examined a Colorado law that provided a number of other restrictions on the signature collection process for ballot initiatives. In that case the court ruled that there must be a compelling state interest to justify any restrictions on initiative petition circulation (Buckley v. American Constitutional Law Foundation (1999), 525 U.S. 182).

Although the United States Supreme Court has not ruled on the constitutionality of prohibiting payment for signature collection on a per-signature basis, a number of federal courts have considered challenges to such laws, with the courts reaching different conclusions about the constitutionality of per-signature payment bans. In light of the differing opinions reached by various federal courts on the constitutionality of laws that prohibit payments on a per-signature basis for signature gathering on petitions, it is unclear whether this bill, if enacted, would be upheld in a court challenge.

According to information from the Secretary of State's office, between 1994 and 2015, the office opened 273 cases investigating potential petition fraud, of which 50 cases were referred for prosecution. These figures do not include petition fraud investigations that may have been conducted by other law enforcement agencies around the state.

Related/Prior Legislation

AB 1947 (Low, 2018), which is currently pending in the Senate Committee on Elections and Constitutional Amendments, is similar to SB 1394, except that it does not permit a private individual to bring a civil action to enforce the bill.

SB 168 (Corbett of 2011), which was vetoed by Governor Brown. In his veto message, the Governor stated that "per-signature payment is often the most cost-effective method for collecting the hundreds of thousands of signatures needed to qualify a ballot measure," and that "[e]liminating this option will drive up the cost of circulating ballot measures, thereby further favoring the wealthiest interests."

SB 34 (Corbett) of 2009, which was vetoed by Governor Schwarzenegger, was identical to SB 168.

AB 2946 (Leno) of 2006, which was vetoed by Governor Schwarzenegger.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• Department of Justice (DOJ): The department anticipates ongoing personnel, operating, and equipment costs of approximately $1.1 million to investigate, intervene in, self-initiate, and prosecute claims against those who pay another to collect signatures for petitions based on the number of signature collected. Costs would be offset, in part, by the portion of proceeds allocated to DOJ from successful actions and settlements. (General Fund)
• Court: Unknown, potentially-significant cost pressures to the court to adjudicate civil actions and criminal charges brought against defendants who pay others money or a thing of value based on the number of signatures for the specified petitions. While the superior courts are not funded on a workload basis, an increase in workload could result in delayed court services and would put pressure on the General Fund to fund additional staff and resources. (General Fund*)
• Prosecution & incarceration: Unknown potential increase in non-reimbursable local enforcement and incarceration costs to prosecute and incarcerate those charged with and found guilty of conduct proscribed by this bill. Costs would be offset, to a degree, by fee and assessment revenue. (Local funds)

SUPPORT: (Verified 5/22/18)

None received

OPPOSITION: (Verified 5/22/18)

California Business Properties Association

California Chamber of Commerce

California Taxpayers Association

Howard Jarvis Taxpayers Association

San Diego Regional Chamber of Commerce

Southwest California Legislative Council

ARGUMENTS IN SUPPORT: According to the author, the initiative, referendum, and recall processes can and should play an important and valued role in California’s politics and governance. It has become clear, however, that under the current system, driven by per-signature bounties, there are scant prospects for deterring bad actors who willfully mislead voters at the expense of the integrity of the electoral process. Other states have similarly examined the issues surrounding paid signature gatherers and have adopted legislation prohibiting per-signature bounty payments for signature gathering, requiring that payment for signature gathering may only be made on an hourly or salary basis. These states include Colorado, Montana, North Dakota, Oregon, and South Dakota. California should do the same. Our democracy and governance will be the better for it.

To the original framers’ way of thinking, the initiative, referendum, and recall represented a means for “the little guy” to achieve direct, reformist actions that elected and vested interests might otherwise thwart. Over the years, and especially in recent decades, however, something very different has transpired: these tools of direct democracy have been effectively co-opted by the very moneyed interests they were originally intended to offset. And as these moneyed interests have become increasingly adept at using the initiative, referendum, and recall processes to their benefit, often at the expense of other statewide or local interests, an “arms race” around these processes has ensued, especially as it pertains to signature gathering. And as the stakes have risen, a highly sophisticated mini-economy has grown up around signature gathering. At its center, a small number of specialized firms with expertise in signature gathering have come to dominate, offering their services to proponents seeking to place a measure on the ballot.

One of the principal tactics used by these specialized signature-gathering firms is the deployment of well trained, professional signature gatherers. Typically, these signature gatherers are paid on a per signature or commission basis, also known as a bounty, at a rate determined by the market as it assessed at the time. Depending on the nature of the initiative, the characteristics of the district, the time of year, or competition with other initiatives at a given time, the cost per signature can vary widely, from as low as $2 per signature gathered to as high as $20. Against this backdrop, the determining factor for getting a measure on the ballot too often has less to do with its merits and more to do with the depth of the pockets of its proponents. And because bounty-paid signature gatherers optimize their yield based on how rapidly they can secure signatures from voters, they frequently traffic in misleading information and outright falsehoods in order to induce as many voters as possible to sign in the minimum amount of time.

This collision between economic self-interest and the public interest has a direct and deleterious impact on the integrity of direct democracy in California. And the fact that it is already explicitly illegal under California’s elections and government codes to intentionally mislead a voter as to the nature and intent of a signature-gathering operation seems to offer little by way of an impediment to unethical behavior in signature gathering.

This bill would affect signature gathering companies and their professional employees who travel from state to state, wherever the bounty per-signature is highest and likely to provide the largest return.

ARGUMENTS IN OPPOSITION: In a letter opposing SB 1394, the Howard Jarvis Taxpayers Association stated the following:

HJTA is broadly opposed to any bill that would curtail the initiative process and the peoples’ right to be actively involved in their own governance. The number of signatures needed to qualify a measure for the ballot (over one million in some cases) will make it difficult to conduct this process, even if the gatherers can be paid on an hourly rate. Government should not be infringing on a contract between private individuals: the gatherer, the signature firm, and a campaign. This process may well also be unconstitutional on First Amendment grounds.

Rather than punishing people for engaging in a free market contract to further democratic governance, a better solution would be to increase the amount of time to gather signatures from six months to a year or decreasing the amount of signatures needed to qualify a measure. This would decrease reliance on paid signature gatherers while furthering direct democracy.

Prepared by:

5/26/18 14:56:06

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

SB 1394 (Newman) - Petitions: compensation for signatures

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

SB 1394 would make it a misdemeanor for a person to pay money or any other thing of value based on the number of signatures obtained on a state or local initiative, referendum, or recall petition, and it would prescribe civil and criminal penalties for this crime.

Fiscal Impact:

• Department of Justice (DOJ): The department anticipates ongoing personnel, operating, and equipment costs of approximately $1.1 million to investigate, intervene in, self-initiate, and prosecute claims against those who pay another to collect signatures for petitions based on the number of signature collected. Costs would be offset, in part, by the portion of proceeds allocated to DOJ from successful actions and settlements. (General Fund)
• Court: Unknown, potentially-significant cost pressures to the court to adjudicate civil actions and criminal charges brought against defendants who pay others money or a thing of value based on the number of signatures for the specified petitions. While the superior courts are not funded on a workload basis, an increase in workload could result in delayed court services and would put pressure on the General Fund to fund additional staff and resources. (General Fund*)
• Prosecution & incarceration: Unknown potential increase in non-reimbursable local enforcement and incarceration costs to prosecute and incarcerate those charged with and found guilty of conduct proscribed by this bill. Costs would be offset, to a degree, by fee and assessment revenue. (Local funds)

*Trial Court Trust Fund

Background:

Existing law provides that notwithstanding any other provision of law, whenever an initiative, referendum, recall, nominating petition or paper, or any other petition or paper, is required to be signed by voters of a county, city, school district, or special district subject to petitioning, only a person who is an eligible registered voter at the time of signing the petition or paper is entitled to sign the petition or paper. At the time of signing a petition or paper, a signer must personally affix his or her signature, printed name, and place of residence, as specified. A person is prohibited from circulating a state or local initiative, referendum, or recall petition or nominating paper unless he or she is 18 years of age or older. Wherever a petition or paper is submitted to the elections official, each section of the petition or paper have attached to it must be accompanied by a declaration signed by the circulator under penalty of perjury, setting forth, in the circulator’s own hand, the following:

• The printed name of the circulator;
• The residence address of the circulator, as specified;
• The dates between which all the signatures to the petition or paper were obtained;
• That the circulator circulated that section and witnessed the appended signatures being written;
• That according to the best information and belief of the circulator, each signature is the genuine signature of the person whose name it purports to be; and
• That the circulator is 18 years of age or older.

Additionally, a state or local initiative petition required to be signed by voters must contain in 12-point type, before the portion of the petition for voters’ signatures, printed names, and residence addresses, the following language:

NOTICE TO THE PUBLIC

THIS PETITION MAY BE CIRCULATED BY A PAID SIGNATURE GATHERER OR A VOLUNTEER. YOU HAVE THE RIGHT TO ASK.

Moreover, existing law provides that the following is a misdemeanor crime:

• Circulating, as principal or agent, or having charge or control of the circulation of, or obtaining signatures to, any state or local initiative, referendum or recall petition, intentionally misrepresents or intentionally makes any false statement concerning the contents, purport or effect of the petition to any person who signs, or who desires to sign, or who is requested to sign, or who makes inquiries with reference to it, or to whom it is presented for his or her signature;
• A person who willfully and knowingly circulates, publishes, or exhibits any false statement or misrepresentation concerning the contents, purport or effect of any state or local initiative, referendum, or recall petition for the purpose of obtaining any signature to, or persuading or influencing any person to sign, that petition;
• Circulating, as principal or agent, or having charge or control of the circulation of, or obtaining signatures to, any state or local initiative, intentionally making any false statement in response to any inquiry by any voter as to whether he or she is a paid signature gatherer or a volunteer;
• A person who refuses to allow a prospective signer to read the measure or petition if working for the proponent or proponents of an initiative or referendum measure or recall petition;
• A person who covers or otherwise obscures the summary of the measure prepared by the Attorney General from the view of a prospective signer if working for the proponent or proponents of a statewide initiative or referendum measure;
• A person who offers or gives money or other valuable consideration to another in exchange for that person’s signature on a state, county, municipal, or district initiative, referendum, or recall petition;
• A person who knowingly or willfully permits the list of signatures on an initiative, referendum, or recall petition to be used for any purpose other than qualification of the initiative or referendum measure or recall question for the ballot, except as provided;
• A person who solicits any circulator to affix to any initiative, referendum, or recall petition any false or forged signature, or to cause or permit a false or forged signature to be affixed; or
• A person who knowingly signs his or her own name more than once to any initiative, referendum, or recall petition, or signs his or her name to that petition knowing himself or herself at the time of signing not to be qualified to sign it.

Proposed Law:

This bill would:

• Provide that it is a misdemeanor for a person to pay money or any other thing of value based on the number of signatures obtained on a state or local initiative, referendum, or recall petition.
• Prescribe a criminal penalty of incarceration in county jail for up to one year and/or a fine equal to the greater of either $25,000 or $50 multiplied by the number of signatures gathered.
• Permit both a person, as the qui tam plaintiff, and the Attorney General to bring a civil claim for a violation of the provisions of this bill for the same fines associated with the criminal penalty.
• Allow the qui tam plaintiff to receive between 17 and 50 percent of the proceeds of the action or settlement of the claim, depending on the extent of the person’s contribution to the prosecution of the action. Allow the Attorney General, if he or she initiations the claim, to receive 33 percent of the proceeds of the action or settlement to support ongoing investigation and prosecution of fraud. Require that non-distributed portions of the recovery by paid to the Secretary of State for the purpose of supporting voter registration efforts.
• Provides that, once a civil action has been filed, the action may be dismissed only with the written consent of the court and the Attorney General, taking into account the best interests of the parties involved and the public purposes behind the bill.
• Allows the Attorney General, when a civil action is commenced, to elect to intervene and proceed with the action within sixty days after receiving a complaint and written disclosure of material evidence and information alleging violations.

Related Legislation:

AB 1947 (Low, 2018) would make it a misdemeanor to pay a person money or any other thing of value based on the number of signatures obtained on a state or local initiative, referendum, or recall petition and subjects a person in violation to a fine of up to $25,000. AB 1947 is pending referral in the Senate Committee on Rules.

SB 1394 is similar in intent to the following bills:

SB 168 (Corbett, 2011), which was vetoed by the governor. In his veto message, the governor stated that "per-signature payment is often the most cost-effective method for collecting the hundreds of thousands of signatures needed to qualify a ballot measure" and that "[e]liminating this option will drive up the cost of circulating ballot measures, thereby further favoring the wealthiest interests."

SB 34 (Corbett, 2009) was identical to SB 168 and was vetoed by the governor. AB 2946 (Leno, 2006) also was vetoed by the governor.

Staff Comments:

To meet the increased workload that would be required and authorized by this bill, DOJ anticipates that its Public Rights Division would require 2.0 Deputy Attorney General IV, 1.0 Legal Analyst, and 2.0 Legal Secretaries. Additionally, DOJ estimates 400 hours of workload increase to its Government Law Section resulting from this bill.

With respect to the court, the fiscal impact of this bill cannot be known with certainty, as the actual impact will be dependent on numerous factors, including, but not limited to, the frequency with which a person is accused of violating the prohibition, the complexity of alleged violations, if parties settle matters prior to litigation, and the factors unique to each case. It costs the court a little over $11,600, on average, in personnel and resources to adjudicate an unlimited civil case, which likely would be the type of case an action filed pursuant to the bill would be. It costs about $7,010 to operate a courtroom for one day. So if the cause of action created by this bill led to more than four new cases, or a few complex case that took longer than seven days that otherwise would not have been brought, the cost pressures of this bill to the court would surpass the Suspense File threshold. As indicated above, while the court is not funded on a workload basis, an increase in workload could result in delayed court services and would put pressure on the General Fund to fund additional staff and resources.

-- END --

SENATE JUDICIARY COMMITTEE

Senator Hannah-Beth Jackson, Chair

2017-2018 Regular Session

Bill No: SB 1394 (Author:Newman)

Version: April 9, 2018

Hearing Date: April 17, 2018

Fiscal: Yes

Urgency: No

Consultant: CK

SUBJECT

Petitions: compensation for signatures

DESCRIPTION

This bill would make it unlawful for a person to pay or to receive money or any other thing of value based on the number of signatures obtained on a state or local initiative, referendum, or recall petition. It would make a violation of this provision a misdemeanor and subject persons who pay based on the number of signatures obtained to civil penalties of at least $25,000. Actions to recover such penalties may be brought by the Attorney General or by private, “qui tam” plaintiffs.

BACKGROUND

Twenty-four states have an initiative process by which citizens can place proposed laws, or in some circumstances proposed amendments to their constitutions, on the ballot. A popular referendum is substantially similar to an initiative, and similarly requires petitions to change the law. In order to qualify initiatives for the ballot, the process generally requires the following steps:

• preliminary filing of a proposed petition with a designated state official;
• review of the petition for conformance with statutory requirements and, in several states, a review of the language of the proposal;
• preparation of a ballot title and summary;
• circulation of the petition to obtain the required number of signatures of registered voters, usually a percentage of the votes cast for a statewide office in the preceding general election;
• submission of the petitions to the state elections official, who must verify the number of signatures; and
• if enough valid signatures are obtained, the question goes on the ballot or, in states with the indirect process, is sent to the legislature.

Nineteen states plus the District of Columbia permit the recall of state officials. Generally, the recall process involves the following steps:

• file an application to circulate a recall petition (some states allow petitions only if they meet certain grounds for recall);
• circulate a recall petition, gathering a specified number of signatures in a limited period of time (view the detailed petitioning requirements);
• submit petitions to election officials for verification of signatures; and
• if sufficient valid signatures are presented, a recall election is held.

Proponents of these processes assert that they are vehicles for direct democracy on a wide range of issues, involving the people in a more direct way on issues that would not otherwise be addressed in a public forum. However, there are strong criticisms of these processes that often point to the undue influence of well-financed interests. Relevant here, each of these processes involves the gathering of petitions from qualified, registered voters, and one particular practice that is identified as problematic in this world is the payment-per-signature method. This practice involves initiative/recall sponsors paying circulators on a per-signature basis. The critique is that such a practice encourages fraud, essentially incentivizing the forging of signatures or misrepresenting the content of the petition or basis for the recall to increase profit.

This bill would respond to this concern by making it unlawful to pay or to receive money or any other thing of value based on the number of signatures obtained on a state or local initiative, referendum, or recall petition. Any individual who pays an individual via this practice would be guilty of a misdemeanor and would be subject to civil penalties in a civil action brought by the Attorney General or a private, “qui tam” plaintiff.

CHANGES TO EXISTING LAW

Existing law provides that notwithstanding any other provision of law, whenever an initiative, referendum, recall, nominating petition or paper, or any other petition or paper, is required to be signed by voters of a county, city, school district, or special district subject to petitioning, only a person who is an eligible registered voter at the time of signing the petition or paper is entitled to sign the petition or paper. Existing law provides that a signer shall at the time of signing a petition or paper personally affix their signature, printed name, and place of residence, as specified. (Elec. Code Sec. 100.)

Existing law provides that a person shall not circulate a state or local initiative, referendum, or recall petition or nominating paper unless the person is 18 years of age or older. (Elec. Code Sec. 102.)

Existing law requires that wherever any petition or paper is submitted to the elections official, each section of the petition or paper have attached to it a declaration signed by the circulator of the petition or paper under penalty of perjury, setting forth, in the circulator’s own hand, the following:

• the printed name of the circulator;
• the residence address of the circulator, as specified;
• the dates between which all the signatures to the petition or paper were obtained;
• that the circulator circulated that section and witnessed the appended signatures being written;
• that according to the best information and belief of the circulator, each signature is the genuine signature of the person whose name it purports to be; and
• that the circulator is 18 years of age or older. (Elec. Code Sec. 104.)

Existing law provides that for purposes of verifying a signature on an initiative, referendum, recall, nomination, or other election petition or paper, the elections official shall determine that the residence address on the petition or paper is the same as the residence address on the affidavit of registration. If the addresses are different, or if the petition or paper does not specify the residence address, or, in the case of an initiative or referendum petition, certain specified information is not included, the affected signature shall not be counted as valid. (Elec. Code Sec. 105.)

Existing law provides that notwithstanding any other law, a state or local initiative petition required to be signed by voters shall contain in 12-point type, before that portion of the petition for voters’ signatures, printed names, and residence addresses, the following language:

“NOTICE TO THE PUBLIC

THIS PETITION MAY BE CIRCULATED BY A PAID SIGNATURE GATHERER OR A VOLUNTEER. YOU HAVE THE RIGHT TO ASK.” (Elec. Code Sec. 101(a).)

Existing law provides that every person is guilty of a misdemeanor who:

• circulating, as principal or agent, or having charge or control of the circulation of, or obtaining signatures to, any state or local initiative, referendum or recall petition, intentionally misrepresents or intentionally makes any false statement concerning the contents, purport or effect of the petition to any person who signs, or who desires to sign, or who is requested to sign, or who makes inquiries with reference to it, or to whom it is presented for his or her signature;
• willfully and knowingly circulates, publishes, or exhibits any false statement or misrepresentation concerning the contents, purport or effect of any state or local initiative, referendum, or recall petition for the purpose of obtaining any signature to, or persuading or influencing any person to sign, that petition;
• circulating, as principal or agent, or having charge or control of the circulation of, or obtaining signatures to, any state or local initiative, intentionally makes any false statement in response to any inquiry by any voter as to whether he or she is a paid signature gatherer or a volunteer;
• refuses to allow a prospective signer to read the measure or petition if working for the proponent or proponents of an initiative or referendum measure or recall petition;
• covers or otherwise obscures the summary of the measure prepared by the Attorney General from the view of a prospective signer if working for the proponent or proponents of a statewide initiative or referendum measure;
• offers or gives money or other valuable consideration to another in exchange for that person’s signature on a state, county, municipal, or district initiative, referendum, or recall petition;
• knowingly or willfully permits the list of signatures on an initiative, referendum, or recall petition to be used for any purpose other than qualification of the initiative or referendum measure or recall question for the ballot, except as provided;
• solicits any circulator to affix to any initiative, referendum, or recall petition any false or forged signature, or to cause or permit a false or forged signature to be affixed; or
• knowingly signs his or her own name more than once to any initiative, referendum, or recall petition, or signs his or her name to that petition knowing himself or herself at the time of signing not to be qualified to sign it. (Elec. Code Sec. 18600-18603, 18610, 18612, 18650.)

Existing law provides that every person who subscribes to any initiative, referendum, or recall petition a fictitious name, or who subscribes thereto the name of another, or who causes another to subscribe such a name to that petition, is guilty of a felony and is punishable by imprisonment for two, three, or four years. (Elec. Code 18613.) Every person is punishable by a fine not exceeding $5,000, or by imprisonment, or by both, who files in the office of the elections official, any initiative, referendum, or recall petition to which is attached, appended or subscribed any signature which the person filing the petition knows to be false or fraudulent or not the genuine signature of the person whose name it purports to be. (Elec. Code Sec. 18614.)

Existing law provides that every person who seeks, solicits, bargains for, or obtains any money, thing of value, or advantage of or from any person, firm, or corporation for the purpose or represented purpose of fraudulently inducing, persuading, or seeking the proponent or proponents of any initiative or referendum measure or recall petition to (a) abandon the measure or petition, (b) fail, neglect, or refuse to file in the office of the elections official or other officer designated by law, within the time required by law, the initiative or referendum measure or recall petition after securing the number of signatures required to qualify the measure or petition, (c) stop the circulation of the initiative or referendum measure or recall petition, or (d) perform any act that will prevent or aid in preventing the initiative or referendum measure or recall petition from qualifying as an initiative or referendum measure, or the recall petition from resulting in a recall election, is punishable by a fine not exceeding $5,000, or by imprisonment, or by both. (Elec. Code Sec. 18620.)

Existing law states that any proponent of an initiative or referendum measure or recall petition who seeks, solicits, bargains for, or obtains any money or thing of value of or from any person, firm, or corporation for the purpose of abandoning the same or stopping the circulation of petitions concerning the same, or failing or neglecting or refusing to file the measure or petition in the office of the elections official or other officer designated by law within the time required by law after obtaining the number of signatures required under the law to qualify the measure or petition, or withdrawing an initiative petition after filing it with the appropriate elections official, or performing any act that will prevent or aid in preventing the initiative, referendum, or recall proposed from qualifying as an initiative or referendum measure, or resulting in a recall election is punishable by a fine not exceeding $5,000 or by imprisonment, or by both. (Elec. Code Sec. 18621.)

Existing law provides that every person who offers to buy or does buy from a circulator any referendum, initiative, or recall petition on which one or more persons have affixed their signatures is guilty of a misdemeanor punishable by imprisonment in the county jail for not more than one year, or by a fine not exceeding $1,000, or both. This provision makes clear that it is not intended to prohibit compensation of a circulator, for his or her services, by a proponent of the petition or their agent. (Elec. Code Sec. 18622.)

Existing law provides that every person is punishable by a fine not exceeding $5,000, or by imprisonment, or by both, who makes any false affidavit concerning an initiative, referendum, or recall petition or the signatures appended to an initiative, referendum, or recall petition. A person, company, organization, company official, or other organizational officer in charge of a person who circulates an initiative, referendum, or recall petition and who does either of the following is punishable by a fine not exceeding $5,000, or by imprisonment, or by both:

• knowingly directs an affiant to make a false affidavit concerning an initiative, referendum, or recall petition or the signatures appended to an initiative, referendum, or recall petition; or
• knows or reasonably should know that an affiant has made a false affidavit concerning an initiative, referendum, or recall petition or the signatures appended to an initiative, referendum, or recall petition and submits the section of the petition that contains the false affidavit. (Elec. Code Sec. 18660.)

Existing law provides that every public official or employee is punishable by a fine not exceeding $5,000, or by imprisonment, or by both, who knowingly makes any false return, certification or affidavit concerning any initiative, referendum, or recall petition or the signatures appended thereto. (Elec. Code Sec. 18661.)

This bill would make it unlawful for a person to pay or to receive money or any other thing of value based on the number of signatures obtained on a state or local initiative, referendum, or recall petition. It would make clear that it does not prohibit the payment for signature gathering not based, either directly or indirectly, on the number of signatures obtained on a state or local initiative, referendum, or recall petition.

This bill would make any person who pays an individual based on the number of signatures obtained on a state or local initiative, referendum, or recall petition guilty of a misdemeanor. Such person would be subject to a fine equal to the greater of $25,000 or $50 times the number of signatures gathered, or by imprisonment in a county jail not to exceed one year, or by both that fine and imprisonment.

This bill would provide for a civil action to be brought for civil penalties against any person in violation by the Attorney General or any other person. Any person bringing such an action would be referred to as the qui tam plaintiff. Once filed, the action could only be dismissed with the written consent of the court and the Attorney General, taking into account the best interests of the parties involved and the public purposes underlying these provisions. A claim could not be waived or released by any private person, except if the action is part of a court approved settlement of a civil action brought hereunder.

This bill would provide detailed procedures for bringing such an action and the proper disbursement of any penalties collected thereby. This bill would require the qui tam plaintiff to serve the Attorney General a copy of the complaint and a written disclosure of substantially all material evidence and information the person possesses on the day the complaint is filed. The Attorney General would then have 60 days within which to intervene in the action. Once an action is initiated, no other person may bring a related action based on the facts underlying the pending action.

This bill would provide that if the Attorney General initiates an action or assumes control of an action initiated by a qui tam plaintiff, the office of the Attorney General shall receive a fixed 33 percent of the proceeds of the action or settlement of the claim, which shall be used to support its ongoing investigation and prosecution of fraud. If a qui tam plaintiff initiates the action, the qui tam plaintiff shall receive at least 17 percent, but not more than 50 percent, of the proceeds of the action or settlement of the claim, depending on the extent to which the qui tam plaintiff substantially contributed to the prosecution of the action. The remainder of the recovery would be paid to the Secretary of State for the purpose of supporting voter registration efforts.

This bill would provide that if the state, through the Attorney General, or the qui tam plaintiff, prevails in or settles an action, the qui tam plaintiff shall receive an amount for reasonable expenses that the court finds to have been necessarily incurred, plus reasonable costs and attorney’s fees. All expenses, costs, and fees would be awarded against the defendant and under no circumstances would they be the responsibility of the state.

This bill would provide that if the Attorney General does not proceed with the action and the qui tam plaintiff conducts the action, the court may award to the defendant its reasonable attorneys’ fees and expenses against the qui tam plaintiff if the defendant prevails in the action and the court finds that the claim was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.

This bill further provides that a qui tam plaintiff shall be entitled to all relief necessary to make him or her whole, if that qui tam plaintiff is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of their employment because of lawful acts done by them, or associated others, in furtherance of efforts to stop one or more violations of these provisions.

COMMENT

1. Stated need for the bill

According to the author:

The initiative, referendum, and recall processes can and should play an important and valued role in California’s politics and governance. It has become clear, however, that under the current system, driven by per-signature bounties, there are scant prospects for deterring bad actors who willfully mislead voters at the expense of the integrity of the electoral process. Seven other states have similarly examined the issues surrounding paid signature gatherers and have adopted legislation prohibiting per-signature bounty payments for signature gathering, requiring that payment for signature gathering may only be made on an hourly or salary basis. These states include Colorado, Montana, Nebraska, North Dakota, Oregon, South Dakota, and Wyoming. California should do the same. Our democracy and governance will be the better for it.

2. Constitutional analysis of laws governing petition circulators

The paid gathering of signatures for initiative politics has a long history in California dating back over 100 years. However, a trend began across the nation that prohibited the payment of signature gatherers. States began to outlaw the practice to stop what they saw as the undue influence of wealthy interests on the process. These bans continued to be passed and upheld by the courts until 1988. In Meyer v. Grant (1988) 486 U.S. 414, 415, the United States Supreme Court was faced with the question of whether a Colorado state law that made it a felony to pay petition circulators was unconstitutional. The Court rejected the state’s asserted justification for the ban that it was necessary to prevent fraud, to protect the public, or to ensure that there was in fact broad public support for the initiative being proposed for the ballot. (Id. at 419-420.) The Court found that the case involved “a limitation on political expression subject to exacting scrutiny.” (Id., citing Buckley v. Valeo (1976) 424 U.S. 1.) The Court further found that “the statute trenches upon an area in which the importance of First Amendment protections is at its zenith.” (Id. at 425, quotation marks omitted.) It concluded that the statute prohibiting payment of petition circulators “impose[d] a burden on political expression that the State ha[d] failed to justify.” (Id. at 428.)

With this avenue closed, many initiative reformers turned their attention to a particular practice that they found incentivized fraud and deception, payment per signature. A number of states have since passed laws that allow persons or entities to pay petition circulators but prohibit payment based on the number of signatures collected. These laws have been challenged in court to varying results.

A statute was enacted in Maine that prohibited payment for the collection of signatures if that payment is based on the number of signatures collected. The law was challenged and found to be in violation of the First Amendment. The federal district court found: “The circulation of an initiative or referendum petition ‘involves the type of interactive communication concerning political change that is appropriately described as core political speech.’ A state may not, consistent with the First Amendment, severely burden such speech unless the regulation at issue is ‘narrowly tailored to serve a compelling state interest.’” (On Our Terms ‘97 Pac v. Secretary of Me. (D.Me. 1999) 101 F.Supp.2d 19, 25, quoting Meyer v. Grant, 486 U.S. at 421-22 & Buckley v. American Constitutional Law Found., Inc. (1999) 525 U.S. 182.) At least four other states have had similar laws overturned. (See e.g., Citizens for Tax Reform v. Deters (6th Cir. 2008) 518 F.3d 375, 388, overturning Ohio’s ban on payment-per-signature.)

Despite these challenges, the Supreme Court has made clear that “States allowing ballot initiatives have considerable leeway to protect the integrity and reliability of the initiative process, as they have with respect to election processes generally.” (Buckley v. Am. Constitutional Law Found. (1999) 525 U.S. 182, 191.) The Ninth Circuit has outlined the relevant analysis:

For purposes of determining whether a state election law violates an individual’s First Amendment rights, we

“weigh the character and magnitude of the burden the State’s rule imposes on those rights against the interests the State contends justify that burden, and consider the extent to which the State’s concerns make the burden necessary. Regulations imposing severe burdens on plaintiffs’ rights must be narrowly tailored and advance a compelling state interest. Lesser burdens, however, trigger less exacting review, and a State’s important regulatory interests will usually be enough to justify reasonable, nondiscriminatory restrictions.”

(Prete v. Bradbury (9th Cir. 2006) 438 F.3d 949, 961, quoting Ariz. Right to Life PAC v. Bayless (9th Cir. 2003) 320 F.3d 1002, 1007.)

This clearly leaves states ample authority to regulate these processes where there is sufficient reason to do so. In fact, according to the National Conference of State Legislatures, seven states have active bans on payment-per-signature practices.

North Dakota law requires all those who circulate petitions must be state residents and prohibits the payment of petition circulators on a “per signature” or commission basis. The law was challenged, but the Eighth Circuit Court of Appeals upheld the law. It found that “the State ha[d] produced sufficient evidence that the regulation is necessary to insure the integrity of the initiative process.” (Initiative & Referendum Inst. v. Jaeger (8th Cir. 2001) 241 F.3d 614, 618.) It relied on the “State’s important interest in preventing signature fraud, the evidence of fraud the State has produced, and the lack of any evidence from the [challengers] showing that the ban on commissioned payment burdens their ability to collect signatures.” (Id.)

The Ninth Circuit has also addressed the issue in a challenge to an Oregon law, Ballot Measure 26, which prohibited payment to electoral petition signature gatherers on a piece-work or per signature basis. The defendant state asserted similar arguments to those put forth in support of this bill, that payment per signature increases the incidence of fraud. The court found the state had “asserted an important regulatory interest in preventing fraud and forgery in the initiative process” and “supported that interest with evidence that signature gatherers paid per signature actually engage in such fraud and forgery.” (Prete v. Bradbury (9th Cir. 2006) 438 F.3d 949, 970-971.) The court reasoned: “This court’s duty is not to determine whether the state’s chosen method for prevention of fraud is the best imaginable. Once the burden is found to be of the ‘lesser’ variety, our inquiry is limited to whether the chosen method is reasonably related to the important regulatory interest.” (Id.) The court agreed with the lower court that the challengers did not make a sufficient showing that the law would otherwise burden their ability to collect signatures.” (Id.) The Ninth Circuit concluded that “because plaintiffs failed to prove the district court erred in determining that Measure 26 does not severely burden their First Amendment rights in circulating initiative petitions, and defendant has established that Measure 26 serves the important regulatory interest in preventing fraud and forgery in the initiative process, we hold that Measure 26 does not violate the First Amendment, as applied . . . .” (Id.)

3. Previous attempts to address payment-per-signature

Similar to this bill, AB 2946 (Leno, 2006) would have made it unlawful for any person to pay or to receive money or any other thing of value based on the number of signatures obtained on a state or local initiative, referendum, or recall petition. Any violation would have been a misdemeanor. The bill passed out of the Legislature but was vetoed by Governor Schwarzenegger. In 2009, SB 34 (Corbett, 2009) was introduced and would have also prohibited the payment-per-signature practice, making it a misdemeanor and subjecting violators to fines of up to $25,000. SB 34 also passed the Legislature and was vetoed by Governor Schwarzenegger. In his veto message, the Governor stated:

The California Constitution provides an important system of checks and balance by giving the people direct control over their government through initiative, referendum and recall. This bill would limit the initiative process by prohibiting a person from paying or receiving money or anything of value based on the number of signatures obtained on such petitions.

As I have stated when vetoing similar legislation, prohibitions on per-signature payments will make it more difficult for grassroots organizations to gather the necessary signatures and qualify measures for the ballot. Therefore, I am unable to sign this bill.

After Governor Brown took office, Senator Corbett tried again, introducing SB 168 (Corbett, 2011), which was identical to SB 34. The bill met a similar fate when Governor Brown vetoed the bill, providing this message:

This bill makes it a crime for a person to pay or receive money (or any other thing of value) based-directly or indirectly--on the number of signatures obtained on a state or local initiative, referendum, or recall petition.

While I understand the potential abuses of the current per-signature payment system, I believe this bill is flawed for two reasons.

First, this bill would effectively prohibit organizations from even setting targets or quotas for those they hire to gather signatures. It doesn’t seem very practical to me to create a system that makes productivity goals a crime.

Second, per-signature payment is often the most cost-effective method for collecting the hundreds of thousands of signatures needed to qualify a ballot measure. Eliminating this option will drive up the cost of circulating ballot measures, thereby further favoring the wealthiest interests.

This is a dramatic change to a long established democratic process in California. After reviewing the materials submitted in support of this bill, I am not persuaded that the unintended consequences won’t be worse than the abuses the bill aims to prevent.

4. Civil penalties enforcement

This bill would provide a unique mechanism for imposing civil penalties against persons who violate the prohibition on paying circulators per signature. The bill would allow for the Attorney General to bring an action, but also provides a right of action for anyone, without any need for standing or a nexus to the unlawful conduct. The bill would refer to these private persons as “qui tam” plaintiffs.

This model does exist in other contexts. Generally, a qui tam plaintiff is standing in the shoes of another by bringing suit and usually shares in the recovery as a result. The basis for providing for such suits is to ensure the enforcement of important public policy. By essentially deputizing private persons and incentivizing them to bring suit to enforce the law, the laws are more effectively enforced and violations are thereby deterred. Qui tam schemes also reduce the pressure on government entities to be solely responsible for rooting out violations of the law.

There are two examples of this sort of mechanism in California law. One context is in the Labor Code. The Private Attorneys General Act allows any provision of the Labor Code that provides for the collection of a civil penalty to be enforced through a civil action brought by an aggrieved employee on behalf of himself or herself and other current or former employees. (Labor Code Sec. 2698 et seq.)

The other context is much more analogous and appears to serve as the template for the enforcement provisions of this bill. California’s False Claims Act provides qui tam plaintiffs incentives to blow the whistle on fraud being perpetrated against the government. (Gov. Code Sec. 12650 et seq.) In short, private parties can bring suit against entities that are defrauding the government or otherwise misusing government funds. The plaintiff must have information not publicly accessible in order to bring such an action, but otherwise there is no standing requirement. The qui tam plaintiff is incentivized to “blow the whistle” on such conduct and bring a claim through the sharing of some percentage of the ultimate recovery.

This bill would provide a private, “qui tam” plaintiff the right to bring an action for civil penalties of at least $25,000, but potentially more based on a $50 per improper signature. These are arguably extremely hefty penalties, especially in relation to previous iterations of the bill that set the cap at $25,000 rather than the minimum there.

Under this bill, the plaintiff would need to notify the Attorney General who would then be given the opportunity to intervene and take control of the action. The qui tam plaintiff would be entitled to between 17 and 50 percent of the proceeds of the action or settlement, based on the plaintiff’s contributions to securing such proceeds.

Such a provision would increase the likelihood that violations of this bill are brought to light and challenged. This would therefore create a strong deterrent effect for those employing petition circulators.

Support: None Known

Opposition: California Business Properties Association; California Chamber of Commerce; California Taxpayers Association; San Diego Regional Chamber of Commerce; Southwest California Legislative Council

HISTORY

Source: Author

Related Pending Legislation: AB 1947 (Low, 2018) would make it a misdemeanor to pay a person money or any other thing of value based on the number of signatures obtained on a state or local initiative, referendum, or recall petition and subjects a person in violation to a fine of up to $25,000. This bill is currently in the Assembly Appropriations Committee.

Prior Legislation:

SB 1094 (Hernandez, 2016) would have, among other things, required that at least five percent of the signatures collected on state initiative petitions be obtained by volunteer circulators. This bill was vetoed.

AB 857 (Fong, 2013) would have, among other things, required that at least ten percent of the signatures collected on state initiative petitions be obtained by volunteer circulators. This bill was vetoed.

SB 168 (Corbett, 2011) See Comment 3.

SB 34 (Corbett, 2009) See Comment 3.

AB 2946 (Leno, 2006) See Comment 3.

Prior Vote: Senate Elections and Constitutional Amendments Committee (Ayes 4, Noes 0)

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SENATE COMMITTEE ON

ELECTIONS AND CONSTITUTIONAL AMENDMENTS

Senator Henry Stern, Chair

2017 - 2018 Regular

Bill No: 1394 Hearing Date: 4/3/18

Subject:

DIGEST

This bill makes it unlawful for a person to pay or to receive money or any other thing of value based on the number of signatures obtained on a state or local initiative, referendum, or recall petition.

ANALYSIS

Existing law:

1. Requires a state or local initiative petition to contain the following notice in 12-point type before the portion of the petition for voters' signatures:

NOTICE TO THE PUBLIC

THIS PETITION MAY BE CIRCULATED BY A PAID SIGNATURE GATHERER OR A VOLUNTEER. YOU HAVE THE RIGHT TO ASK.

1. Makes it a misdemeanor for a person to do any of the following:
   
   1. While circulating a state or local initiative, referendum, or recall petition, intentionally misrepresent or intentionally make a false statement concerning the contents, purport, or effect of the petition to any person who signs or is requested to sign the petition.
      
   2. Willfully and knowingly circulate, publish, or exhibit any false statement or misrepresentation concerning the contents, purport, or effect of a state or local initiative, referendum, or recall petition for the purpose of obtaining any signature to, or persuading or influencing any person to sign, that petition.
      
   3. While circulating a state or local initiative petition, intentionally make a false statement in response to an inquiry by a voter as to whether the circulator is paid or a volunteer.
      
2. Provides that a person, company, organization, company official, or other organizational officer in charge of a person who circulates an initiative, referendum, or recall petition who knowingly directs an affiant to make a false affidavit or who knows or reasonably should know that an affiant has made a false affidavit concerning an initiative, referendum, or recall petition or the signatures appended thereto is punishable by a fine not exceeding $5,000, by imprisonment in a county jail not exceeding one year, or by both the fine and imprisonment.
   
3. Provides that upon conviction of specified prohibited conduct related to the circulation of petitions, a court may order as a condition of probation that the convicted person be prohibited from receiving money or other valuable consideration for gathering signatures on an initiative, referendum, or recall petition.

This bill:

1. Provides that it is unlawful for a person to pay or to receive money or any other thing of value based on the number of signatures obtained on a state or local initiative, referendum, or recall petition.
2. Provides that violation of this prohibition is punishable as follows:
3. A person who pays an individual based on the number of signatures obtained on a state or local initiative, referendum, or recall petition shall be punished by a fine equal to the greater of $25,000 or $50 times the number of signatures gathered, or by imprisonment in a county jail not to exceed one year, or by both that fine and imprisonment.
4. An individual who is paid based on the number of signatures obtained on a state or local initiative, referendum, or recall petition shall be punished by a fine not to exceed $1,000, or by imprisonment in a county jail not to exceed six months, or by both that fine and imprisonment.
5. Provides that the Attorney General may bring a civil action against a person for violation of this prohibition.
   
6. Provides that a person may bring a civil action for a violation of this prohibition to recover the fines described above, as follows:
7. The person bringing the action shall be referred to as the qui tam plaintiff.
8. Once filed, the action may be dismissed only with the written consent of the court and the Attorney General, taking into account the best interests of the parties involved and the public purposes behind this prohibition. A claim for a violation of this prohibition shall not be waived or released by any private person, except if the action is part of a court approved settlement.
9. On the same day as the complaint is filed the qui tam plaintiff shall serve by mail with “return receipt requested” the Attorney General with a copy of the complaint and a written disclosure of substantially all material evidence and information the person possesses.
10. Within 60 days after receiving a complaint and written disclosure of material evidence and information alleging violations of this prohibition, the Attorney General may elect to intervene and proceed with the action.
11. Provides that if the Attorney General initiates an action or assumes control of an action initiated by a qui tam plaintiff, the office of the Attorney General shall receive a fixed 33 percent of the proceeds of the action or settlement of the claim, which shall be used to support its ongoing investigation and prosecution of fraud.
    
12. Provides that if a qui tam plaintiff initiates an action he or she shall receive at least 17 percent, but not more than 50 percent, of the proceeds of the action or settlement of the claim, depending on the extent to which the qui tam plaintiff substantially contributed to the prosecution of the action.
    
13. Provides that the portion of the recovery not distributed as described above shall be paid to the Secretary of State for the purpose of supporting voter registration efforts.
    
14. Provides that if the state, through the Attorney General, or the qui tam plaintiff, prevails in or settles an action under this bill, the qui tam plaintiff shall receive an amount for reasonable expenses that the court finds to have been necessarily incurred, plus reasonable costs and attorney’s fees. All expenses, costs, and fees shall be awarded against the defendant and under no circumstances shall they be the responsibility of the state.
    
15. Provides that if the Attorney General does not proceed with the action and the qui tam plaintiff conducts the action, the court may award to the defendant its reasonable attorneys’ fees and expenses against the party that proceeded with the action if the defendant prevails in the action and the court finds that the claim was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.
    
16. Provides that a qui tam plaintiff shall be entitled to all relief necessary to make him or her whole, if that qui tam plaintiff is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of his or her employment because of lawful acts done by him or her, or associated others, in furtherance of an action under this bill or other efforts to stop one or more violations of this prohibition.
    
17. Provides that if a person brings such an action no other person may bring a related action based on the facts underlying the pending action.
    
18. States that the provisions of this bill do not prohibit the payment for signature gathering not based, either directly or indirectly, on the number of signatures obtained on a state or local initiative, referendum, or recall petition.
    
19. Provides that the Legislature hereby finds and declares that the communication of accurate information by signature gatherers is important to the integrity of the elections process and states that the intent of this bill is to prohibit the compensation of signature gatherers in a manner that gives signature gatherers an incentive to deceive voters in order to obtain their signatures.

BACKGROUND

Initiative, Referendum, and Recall & Other States. According to information from the National Conference on State Legislatures (NCSL), 24 states, including California, allow voters through the initiative to propose laws, constitutional amendments, or both through a petition process. Twenty-three states, including California, allow voters through the referendum process to petition to demand a popular vote on a new law passed by the Legislature. Nineteen states, including California, permit state officers to be removed from office before the end of the term of office through the recall process.

At least five states (Arizona, Montana, North Dakota, Oregon, and South Dakota) limit the ability of initiative or referendum proponents to pay signature gatherers on a per-signature basis. One state (Nebraska) recently repealed a state law that prohibited petition circulators from being paid on a per-signature basis, while another state (Wyoming) recently repealed a state law that restricted initiative proponents from paying signature gatherers on a per-signature basis while continuing to ban payments on a per-signature basis for referendum petitions. Laws to ban per-signature payments in at least six other states (Colorado, Idaho, Maine, Mississippi, Ohio, and Washington) have been invalidated by courts (additional details are available below). Alaska does not ban payments that are made on a per-signature basis, but prohibits any such payment that is greater than $1 per signature.

Payment for Signature Gathering and Constitutional Issues. In 1988, the United States Supreme Court ruled that a Colorado prohibition against the use of paid circulators for initiative petitions violated the First Amendment's right of free speech. Writing for a unanimous court, Justice Stevens noted that "[t]he State's interest in protecting the integrity of the initiative process does not justify the prohibition because the State has failed to demonstrate that it is necessary to burden appellees' ability to communicate their message in order to meet its concerns." Meyer v. Grant (1988), 486 U.S. 414. The Meyer court, however, did not address the issue of whether a state may regulate the manner in which circulators are paid.

In 1999, the United States Supreme Court examined a Colorado law that provided a number of other restrictions on the signature collection process for ballot initiatives. In that case the court ruled that there must be a compelling state interest to justify any restrictions on initiative petition circulation. Buckley v. American Constitutional Law Foundation (1999), 525 U.S. 182.

In Buckley, the court invalidated Colorado's requirement that paid petition circulators wear a badge identifying themselves and identifying that they are paid circulators. The court stated that the requirement to wear badges inhibits participation in the petitioning process.

Although the United States Supreme Court has not ruled on the constitutionality of prohibiting payment for signature collection on a per-signature basis, a number of federal courts have considered challenges to such laws, with the courts reaching different conclusions about the constitutionality of per-signature payment bans.

In February 2001, the Eighth Circuit Court of Appeals ruled that a North Dakota law prohibiting payment for signature collection on a per-signature basis was consistent with the United States Constitution and with the Supreme Court's rulings in Buckley and Meyer. In reaching this decision, the court noted that the state "produced sufficient evidence that the regulation is necessary to insure the integrity of the initiative process," and also noted that no evidence was presented "that payment by the hour, rather than on commission, would in any way burden [the] ability to collect signatures." Initiative & Referendum Institute v. Jaeger (2001), 241 F.3d 614.

In February 2006, the Ninth Circuit Court of Appeals ruled that an Oregon law that prohibited payment to electoral petition signature gatherers on a piece-work or per-signature basis did not impose a severe burden under the First Amendment, and therefore did not unconstitutionally burden core political speech. The court found that Oregon had an "important regulatory interest in preventing fraud and its appearances in its electoral processes," and that prohibiting the payment of signature gatherers on a per-signature basis was reasonably related to that interest. Prete v. Bradbury (2006), 438 F.3d 949.

In October 2006, the Second Circuit Court of Appeals upheld a New York law that prohibited payment of any compensation to individuals hired to circulate electoral petitions if that compensation is contingent on the number of signatures obtained. Because New York does not have the initiative process, the law applies only to nomination petitions for candidates and to petitions to qualify a new political party. In its decision upholding the law, the Court referenced the decisions in the Eighth and Ninth Circuits, and noted that "[l]ike our sister circuits, we find the record presented to us provides insufficient support for a claim that the ban on per-signature payment is akin to the complete prohibition on paying petition circulators that was deemed unconstitutional in Meyer, or that the alternative methods of payment it leaves available are insufficient." Person v. New York State Board of Elections (2006), 467 F.3d 141.

On the other hand, the Sixth Circuit Court of Appeals struck down an Ohio law that made it a felony to pay anyone for gathering signatures on election-related petitions on any basis other than time worked. In its decision, the Court noted that while Ohio's interest in eliminating election fraud is a compelling state interest, "there is no evidence in the record that most, many, or even more than a de minimis number of circulators who were paid by signature engaged in fraud in the past." The court further noted that "[t]here is little dispute that operating under a per-time-only system will increase the costs of both proposing an initiative and qualifying it for the ballot," and cited evidence presented that professional coordinators and circulators were less interested in working under a per-time-only system. At the same time, however, the Court discussed the rulings in the Second, Eighth, and Ninth Circuits, noting that unlike the laws that were upheld in North Dakota, Oregon, and New York, the Ohio law was more restrictive and had harsher criminal sanctions for violations.

Specifically, the court noted that the laws in North Dakota, Oregon, and New York banned payments made on a per-signature basis, while Ohio banned all payment to circulators except on a per-time basis. The court noted that unlike the laws considered by appellate courts in other circuits, the Ohio law would prohibit bonuses to circulators based on productivity or longevity, would prohibit a person employing circulators from setting a minimum signature requirement, and could even prohibit a person employing circulators from terminating a circulator who consistently did not collect enough signatures. Additionally, the court noted that a violation of the Ohio law was a felony, compared to misdemeanor penalties for violations in North Dakota, Oregon, and New York. Although the court recognized these distinctions between the Ohio law and the laws upheld by three other appellate circuits, the court refused to discuss whether it would uphold an Ohio law that was similar to Oregon's, North Dakota's, or New York's. Citizens for Tax Reform et al. v. Deters et al. (2008), 518 F.3d 375.

A number of federal district courts have struck down bans on per-signature payments in other states, however. In 1994, a federal district court struck down a Washington law that made it illegal to pay gatherers of signatures on initiative and referendum petitions on a per-signature basis, noting in its decision that the state had failed to provide any "proof of fraud stemming specifically from the payment per signature method of collection." Limit v. Maleng (1994), 874 F.Supp. 1138. In 1997, a district court struck down a similar Mississippi law, citing evidence presented that the "payment of a flat daily rate to Mississippi circulators had yielded poor results," and concluding that the state had failed to prove "actual fraud or threat to citizens' confidence in government posed by…circulators who were paid per signature." Term Limits Leadership Council, Inc. v. Clark (1997), 984 F.Supp. 470. Federal district courts also struck down similar laws in Maine (On Our Terms '97 PAC v. Secretary of State of State of Maine (1999), 101 F.Supp.2d 19) and in Idaho (Idaho Coalition United for Bears v. Cenarrusa (2001), 234 F.Supp.2d 1159). More recently, a Colorado court issued a permanent injunction against a Colorado law that prohibited a petition circulator from being paid more than twenty percent of his or her compensation on a per-signature basis (Independence Institute v. Gessler (2013), 936 F.Supp.2d 1256).

In light of the differing opinions reached by various federal courts on the constitutionality of laws that prohibit payments on a per-signature basis for signature gathering on petitions, it is unclear whether this bill, if enacted, would be upheld in a court challenge.

Petition Fraud. According to information from the Secretary of State's office, between 1994 and 2015, the office opened 273 cases investigating potential petition fraud, of which 50 cases were referred for prosecution. These figures do not include petition fraud investigations that may have been conducted by other law enforcement agencies around the state.

Labor Law Implications. This bill prohibits the payment of individuals on a per-signature basis for collecting signatures on petitions. Typically, in California, those individuals who are paid to circulate petitions or register voters on a per-signature or per-piece basis are independent contractors. However, to the extent that this bill forces individuals who are paid to circulate petitions or register voters to be paid an hourly wage, this bill could also result in these individuals being considered employees under California law. As such, the individual, corporation, or group paying individuals to circulate petitions may be required to pay minimum wage, provide workers compensation insurance and unemployment insurance for its employees, etc.

COMMENTS

1. According to the author: The initiative, referendum, and recall processes can and should play an important and valued role in California’s politics and governance. It has become clear, however, that under the current system, driven by per-signature bounties, there are scant prospects for deterring bad actors who willfully mislead voters at the expense of the integrity of the electoral process. Other states have similarly examined the issues surrounding paid signature gatherers and have adopted legislation prohibiting per-signature bounty payments for signature gathering, requiring that payment for signature gathering may only be made on an hourly or salary basis. These states include Colorado, Montana, North Dakota, Oregon, and South Dakota. California should do the same. Our democracy and governance will be the better for it.
   
   To the original framers’ way of thinking, the initiative, referendum, and recall represented a means for “the little guy” to achieve direct, reformist actions that elected and vested interests might otherwise thwart. Over the years, and especially in recent decades, however, something very different has transpired: these tools of direct democracy have been effectively co-opted by the very moneyed interests they were originally intended to offset. And as these moneyed interests have become increasingly adept at using the initiative, referendum, and recall processes to their benefit, often at the expense of other statewide or local interests, an “arms race” around these processes has ensued, especially as it pertains to signature gathering. And as the stakes have risen, a highly sophisticated mini-economy has grown up around signature gathering. At its center, a small number of specialized firms with expertise in signature gathering have come to dominate, offering their services to proponents seeking to place a measure on the ballot.
   
   One of the principal tactics used by these specialized signature-gathering firms is the deployment of well trained, professional signature gatherers. Typically, these signature gatherers are paid on a per signature or commission basis, also known as a bounty, at a rate determined by the market as it assessed at the time. Depending on the nature of the initiative, the characteristics of the district, the time of year, or competition with other initiatives at a given time, the cost per signature can vary widely, from as low as $2 per signature gathered to as high as $20. Against this backdrop, the determining factor for getting a measure on the ballot too often has less to do with its merits and more to do with the depth of the pockets of its proponents. And because bounty-paid signature gatherers optimize their yield based on how rapidly they can secure signatures from voters, they frequently traffic in misleading information and outright falsehoods in order to induce as many voters as possible to sign in the minimum amount of time.
   
   This collision between economic self-interest and the public interest has a direct and deleterious impact on the integrity of direct democracy in California. And the fact that it is already explicitly illegal under California’s elections and government codes to intentionally mislead a voter as to the nature and intent of a signature-gathering operation seems to offer little by way of an impediment to unethical behavior in signature gathering.
   
   This bill would affect signature gathering companies and their professional employees who travel from state to state, wherever the bounty per-signature is highest and likely to provide the largest return.
   
2. Argument in Opposition. In a letter opposing SB 1394, the Howard Jarvis Taxpayers Association stated the following:

HJTA is broadly opposed to any bill that would curtail the initiative process and the peoples’ right to be actively involved in their own governance. The number of signatures needed to qualify a measure for the ballot (over one million in some cases) will make it difficult to conduct this process, even if the gatherers can be paid on an hourly rate. Government should not be infringing on a contract between private individuals: the gatherer, the signature firm, and a campaign. This process may well also be unconstitutional on First Amendment grounds.

Rather than punishing people for engaging in a free market contract to further democratic governance, a better solution would be to increase the amount of time to gather signatures from six months to a year or decreasing the amount of signatures needed to qualify a measure. This would decrease reliance on paid signature gatherers while furthering direct democracy.

1. Multiple Referral. This bill has also been referred to the Senate Judiciary and Senate Public Safety Committees for policy review as well as the Senate Appropriations Committee for fiscal review.

RELATED/PRIOR LEGISLATION

AB 1947 (Low), which is currently pending in the Assembly Appropriations Committee, is similar to SB 1394, except that it does not permit a private individual to bring a civil action to enforce the bill.

SB 1394 is also similar in intent to the following prior bills:

SB 168 (Corbett) of 2011, which was vetoed by Governor Brown. In his veto message, the Governor stated that "per-signature payment is often the most cost-effective method for collecting the hundreds of thousands of signatures needed to qualify a ballot measure," and that "[e]liminating this option will drive up the cost of circulating ballot measures, thereby further favoring the wealthiest interests."

SB 34 (Corbett) of 2009, which was vetoed by Governor Schwarzenegger, was identical to SB 168.

AB 2946 (Leno) of 2006, which was vetoed by Governor Schwarzenegger.

POSITIONS

Sponsor: Author

Support: None received

Oppose: California Business Properties Association

California Chamber of Commerce

California Taxpayers Association

Howard Jarvis Taxpayers Association

San Diego Regional Chamber of Commerce

Southwest California Legislative Council

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