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The Committee to Elect Dan Forest v. Employees Political Action Committee (EMPAC)

Court of Appeals of North Carolina

June 19, 2018

THE COMMITTEE TO ELECT DAN FOREST, a political committee, Plaintiff,

          Heard in the Court of Appeals 16 October 2017.

          Appeal by Plaintiff from order entered 15 February 2017 by Judge Allen Baddour in Wake County No. 16-CV-003099 Superior Court.

          Walker Law Firm, PLLC, by David "Steven" Walker, for the Plaintiff-Appellant.

          Stevens Martin Vaughn & Tadych, PLLC, by C. Amanda Martin, for the Defendant-Appellee.

          DILLON, Judge.

         During the 2012 election cycle, a political advertisement sponsored by the Employees Political Action Committee ("EMPAC"), the political arm of the State Employees Association of North Carolina ("SEANC"), ran on television supporting Linda Coleman, Democratic candidate for Lieutenant Governor. The Committee to Elect Dan Forest (the "Committee") commenced this action seeking statutory damages, contending that EMPAC's television ad violated the "stand by your ad" law, which was still in effect during the 2012 campaign cycle.

         The trial court granted summary judgment for EMPAC, concluding that the law was unconstitutional as applied because Mr. Forest could not forecast any evidence that he suffered any actual damages, presumably because Mr. Forest won the election anyway. We reverse the trial court's order granting summary judgment and remand the matter for further proceedings consistent with this opinion.

         I. Background

         In 1999, the General Assembly enacted a "stand by your ad" law, codified in N.C. Gen. Stat. § 163-278.39A (hereinafter referred to as the "Disclosure Statute"), to regulate political advertisements. The Disclosure Statute required in relevant part that any television ad sponsored by a political action committee contain: (1) a "disclosure statement" identifying the sponsor of the ad spoken by either the sponsor's chief executive officer ("CEO") or its treasurer; and (2) a "full-screen picture containing [this] disclosing individual" featured during the disclosure statement. N.C. Gen. Stat. § 163-278.39A(b)(3) and (6) (2012).[1]

         The Disclosure Statute creates the right for a candidate to seek statutory damages against an ad sponsor who runs a non-conforming ad in the candidate's race. N.C. Gen. Stat. § 163.278.39A(f).

         In 2012, North Carolina's race for Lieutenant Governor featured two candidates: Dan Forest and Linda Coleman. EMPAC ran a television advertisement in support of Ms. Coleman during the 2012 election cycle. There is evidence in the Record that this ad's disclosure statement violated the Disclosure Statute in two different ways: (1) the picture of the disclosing individual was not a "full-screen" picture, but rather was much smaller; and (2) the disclosing individual depicted in the ad was neither EMPAC's CEO nor Treasurer, but was rather Dana Cope, the then-CEO of EMPAC's affiliate entity, SEANC.

         Mr. Forest's Committee filed a notice of complaint with the State Board of Elections (the "SBOE"), whereupon EMPAC pulled the offending ad and ran a new ad for the remainder of the 2012 election cycle with a disclosure which complied with the Disclosure Statute. Mr. Forest won the 2012 election for Lieutenant Governor by a narrow margin of 6, 858 votes out of over 4 million votes cast. After the election, Mr. Forest's Committee commenced this action seeking statutory damages against EMPAC for its nonconforming ad supporting Ms. Coleman. The trial court granted summary judgment to EMPAC. The Committee timely appealed.

         II. Condition Precedent

         Before addressing the arguments of the parties, we address the argument raised by our dissenting colleague. Specifically, the Disclosure Statute requires that in order to preserve the right to bring an action for damages, a candidate's committee must first "complete and file a Notice of Complaint" with the SBOE regarding the nonconforming ad no later than three days after the election. N.C. Gen. Stat. § 163-278.39A(f)(1).[2] Our dissenting colleague contends that the Record fails to demonstrate that the Committee filed a notice of complaint with the SBOE by the Friday following the 2012 election as required by the Disclosure Statute.

         We agree with our dissenting colleague that the requirement to file a notice of complaint with the SBOE is a statutory "condition precedent" which cannot be waived; that is, by the terms of the Disclosure Statute, it was a condition precedent to bringing this matter that Mr. Forest's Committee first have lodged a complaint with the SBOE regarding EMPAC's ad by the Friday following the election. See Bolick v. American Barmag Corp., 306 N.C. 364, 368-69, 293 S.E.2d 415, 419 (1982). However, we disagree with our dissenting colleague that the Record lacks sufficient evidence to create an issue of fact that the Committee satisfied this condition precedent. Specifically, the Record contains a verified Complaint[3] in which the Committee alleges that it indeed sent a notice of complaint regarding EMPAC's nonconforming ad to the SBOE before the election, in late October 2012. Additionally, the Record contains a copy of this notice of complaint, which was attached as an exhibit to the verified Complaint. This notice of complaint is dated 26 October 2012, it states that it is being filed that same day, and it too is verified. There was no other evidence before the trial court at the summary judgment hearing concerning this issue; EMPAC never raised the issue at summary judgment nor has EMPAC raised the issue in its brief on appeal. Accordingly, we conclude that the Record shows that the Committee met its burden at summary judgment of presenting evidence that it timely filed a notice of complaint with the SBOE.

         We note the dissent's argument concerning the lack of a file stamp of the SBOE on the copy of the notice of complaint contained in the Record. We disagree with the dissent that this lack of a file stamp is fatal to the Committee's claim. First, the lack of a file stamp does not bear on our appellate jurisdiction; and therefore, Crowell v. State, 328 N.C. 563 (1991) and McKinney v. Duncan, __ N.C.App. __, __, 808 S.E.2d 509, 512 (2017), cited in the dissent, are inapposite. It is clear from the Record that our Court has appellate jurisdiction to consider the trial court's summary judgment.

         Secondly, the lack of a file stamp was not fatal to the superior court's jurisdiction. Though the Committee bears the burden to show that it filed a notice of complaint with the SBOE within three days of the 2012 election, we note that providing a filed stamped copy of the notice is not the only way in which the Committee may meet its burden. Indeed, even the cases cited by our dissenting colleague, State v. High, 230 N.C.App. 330, 750 S.E.2d 9 (2013) and State v. Moore, 148 N.C. App 568, 559 S.E.2d 565 (2002), suggest that producing a file-stamped copy is not the only means to meet the burden of showing that a document was filed. These cases stand for the proposition that a trial court lacks jurisdiction to revoke a criminal defendant's probation based on a probation violation report which was not filed prior to the expiration of the defendant's probation period. In each case, we held that the State failed to meet its burden to show that the probation violation report was filed prior to the expiration of the defendant's probation period. However, we recognized that presenting a filed-stamped copy was not the only way which the State could have met its burden. For instance, in High, we vacated the trial court's order because "the [violation] reports were not filed stamped, nor [was] there any other evidence in the record indicating that the reports were actually filed within the period of probation." High, 230 N.C.App. at 336, 750 S.E.2d at 14 (emphasis added). And in Moore, we vacated the trial court's order, stating that "[i]n the absence of a filed stamped motion or any other evidence of the motion's timely filing[, ] the trial court is without jurisdiction." Moore, 148 N.C.App. 570, 559 S.E.2d at 566 (emphasis added). But in the matter before us, though the copy of the notice of complaint in the Record lacks the file stamp of the SBOE, the Record does contain other evidence showing that the notice of complaint was timely filed with the SBOE, as outlined above.

         III. Analysis

         We now turn to the arguments raised by the parties in their appellate briefs. In this matter, the trial court granted summary judgment in favor of EMPAC on the Committee's claim for statutory damages, concluding that "in the absence of any forecast of actual demonstrable damages [suffered by Mr. Forest], the statute at issue is unconstitutional as applied." In essence, the trial court did not declare the Disclosure Statute unconstitutional per se, but rather held that Mr. Forest lacked standing to seek damages under the Statute since he did not suffer any actual damages, apparently because he won the election.

         On appeal, the Committee contends that the trial court erred in its ruling. EMPAC argues that the trial court correctly determined that the Disclosure Statute is unconstitutional as applied and further argues that the Disclosure Statute is unconstitutional on its face. We review these constitutional arguments de novo. Forbis v. Neal, 361 N.C. 519, 524, 649 S.E.2d 382, 385 (2007) ("The standard of review for summary judgment is de novo."); State ex rel. McCrory v. Berger, 368 N.C. 633, 639, 781 S.E.2d 248, 252 (2016) ("We review constitutional questions de novo.").

         A. Dan Forest's Committee Has Standing To Seek Damages.

         The trial court essentially concluded that Dan Forest's Committee lacked standing to bring this suit based on the absence of any evidence that Mr. Forest suffered any actual damage. That is, because Mr. Forest won the 2012 election, he had no standing, in the constitutional sense, to seek statutory damages allowed under the Disclosure Statute. However, based on controlling precedent, it is clear that Mr. Forest's Committee does have standing: simply because Mr. Forest won his election does not mean that he did not suffer an injury sufficient in a constitutional sense to confer standing.

         The North Carolina Constitution provides in regard to standing as follows:

All courts shall be open; every person for an injury done him in his lands, goods, person, or reputation shall have remedy by due course of law; and right and justice shall be administered without favor, denial, or delay.

N.C. Const. art. I, § 18 (emphasis added). According to our Supreme Court, "[t]he North Carolina Constitution confers standing on those who suffer harm[, ]" Mangum v. Raleigh Bd. of Adjustment, 362 N.C. 640, 642, 669 S.E.2d 279, 281 (2008), and that one must have suffered some "injury in fact" to have standing to sue, Dunn v. Pate, 334 N.C. 115, 119, 431 S.E.2d 178, 181 (1993).

         Our Supreme Court has held in a variety of contexts that a party has standing to bring suit where a private right has been breached, even where the party has not suffered actual damages beyond that fact that a breach occurred. The breach itself is an "injury in fact." For instance, one has standing to seek nominal damages "where some legal right has been invaded but no actual loss or substantial injury has been sustained. Nominal damages are awarded in recognition of the right and of the technical injury resulting from its violation." Potts v. Howser, 274 N.C. 49, 61, 161 S.E.2d 737, 747 (1968). A party to a contract has standing to bring suit where the other party has breached the contract, even if no actual damage is shown. Kirby v. Stokes County, 230 N.C. 619, 627, 55 S.E.2d 322, 327 (1949). An owner of land has the right to exclusive possession of his property and has standing to bring suit against anyone who trespasses, even where the owner suffers no actual damage; the owner's legal right to exclusive enjoyment of his property has been invaded. Hildebrand v. Southern Bell, 219 N.C. 402, 408, 14 S.E.2d 252, 257 (1941) (holding that a landowner "is entitled to be protected as to that which is his without regard to its money value").

         If EMPAC had slandered Mr. Forest in its political ad, Mr. Forest would have had standing to seek at least nominal damages for this tort, even though he won the election. Wolfe v. Montgomery Ward, 211 N.C. 295, 296, 189 S.E.2d 772, 772 (1937) (holding that a plaintiff who has been slandered has standing to seek nominal damages even where there is no evidence that he suffered actual damages).

         The private right at issue in the present case was not one that existed at common law but rather was one created by our General Assembly in the Disclosure Statute to provide an enforcement mechanism. This private right is a right expressly conferred by our General Assembly on a candidate to participate in an election where sponsors of political ads supporting his or her opponent must make themselves known to the public in their ads. The General Assembly acted within its authority to create a private right not recognized in the common law:

The legislative branch of government is without question the policy-making agency of our government, and when it elects to legislate in respect to the subject matter of any common law rule, the statute supplants the common law rule[.]

Rhyne v. K-Mart Corp., 358 N.C. 160, 169, 594 S.E.2d 1, 8 (2004). See also Bumpers v. Cmty. Bank, 367 N.C. 81, 88, 747 S.E.2d 220, 226 (2013) (recognizing our General Assembly's authority to prohibit unfair and deceptive trade practices and to create a private cause of action in favor of a class of individuals to enforce this prohibition).

         Our Court has held that a party has standing to sue for statutory damages without having to demonstrate actual damages where the statute at issue creates a private cause of action as a mechanism to enforce the provisions of the statute at issue. See Addison v. Britt, 83 N.C.App. 418, 421, 350 S.E.2d 158, 160 (1986) (Chief Judge Eagles, joined by future Chief Justice Parker and future Justice Webb, writing that "[o]nce a violation of an actionable portion of the [Truth In Lending Act] is established, the debtor is entitled to recover statutory damages [and that b]ecause the purpose of that section is to encourage private enforcement of the Act, proof of actual damages is unnecessary").

         Concerning the Disclosure Statute at issue here, in 2012, in an opinion joined by Judge (now Justice) Beasley, our Court recognized that by enacting the Disclosure Statute in 1999, the General Assembly made the policy decision to create disclosure rules in political advertising and to enforce those rules through a "private cause of action, " by which candidates may seek statutory damages when those rules have been broken. Friends of Queen v. Hise, 223 N.C.App. 395, 735 S.E.2d 229 (2012) (footnote 7). The General Assembly expressly created a private right of action for political candidates and their committees to enforce its policy decision to require that political television ad sponsors be properly disclosed. It is equally clear that a candidate suffers an "injury in fact" for a breach, even a technical breach, of this right when an ad is run in the candidate's election which runs afoul of the Disclosure Statute. This "injury in fact" is a breach of a private right similar to a breach of a private right suffered by a party to a contract who has suffered a breach by the other party to that contract, or by a landowner whose land has been trespassed upon, or by an individual who has been slandered. Even though there may not be any other actual damage, like the loss of an election; the breach of the private right, itself, constitutes an injury which provides standing to seek recourse.[4]

         We are not to be concerned with the "wisdom or expediency" of the Disclosure Statute, but rather we are only concerned with whether the General Assembly had the "power" to enact the law. In re Denial, 307 N.C. 52, 57, 296 S.E.2d 281, 284 (1982). We conclude that the General Assembly acted within its authority in 1999 when it enacted the Disclosure Statute to require that political ads disclose their sponsors and to provide the committee of a political candidate running for office with a private cause of action to seek damages against the ...

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