IN THE COURT OF APPEALS OF THE STATE OF MISSOURI WESTERN DISTRICT REX A. SINQUEFIELD, et al., Plaintiffs/Respondents, vs.

JASON KANDER, et al., Defendants, TODD S. JONES, et al., Intervenors/Appellants. ) ) ) ) ) ) ) ) ) ) ) ) )

Case No. WD77056

Appeal from the Circuit Court of Cole County, Missouri Nineteenth Judicial Circuit The Honorable Jon E. Beetem, Judge

BRIEF OF PLAINTIFFS/RESPONDENTS REX A. SINQUEFIELD AND TRAVIS H. BROWN

Marc H. Ellinger, #40828 Stephanie S. Bell, #61855 BLITZ, BARDGETT & DEUTSCH, L.C. 308 East High Street, Suite 301 Jefferson City, MO 65101 Telephone No.: (573) 634-2500 Facsimile No.: (573) 634-3358 Attorneys for Plaintiffs/Respondents Rex A. Sinquefield and Travis H. Brown

TABLE OF CONTENTS Table of Authorities ............................................................................................................ 4 Jurisdictional Statement ...................................................................................................... 5 Statement of Facts .............................................................................................................. 6 A. Background .......................................................................................................... 6 B. The Initiative Petition Fiscal Note ....................................................................... 6 C. The Initiative Petition Fiscal Note Summary ...................................................... 9 D. Sinquefield v. Kander ......................................................................................... 9 E. Sinquefield v. Kander Appeal ........................................................................... 10 Argument ........................................................................................................................... 11 Introduction ............................................................................................................ 11 Point I ................................................................................................................................ 12 THE TRIAL COURT DID NOT ERR IN FINDING THAT THE FISCAL NOTE MUST BE REMANDED, BECAUSE THE FISCAL NOTE IS INSUFFICENT AND UNFAIR IN THAT THE FISCAL NOTE INCLUDED THE DEPARTMENT OF REVENUES UNREASONABLE SUBMISSION A. The standard of review is de novo for questions of law and deference to the trial court on contested issues of fact ................................................................ 12 B. Facts determined by the trial court which should be given deference by this court .................................................................................................................. 14 C. The inclusion of the Department of Revenues submission makes the Fiscal Note insufficient and unfair .............................................................................. 14
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Point II ............................................................................................................................... 18 THE TRIAL COURT DID NOT ERR IN FINDING THAT THE FISCAL NOTE SUMMARY MUST BE REMANDED, BECAUSE THE FISCAL NOTE SUMMARY IS INSUFFICENT AND UNFAIR IN THAT THE FISCAL NOTE SUMMARY FAILED TO REFLECT THE NUMBERS IN THE ELLINGER SUBMISSION AND IMPROPERLY SUGGESTED THAT THE FISCAL IMPACT COULD BE POSITIVE A. The Standard of Review is de novo for questions of law and deference to the trial court on contested issues of fact ................................................................ 18 B. Facts determined by the trial court which should be given deference by this court .................................................................................................................. 20 C. The Auditor does not have the discretion to consider arguments made at trial based on information not in the record before him when drafting the Fiscal Note and Fiscal Note Summary ........................................................................ 21 D. The Ellinger Submission is not speculative ...................................................... 25 E. The Trial Court correctly determined that the Fiscal Note Summary must reflect the numbers in the Ellinger Submission ................................................ 26 F. The Trial Court correctly determined that the Fiscal Note Summary must reflect the numbers in the Ellinger Submission ................................................ 27 Conclusion ........................................................................................................................ 29 Certificate of Compliance with Rule 84.06(b) and (c) ..................................................... 31 Certificate of Service ........................................................................................................ 32
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TABLE OF AUTHORITIES Brown v. Carnahan, 370 S.W.3d 637 (Mo. banc 2012)............................ 21, 22, 23, 24, 27 Buchanan v. Kirkpatrick, 615 S.W.2d 6 (Mo. banc 1981) ................................................ 16 Essex Contracting Inc. v. Jefferson Cnty., 277 S.W.3d 647 (Mo. banc 2009)............ 13, 19 Missouri Municipal League v. Carnahan, 303 S.W.3d 573 (Mo. App. W.D. 2010) ........ 28 Moore v. Bi-State Dev. Agency, 132 S.W.3d 241 (Mo. banc 2004) ............................ 13, 19 Murphy v. Carron, 536 S.W.2d 30 (Mo banc. 1976) ............................................ 12, 13, 19 Safeco Ins. Co. of America v. Stone & Sons, Inc. 822 S.W.2d 565 (Mo. App. E.D. 1992) .. ..................................................................................................................................... 13, 20 White v. Director of Revenue, 321 S.W.3d 298 (Mo. banc 2010) ............. 12, 13, 14, 18, 19 Section 116.175, RSMo ..................................................................................................... 21 Section 116.175.1, RSMo .................................................................................................. 21 Section 116.180, RSMo ....................................................................................................... 6 Section 116.190, RSMo ................................................................................................... 5, 9 Section 116.190.4, RSMo .................................................................................................... 5 Section 116.334, RSMo ....................................................................................................... 6 Section 477.070, RSMo ....................................................................................................... 5 Mo. Const. art. V, 3 .......................................................................................................... 5

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JURISDICTIONAL STATEMENT This appeal was filed regarding a Final Judgment of the Circuit Court of Cole County, Judge Beetem, holding that the Fiscal Note and Fiscal Note Summary of the State Auditor for Initiative Petition No. 2014-032, filed by Todd S. Jones, was unfair and insufficient and remanding such Fiscal Note and Fiscal Note Summary to the State Auditor. The underlying action was filed under Section 116.190, RSMo, and the appeal was taken under Section 116.190.4, RSMo. This case does not raise any of the claims or issues that vest jurisdiction in the Supreme Court and thus such appeal is in the jurisdiction of the Court of Appeals. Mo. Const. art. V, 3. Since this case arises out of the Circuit Court of Cole County, jurisdiction is vested in the Western District of the Court of Appeals. 477.070, RSMo.

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STATEMENT OF FACTS A. Background On May 3, 2013, Todd S. Jones submitted a sample sheet to Defendant Kander for an initiative petition regarding campaign contribution limitations (hereafter Initiative Petition.).1 (Legal File 303-12) (hereinafter L.F. _____). On May 6, 2013,

Defendant Kander sent the initiative petition to the State Auditor for preparation of a Fiscal Note and Fiscal Note Summary. (L.F. 314). On May 28, 2013, the State Auditor sent his Fiscal Note Summary for the Initiative Petition to Missouri Attorney General Christopher Koster for review and approval pursuant to Section 116.334, RSMo. (L.F. 317). On June 7, 2013, Attorney General Koster sent Opinion Letter No. 36-2013 to

Defendant Kander, approving the legal content and form of the Fiscal Note and Fiscal Note Summary. (L.F. 386). On June 12, 2013, Defendant Kander certified the official ballot title of the Initiative Petition (Official Ballot Title) pursuant to Section 116.180, RSMo. (L.F. 389). B. The Initiative Petition Fiscal Note The Fiscal Note prepared by the State Auditor contained submissions from a number of state entities, including the Department of Revenue. (L.F. 318-23). It also

Appellants Statement of Facts contains extensive argument and matters beyond the

record in this case (including citations to editorial pages and allegations with no factual support). Pursuant to Rule 84.04(f), Respondents submit this Statement of Facts in compliance with Rule 84.04(c).

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included several submissions from local government entities and educational institutions. (L.F. 321) Finally, the Fiscal Note contained a submission by an opponent of the proposed measure, Marc H. Ellinger (the Ellinger Submission) (L.F. 323-383). The Fiscal Note includes the following response attributed to the Department of Revenue: [T]he Department of Revenue indicated this initiative petition will have no impact on their department. The officials indicated they had no way of measuring the proposals [sic] economic impact. (L.F. 320). This language in the Fiscal Note is the Auditors summary of the following exchange: State Auditors Office (SAO): [P]lease also comment on the revenue impact to the state in the attached proposed statement of fiscal impact Department of Revenue (DOR): While we have no expertise in the area of the impacts of campaign spending.This will not impact the Department of Revenue. SAO: You do not think the proposal will impact revenue to the state? DOR: We would have no way of measuring the economic impact it may generate. SAO: The submission is projecting a decrease in state revenue not an increase. DOR: Im sorry. I meant that any campaign spending would generate. (L.F. 429-30). The Fiscal Note also includes the Ellinger Submission which contained estimates of fiscal impact to both state and local entities. (L.F. 323-83). The State Auditors
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official representative, Jon Halwes, testified that the data in the Ellinger Submission was supported by verifiable source citations. (Transcript 47:16 - 48:19) (hereinafter Tr. _____). The Auditor found, as did the trial court, that the Ellinger Submission was complete and reasonable. (L.F. 612). With respect to the costs associated with lost revenue to state entities, the only substantive responses received by the Auditor were from Marc Ellinger and the Department of Revenue. (L.F. 320, 323-83). The Ellinger Submission indicated a

negative impact to the state based on lost state income tax, corporate income tax, and state sales tax of more than $7.3 million dollars. (L.F. 330-31). The Department of Revenue, as described above, only indicated they would have no way of measuring the economic impact. (L.F. 429-30). After being given the Ellinger Submission to review prior to their response, the Department of Revenue indicated that it was unable to independently measure the economic impact. (L.F. 429-30). No submission

contradicted or conflicted with the numbers in the Ellinger Submission. (Tr. 48:2 54:11). No submission suggested that there would be a positive impact on state

governmental entities. (L.F. 318-83; Tr. 55:19-22). The Auditor summarized such impact as follows: Any potential impact to revenues for state governmental entities is unknown. (L.F. 380). With respect to the costs associated with lost revenue to local entities, the only responses received by the Auditor were from Marc Ellinger, the City of Columbia, the City of Jefferson, the City of Kansas City and the City of Raymore. (L.F. 321, 323-83). The City of Jefferson, the City of Kansas City and the City of Raymore responses stated:
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no impact. (L.F. 32). The City of Columbia stated it is impossible for the city to determine if this would increase or decrease contributions[.] (L.F. 321). The Ellinger

Submission indicated a more than $1.2 million dollar impact on local governments as a result of lost earnings taxes and lost sales taxes. (L.F. 331-32). No submission suggested that there would be a positive impact on local governmental entities. (Tr. 96:9-11). The Auditor summarized these responses in his summary as follows: Any potential impact to revenues forlocal governmental entities is unknown. (L.F. 380). C. The Initiative Petition Fiscal Note Summary The Fiscal Note Summary of the Official Ballot Title of the Initiative Petition (Fiscal Note) reads: It is estimated this proposal will increase state government costs by at least $118,000 annually and have an unknown change in costs for local government entities. Any potential impact to revenues for state and local governmental entities is unknown. (L.F. 380). D. Sinquefield v. Kander Respondents Sinquefield and Brown filed a lawsuit challenging the ballot title for Initiative Petition 2014-032 on December 30, 2011. (L.F. 6-37). The lawsuit named

Secretary of State Jason Kander and State Auditor Thomas Schweich as the Defendants, pursuant to Section 116.190, RSMo. (L.F. 6-37).

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On August 16, 2013, Appellants Todd S. Jones and Missouri Roundtable For Life filed a Motion to Intervene as Party Defendants. (L.F. 101-05). The Motion was granted and Respondents/Intervenors Answer was filed. (L.F. 106-21). On October 15, 2013 Respondents Sinquefield & Brown filed a Motion for Partial Summary Judgment and Suggestions in Support thereof (L.F. 3; 192-200) with respect to the Secretarys Summary Statement. Defendant Kander filed a Response and

Memorandum in Opposition on October 22, 2013. (L.F. 3). Defendant Kander, Respondents Sinquefield and Brown, and Intervenors filed Pre-Trial Briefs on October 18, 2013. (L.F. 236-99). On October 21, 2013, a Joint Stipulation of Facts and Exhibits was filed. (L.F. 300-577). On October 23, 2013 the court heard evidence, including the testimony of Jon Halwes as representative of the State Auditor, and arguments by the parties on all pending claims and took the case under advisement. (L.F. 4). On November 26, 2013, the trial court entered judgment ruling that (1) the Fiscal Note and Fiscal Note Summary are insufficient and unfair; (2) the Secretarys summary statement is fair and sufficient and (3) Plaintiffs constitutional claims in Count IV, V, and VI are not ripe. (Appendix to Appellants Brief at A18-19). E. Sinquefield v. Kander Appeal On November 27, 2013, Appellants filed a Notice of Appeal. (L.F. 5). Appellants filed their Brief on December 10, 2013.

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ARGUMENT INTRODUCTION Appellants raise two points on appeal, the first being that the trial court erred in holding that the Fiscal Note was insufficient and unfair and the second being the trial court erred in holding the Fiscal Note Summary was insufficient and unfair. With respect to their first point, Appellants claim that the Department of Revenues submission was reasonable and properly included in the Fiscal Note. Related to their second point, Appellants claim: (1) the Auditor properly exercised discretion in determining the Ellinger Submission was speculative and assigning it less weight, (2) the Ellinger Submission was speculative based on the submission itself, (3) the court erred in holding that the Fiscal Note Summary should include the Ellinger Submission numbers, and (4) the court erred in holding the Fiscal Note Summary should include the word negative. Neither point raised by Appellants is supported by the facts or the applicable law. The trial court was correct in its ruling that the Fiscal Note and Fiscal Note Summary were both unfair and insufficient and should be remanded to the State Auditor for a new Fiscal Note and Fiscal Note Summary. This Court should affirm the Judgment.

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I. THE TRIAL COURT DID NOT ERR IN FINDING THAT THE FISCAL NOTE MUST BE REMANDED, BECAUSE THE FISCAL NOTE IS INSUFFICENT AND UNFAIR IN THAT THE FISCAL NOTE INCLUDED THE DEPARTMENT OF REVENUES

UNREASONABLE SUBMISSION. (Responds to Appellants Brief Point I) The trial court correctly found that the Auditor included in the Fiscal Note a response from the Department of Revenue which was unreasonable. The trial courts determination was based on facts adduced at trial. Appellants bear a heavy burden to show that the trial court erred based on fact issues. They have not carried this burden and thus the trial court should be affirmed. A. The standard of review is de novo for questions of law and deference to the trial court on contested issues of fact The applicable standard of review for appeals of court-tried civil cases is found in White v. Dir. of Revenue, 321 S.W.3d 298, 307-08 (Mo. banc 2010). The judgment of the trial court will be affirmed !unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law." Id. at 307-08 (citing Murphy v. Carron, 536 S.W.2d 30, 32 (Mo banc. 1976)). The determination of the court, as to whether the Auditor#s Fiscal Note and Fiscal Note Summary was insufficient or unfair was, in part, a determination of law. This Court applies de novo review to questions of law decided in court-tried cases. Id. at 308.
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Questions of law are reviewed !independently [and] without deference to [the trial court#s] conclusions." Moore v. Bi-State Dev. Agency, 132 S.W.3d 241, 242 (Mo. banc 2004). The determination of the court, as to whether the Auditor#s Fiscal Note and Fiscal Note Summary was insufficient or unfair was, in part, a determination of contested fact. Evidence is contested when one !dispute[s] a fact in any matter." White, 321 S.W.3d at 308. A factual issue is contested when a party presents contradictory or contrary evidence, through cross-examination, through pointing out internal inconsistences in the evidence. Id. The role of the appellate court is not to !re-evaluate testimony through its own perspective" but rather, the court !confines" itself to the standard set forth in Murphy v. Carron. Id at 309. !Appellate courts defer to the trial court on factual issues $because it is in a better position not only to judge the credibility of witnesses and the persons directly, but also their sincerity and character and other trial intangibles which may not be completely revealed by the record." Id. at 308-09 (quoting Essex Contracting Inc. v. Jefferson Cnty., 277 S.W.3d 647, 652 (Mo. banc 2009)). In addition, fact issues without specific findings in the judgment are considered on appeal as being found in accordance with the result reached (here that the fiscal note and fiscal note summary are insufficient) and this court will affirm the trial court#s judgment if it is correct on any reasonable theory supported by the evidence. Safeco Ins. Co. of America v. Stone & Sons, Inc. 822 S.W.2d 565 (Mo. App. E.D. 1992).

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B. Facts determined by the trial court which should be given deference by this court The trial court found, from the response of the Department of Revenue itself, (1) that the Department had not reviewed the submission sent by the Auditor and (2) that the Department did not understand the Auditors request. (L.F. 620). As a result of these facts, the trial court stated the finding by Mr. Halwes that the response was reasonable was not supported. (L.F. 620). Such facts were still !contested" as described in White, and therefore this Court should defer to the trial court#s determination of such facts. C. The inclusion of the Department of Revenues submission makes the Fiscal Note insufficient and unfair Appellants claim that the Departments statement was clear that they would have no way of measuring the economic impact that any campaign spending would generate. Appellants Brief, p. 19. The Departments statements show just what the trial court concluded, that the Department had not reviewed the Ellinger Submission and they did not understand the request. The Department stated (after supposedly having time to review the Ellinger Submission): We would have no way of measuring the economic impact it would generate. (L.F. 429-30). The Auditor was forced to respond, because the submission the Auditor sent in no way indicated that the proposed measure would in any way generate revenue. The Auditor clarified, The submission is projecting a

decrease in state revenue not an increase. Id. The Department replied, I meant that any campaign spending would generate. Id. Not only is this confusing, it does not respond to the original question of the Auditor: You do not think the proposal will impact
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revenue to the state? There exists no possibility that the Department of Revenue could have reviewed the Ellinger Submission and believed it had suggested that the proposed measure would generate revenue. In addition, the Department did not understand the Auditors request regarding impact [to] revenue of the state when it answered regarding campaign spending. Appellants claim the fact the Department of Revenue did not review the Ellinger Submission is legally irrelevant. Respondents agree that the Auditor is not required to forward a submission to any government entity or compel submission from certain entities. But the fact remains that the Auditor did forward a submission to the

Department of Revenue and follow up with them about such submission. While the Department of Revenue generally has no duty to review another submission, the fact remains that it responded in a manner which was intended to lead the Auditor to believe it had reviewed such submission. The Auditor could assign more or less weight to the Departments response of no impact or unknown impact based on whether or not the Department had the opportunity to review another submission that suggested something different. The Auditor summarized the Departments response as The officials indicate they had no way of measuring the proposals impact. This statement is an incorrect synopsis of the communications from the Department of Revenue because the Department had not reviewed what was sent and because the Department did not understand the Auditors request.

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Appellants claim that the email exchange between the Department of Revenue and the Auditor shows that the Department did, in fact, review the Ellinger Submission. Their basis for the argument is (1) that the Department stated it reviewed such document and (2) that some amount of time passed between the Auditors request and the Departments response. Nothing about the passage of time suggests the Department actually reviewed the submission. And while there might not be any evidence that the Department was purposefully or maliciously lying to the Auditor, the substance of the Departments response makes abundantly clear they had not reviewed the Ellinger Submission. Appellants claim that the Final Judgment contradicts the Courts holding, but the trial courts description of the Department of Revenues response is of no consequence to whether the Fiscal Note itself was insufficient or unfair. Appellants additionally claim that it makes no difference if the Revenue officials had misunderstood the Auditors request. This is untrue. Missouri courts have long recognized that procedural safeguards, both those in the Constitution and those created by the legislature, are important and necessary in the initiative petition process for two reasons: "(1) to promote an informed understanding by the people of the probable effects of the proposed amendment; or (2) to prevent a self-serving faction from imposing its will upon the people without their full realization of the effects." Buchanan v. Kirkpatrick, 615 S.W.2d 6, 11(Mo. banc 1981). The Auditors inclusion of the

Department of Revenues statement in the Fiscal Note is for the purpose of promot[ing] an informed understanding by the people of the probable effects of the proposed
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amendment. If the language in the Fiscal Note is an incorrect summary of what the Department actually communicated, or is based on a misunderstanding between the Auditor and the Department of Revenue, then the language in the Fiscal Note no longer promotes such informed understanding by the people. It actually serves to mislead the people about the probable effects of the proposed amendment, and therefore, renders the Fiscal Note insufficient and unfair. Appellants Point I should be denied.

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II. THE TRIAL COURT DID NOT ERR IN FINDING THAT THE FISCAL NOTE SUMMARY MUST BE REMANDED, BECAUSE THE FISCAL NOTE SUMMARY IS INSUFFICENT AND UNFAIR IN THAT THE FISCAL NOTE SUMMARY FAILED TO REFLECT THE NUMBERS IN THE ELLINGER SUBMISSION AND

IMPROPERLY SUGGESTED THAT THE FISCAL IMPACT COULD BE POSITIVE. (Responds to Appellants Brief Point II) The trial court correctly found that the Fiscal Note Summary should not have left open the possibility of a positive impact to state or local revenues, a conclusion that was not supported by the record before the Auditor. In addition, the trial court correctly found that there was nothing in the record before the Auditor to support a conclusion that the numbers in the Ellinger Submission were speculative and allow the Auditor to give such submission less weight. The trial courts determination was based on facts adduced at trial. Appellants bear a heavy burden to show that the trial court erred based on fact issues. They have not carried this burden and thus the trial court should be affirmed. A. The Standard of Review is de novo for questions of law and deference to the trial court on contested issues of fact The applicable standard of review for appeals of court-tried civil cases is found in White v. Dir. of Revenue, 321 S.W.3d 298, 307-08 (Mo. banc 2010). The judgment of the trial court will be affirmed !unless there is no substantial evidence to support it, it is
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against the weight of the evidence, or it erroneously declares or applies the law." Id. at 307-08 (citing Murphy v. Carron, 536 S.W.2d 30, 32 (Mo banc. 1976)). The determination of the court, as to whether the Auditor#s Fiscal Note and Fiscal Note Summary was insufficient or unfair was, in part, a determination of law. This Court applies de novo review to questions of law decided in court-tried cases. Id. at 308. Questions of law are reviewed !independently [and] without deference to [the trial court#s] conclusions." Moore v. Bi-State Dev. Agency, 132 S.W.3d 241, 242 (Mo. banc 2004). The determination of the court as to whether the Auditor#s Fiscal Note and Fiscal Note Summary was insufficient or unfair was, in part, a determination of contested fact. Evidence is contested when one !dispute[s] a fact in any matter." White, 321 S.W.3d at 308. A factual issue is contested when a party presents contradictory or contrary evidence, through cross-examination, through pointing out internal inconsistences in the evidence. Id. The role of the appellate court is not to !re-evaluate testimony through its own perspective" but rather, the court !confines" itself to the standard set forth in Murphy v. Carron. Id at 309. !Appellate courts defer to the trial court on factual issues $because it is in a better position not only to judge the credibility of witnesses and the persons directly, but also their sincerity and character and other trial intangibles which may not be completely revealed by the record." Id. at 308-09 (quoting Essex Contracting Inc. v. Jefferson Cnty., 277 S.W.3d 647, 652 (Mo. banc 2009)). In addition, fact issues without specific findings in the judgment are considered on appeal as being found in accordance with the result reached (here that the fiscal note and fiscal note summary are insufficient)
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and this court will affirm the trial court#s judgment if it is correct on any reasonable theory supported by the evidence. Safeco Ins. Co. of America v. Stone & Sons, Inc. 822 S.W.2d 565 (Mo. App. E.D. 1992). B. Facts determined by the trial court which should be given deference by this court The trial court made a factual finding that the only substantive responses regarding impact to local government entities were the Ellinger Submission and the submission from the City of Columbia. (L.F. 620). Columbia stated that it was impossible to determine whether the proposed measure would increase or decrease contributions. Id. The data in the Ellinger Submission showed more than a $1.2 negative fiscal impact on local government entities as a result of lost tax revenues. Id. The trial court found that the data was supported by verifiable source citations based on the testimony of Mr. Halwes. Id. The trial court also found no submission indicated a positive impact to local governmental entities. Id. The trial court found the only responses regarding state revenue impact were the Ellinger Submission and the submission from the Department of Revenue. (L.F. 621). The data in the Ellinger Submission showed more than a $7.3 million dollar loss to state revenues as a result of lost state income tax, corporate income tax, and state sales tax. Id. The Department of Revenue only indicated they would have no way of measuring economic impact and the trial court found its response to be unreasonable. Id. The trial court found that the Department of Revenues response did not cast doubt on any of the underlying assumptions in the Ellinger Submission. Id. This Court should defer to the
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trial court#s determination of such facts. C. The Auditor does not have the discretion to consider arguments made at trial based on information not in the record before him when drafting the Fiscal Note and Fiscal Note Summary Appellants argue that that the word assess in Section 116.175.1, RSMo, gives the Auditor the discretion to review an opponents submission, determine whether it is speculative, and if so, give it less weight when preparing a fiscal note summary. To the contrary, Section 116.175, RSMo, dictates that the Auditor must rely on the information in the record before him when preparing the Fiscal Note Summary. The Auditor has previously taken this position, and this position has been upheld by the Missouri Supreme Court.2 In Brown v. Carnahan, 370 S.W.3d 637, 649 (Mo. banc 2012), the Missouri Supreme Court determined the Auditor is conducting an investigation when preparing a fiscal note and fiscal note summary. The Court explained that the process is an official inquiry performed to statutory directive. Id. The court closely examined the Auditors

See Brown v. Carnahan, 370 S.W.3d 637, 649 (Mo. banc 2012) (The Auditor argued

that he was not required to look beyond the record before him when preparing a fiscal note and fiscal note summary and that even if the later adduced information about fiscal impact was true, because it was not part of the record before him, it was appropriately absent from the Fiscal Note and Fiscal Note Summary. The Missouri Supreme Court agreed.).

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process and procedures. With respect to the process, the court stated: The auditor does not analyze or evaluate the correctness of the returned fiscal impact submissions. Rather, he or she examines the submissions, to determine whether they appear complete, are relevant, have an identifiable source and are relevantWith respect to reasonableness, the auditor examines the submission to establish whether it address or diverges from the particular issue. Id. (emphasis added). Appellants would like to have the Auditor conduct independent research, or analysis, or double-check the theories and assumptions in the Ellinger Submission. But, according to the Missouri Supreme Court, this is not the Auditors role.3 The Missouri Supreme Court continued to explain the process: The auditor then drafts the fiscal note and fiscal note summary based solely on the responses he or she receives. Id. at 649. Appellants would like the Auditors fiscal note summary to reflect the attacks on the Ellinger Submission present in their Pre-Trial Brief (L.F. 273-74). The fundamental flaw with this argument is that such attacks were not part of any of the responses the Auditor received when preparing the fiscal note and fiscal note summary. Such attacks were only made many months later, just days before trial, and thus cannot be a factor in the Fiscal Note or Fiscal Note Summary under Brown.

" The

Appellants themselves could have made a submission to the State Auditor

suggesting the Ellinger Submission is speculative, but they chose not to do so.

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In Brown, the Auditor conceded that he conducts no independent research or analysis regarding the fiscal impact of a proposed initiative. Id. Appellants suggest that the Auditor was justified in discounting the Ellinger Submission based on the assumptions contained in the submission itself. Again, the grounds for questioning such assumptions were not brought to light until many months following the Auditors actual preparation of the summary, and come directly from Appellants Pre-Trial Brief, which was not before the Auditor when he was drafting the Fiscal Note Summary. Missouri Supreme Court made clear in Brown: The auditor is not required to compel and second-guess reasonable submissions from entities but is able to rely on the responses submitted. Nor should the auditor wade into the policy debates surrounding initiative petitions, which an independent investigation would entail.It is not the auditors role to choose a winner among those opposing viewpoints by independently researching the issue himself [and] double-checking economic theories and assumptions[.] Id. at 650. Now, Appellants assert that there were reasonable grounds for the Auditor to double-check the assumptions in the Ellinger Submission, find them speculative, and give the submission less weight. But according to the Missouri Supreme Court, doublechecking economic theories and assumptions is not the auditors role. Id. Proponents could have submitted information related to the assumptions in the Ellinger Submission but failed to do so. They cannot now use additional information which was not in the record before the Auditor to attempt to save or justify, after-the-fact, an insufficient and unfair Fiscal Note Summary.
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The

This case is nearly identical to one of the initiative cases (the Payday Loan Initiative) at issue in Brown. In that case, an economist testified at trial about the effect of the initiative on 510 lenders and how the Fiscal Note and Fiscal Note Summary did not include the fiscal impact on these lenders. Id. at 666. The trial court in that case ruled that the Fiscal Note was insufficient for not reflecting the impact on 510 lenders. Id. The Missouri Supreme Court pointed out, The economist admittedthat his trial testimony evidenced fiscal impact information on 510 lenders that was not provided to the auditor during the time the auditor was preparing the fiscal note and fiscal note summary. Id. The Missouri Supreme Court, in reversing the decision of the trial court and finding the Fiscal Note and Fiscal Note Summary to be fair and sufficient, stated: The auditor did nothing out of his ordinary practice when incorporating verbatim the fiscal impact submissions that were returned to him, and the initiative opponents are unpersuasive in suggesting that the auditor should have undertaken additional examinations of the fiscal impacts that the initiative would have specifically on 510 lenders[the Auditor need not] look beyond the information he was provided in assessing the fiscal impact on those lenders. Id. at 666-67. Here, Appellants suggest that the Auditor should complete additional examinations related to the fiscal impact of the measure. Appellants want the Auditor to look beyond the submissions that were returned to him in order to find the Ellinger Submission speculative. This is not within the normal procedures of the Auditor, not part of the process that has been approved by Missouri courts, and not within the Auditors discretion.
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D. The Ellinger Submission is not speculative The alleged speculative nature of the Ellinger Submission is not evident from the submission itself as Appellants argue. The nine points in Appellants Brief (p. 2832), which Appellants claim are the basis for Halwes finding the submission speculative, are taken directly from their Pre-Trial Brief and were essentially read into the trial testimony by counsel for Appellants. Mr. Halwes admissions at trial that certain assumptions were not justified is not the same as him reviewing the submission and at the time of drafting the Fiscal Note Summary, it being immediately apparent that the numbers in such submission were somehow inaccurate, unjustifiable, or incomplete. Quite the opposite, Mr. Halwes did not find the Ellinger Submission unreasonable, irrelevant, or inaccurate. (L.F. 396). Moreover, Mr. Halwes found the data in the submission was attributable to verifiable source citations. (Tr. 47:1648:19). Mr. Halwes reviewed the references and articles cited. (Tr. 47:20-22). He reviewed the projections in the Ellinger Submission and found no submissions that contradicted the projections therein. (Tr. 47:24-48:4). Mr. Halwes testified he reviewed the data related to the negative impact to revenues and that he had nothing from the other submissions to contradict such data. (Tr. 54:15-24). On the record before the Auditor and information available to him at the time he was preparing the Fiscal Note and Fiscal Note Summary, there were no grounds for him to find the Ellinger Submission speculative. The trial court expressly found that the Auditor had no basis for finding the Ellinger Submission speculative. (L.F. 622).

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E. The Trial Court correctly determined that the Fiscal Note Summary must reflect the numbers in the Ellinger Submission First, it should be clarified that the trial court did not hold that the Summary must include the specific numbers in the Ellinger Submission. The trial court stated that the numbers from such submission should be reflected in the summary. (L.F. 623). This can be accomplished in a number of ways besides simply stating the specific numbers from the submission. In the past, the Auditor has (1) included a range of numbers or (2) included a lower or upper end estimate to provide potential signors and voters information about the possible effects of the initiative. The Fiscal Note, as it stands, completely disregards the numbers in the Ellinger Submission. This is insufficient and unfair, in light of the Auditors finding that the submission was not unreasonable, irrelevant, or inaccurate. Appellants take issue with reasons for the trial courts holding that Mr. Halwes had no basis for finding the Ellinger Submission speculative. The trial court was attempting to find a basis, any basis, for Mr. Halwes conclusion that the Ellinger Submission was speculative. The three possible bases for such a conclusion are: (1)

from another submission contradicting or questioning the Ellinger Submission; (2) some other source of information or research available to the Auditor; or (3) Mr. Halwes own knowledge about economics and the matters at issue. Appellants argue that the Auditor does not need a separate submission to find the Ellinger Submission speculative and that the Auditor has the discretion to give a submission less weight when the Auditor finds the submission unreasonable.
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Appellants Brief at 34. But those facts were not before the trial court. Mr. Halwes did not find the Ellinger Submission unreasonable, irrelevant, or inaccurate. (L.F. 396).4 As a result, he was not entitled to accord the Ellinger Submission less weight. Appellants misconstrue the trial courts justification for its findings. They argue that Halwes was not required to conduct any additional research, and therefore this cannot be grounds for the courts decision. The trial court is simply stating that the Auditor conceded he did not conduct any independent research on the economic impact and therefore such independent research could not be a basis for finding the Fiscal Note speculative. Similarly, the Missouri courts have recognized from time to time that the Auditor can rely on his own knowledge (for example, about state government) in making determinations regarding the Fiscal Note Summary. Brown v. Carnahan, 370 S.W.3d 637, 649 (Mo. banc 2012). Mr. Halwes conceded at trial that he has no knowledge with respect to the information contained in the Ellinger Submission regarding campaign finance and therefore the trial court ruled out the Halwes knowledge as a basis for finding the submission speculative. (L.F. 622). F. The Trial Court correctly determined that the Fiscal Note Summary must reflect the numbers in the Ellinger Submission The trial court did not err in finding that the Fiscal Note Summary should have included the word negative. Appellants allege that this finding constitutes just the sort of micro-parsing that this Court has repeatedly rejected. Quite the opposite, without the
# In

fact, Mr. Halwes expressly found the submission to be reasonable. (L.F. 396).
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word negative in the Fiscal Note Summary the summary misleads potential signors and voters to the conclusion that the impact of the proposed measure could be positive, when it most certainly will not. Adding the word negative to the Summary is not about finding the best language, but rather about finding language that will not mislead the public. Appellants rely on Missouri Municipal League v. Carnahan, 303 S.W.3d 573 (Mo. App. W.D. 2010). That case is not on point. Plaintiffs argued the trial court erred in affirming the fiscal note summary because the summary suggested a potential savings when no entity reported a savings would result. The Court found that several entities indicated the costs or savings was unknown or provided conditional responses. Id. at 583. The Auditor testified he interpreted the responses to mean there could be indirect costs or savings at some point in time. Id. Therefore, the Auditors summary that costs or savings is unknown was a fair indication to the voters of the responses received. Id. Here, there were not several submissions indicating unknown costs or savings or providing conditional responses. As described herein, the Auditor had no basis for suggesting to potential signors or voters that the proposed measure could result in savings. Finally, Mr. Halwes testimony with respect to the speculative nature of the Ellinger Submission was not based on anything in the record before him when preparing the Fiscal Note Summary. Mr. Halwes had no basis for finding that such submission was speculative and therefore no basis for finding the submission failed to establish that the impact on state and local revenues would necessarily be negative. The only thing
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Mr. Halwes even questioned at the time of preparing the Fiscal Note and Fiscal Note Summary, was whether contributions would be 27 percent of what they would have been without the law change. Tr. 58:16-21. None of the other testimony elicited from Mr. Halwes at trial, through cross examination by Appellants, was identified as an issue with the Ellinger Submission at any time prior to the trial itself. For example, Appellants now claim that smaller contributors might become more prolific and total money in politics would not be affected by the proposed measure, but proponents did not make such a claim, much less provide any evidence of such a claim to the Auditor during the Fiscal Note and Fiscal Note Summary preparation. Tr. 91: 11-14. Mr. Halwes had no support or authority in his own experience or knowledge base, from any research, or from any other submissions for questioning the 27 percent calculation. Halwes testified that he reviewed the numbers in the Ellinger Submission and could find and received no conflicting information. Therefore, the Auditors

conclusion must be based on the reasonable information which was submitted to him which was that the proposal would have negative impact on both state and local government entities. Appellants Point II should be denied. CONCLUSION The trial court correctly found that the Fiscal Note and Fiscal Note Summary are insufficient and unfair. The trial court did not err in finding that the Fiscal Note must be remanded because the Fiscal Note included the Department of Revenues unreasonable submission. The trial court did not err in finding that the Fiscal Note Summary must be
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remanded because the Fiscal Note Summary failed to reflect the numbers in the Ellinger Submission and improperly suggested that the fiscal impact could be positive. Respondents Rex A. Sinquefield and Travis H. Brown respectfully request that this Court affirm the Judgment of the Circuit Court. Respectfully submitted, BLITZ, BARDGETT & DEUTSCH, L.C. By: \s\ Marc H. Ellinger_____________ Marc H. Ellinger, #40828 Stephanie S. Bell, #61855 308 East High Street, Suite 301 Jefferson City, MO 65101 Telephone: 573/634-2500 Facsimile: 573/634-2500 E-mail: mellinger@bbdlc.com E-mail: sbell@bbdlc.com

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CERTIFICATE OF COMPLIANCE WITH RULE 84.06 The undersigned certifies that: (1) (2) (3) This Brief contains the information required by Rule 55.03; This Brief complies with the limitations contained in Rule 84.06(b); and There are 6,910 words in this Brief. \s\ Marc H. Ellinger___________ Marc H. Ellinger

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CERTIFICATE OF SERVICE The undersigned certifies that a true and accurate copy of the foregoing Brief of Intervenors/Respondents was filed electronically on December 24, 2013, to be served by operation of the Courts electronic filing system upon the following registered users: Stephen Robert Clark D. John Sauer Clark & Sauer, LLC 7733 Forsyth Boulevard, Suite 625 St. Louis, MO 63105 E-mail: sclark@clarksauer.com E-mail: jsauer@clarksauer.com Attorneys for Intervening Defendants Missouri Roundtable for Life and Todd S. Jones Jeremiah J. Morgan Deputy Solicitor General Jonathan M. Hensley Assistant Attorney General P.O. Box 899 Jefferson City, MO 65102-0899 E-mail: jeremiah.morgan@ago.mo.gov Attorney for Secretary of State Kander Darrell L. Moore Chief Litigation Counsel Missouri State Auditors Office 301 West High Street, Suite 880 Jefferson City, MO 65101 E-mail: darrell.moore@auditor.mo.gov Attorney for Auditor Schweich

\s\ Marc H. Ellinger___________ Marc H. Ellinger

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