Protect Our Ariz. v. Fontes, – 1/17/2023

January 23, 2023

Arizona Supreme Court clarifies that statements made in initiative descriptions must be read in context.

Before the 2022 election, a political committee circulated the Predatory Debt Collection Protection Act initiative (“the Act”), seeking enough signatures to place it on the ballot. The description that accompanied the petition sheets said the Act:

Caps interest rate on “medical debt,” as defined in the Act; applies this cap to judgments on medical debt as well as to medical debt incurred. Increases the value of assets—a homestead, certain household possessions, a motor vehicle, funds in a single bank account, and disposable earnings—protected from certain legal processes to collect debt. Annually adjusts these amended exemptions for inflation beginning 2024. Allows courts to further reduce the amount of disposable earnings subject to garnishment in some cases of extreme economic hardship. Does not affect existing contracts. Does not change existing law regarding secured debt.

This description was paired with a notice that a potential signer should read the full act to understand each of its provisions.

The committee gathered enough signatures to place the Act on the ballot, and the Secretary of State certified the Act as Proposition 209 for the 2022 ballot. At that stage, a different political committee filed an action challenging the placement of the Act on the ballot. The committee’s primary argument (others were resolved in a separate appeal, summarized by AzApp here) was that the Act’s description was misleading. Specifically, the committee argued that the phrase “Does not change existing law regarding secured debt” was false and misleading because the Act changed existing law regarding involuntarily secured debt and failed to distinguish those changes from the lack of changes to law governing voluntarily secured debt. The superior court rejected this challenge and concluded that the Act could be placed on the ballot.

In an expedited election appeal, the Arizona Supreme Court affirmed. Although most of the parties’ arguments focused on the meaning of “secured debt,” the Court instead ruled that regardless of whether “secured debt” encompassed “involuntarily secured debt,” the Act’s description was not misleading because, when read in context, a reasonable person would understand the changes to existing law being made. Put another way, because other parts of the description described the changes being made, the sentence “Does not change existing law regarding secured debt” would be understood to mean that there were no changes to existing law beyond those specifically identified.

Justice King authored the opinion for the unanimous Court.

Disclosure: Osborn Maledon attorneys participated in this case.

Posted by: Joshua J. Messer