Gov. Scott Walker was dealt a major blow Wednesday when a federal appeals court overturned a lower court’s ruling that had stopped a probe into alleged illegal campaign activity involving Walker’s campaign and more than two dozen Republican and conservative groups.

The three-judge panel of the 7th U.S. Circuit Court of Appeals in Chicago also ordered a lower court to throw out the lawsuit, filed in February by Wisconsin Club for Growth and its director, Eric O’Keefe. Walker was not a party to the lawsuit.

The judges found that U.S. District Judge Rudolph Randa had abused his discretion and that the legality of the type of activity under investigation — coordination between ostensibly independent political groups and Walker’s campaign — “is subject to lively debate among judges and academic analysts.”

The question of whether the so-called “John Doe” investigation is allowed to continue heads back to the state Court of Appeals and state Supreme Court, which have also been asked to intervene.

O’Keefe and Club for Growth had sued in U.S. District Court in Milwaukee seeking to halt the investigation, which they alleged was a violation of their free-speech rights. In May, Randa sided with the plaintiffs and shut down the investigation.

A statement issued by David Rivkin, attorney for O’Keefe and Club for Growth, called Wednesday’s decision “disappointing” but noted that the John Doe judge, Gregory Peterson, had already stalled the investigation in January by quashing subpoenas seeking records of various groups and individuals sought by the John Doe prosecutor.

Rivkin said his clients will appeal “to correct today’s mistaken decision, and we will continue to fight this abuse of government power.”

“The Seventh Circuit’s view that a federal court is powerless to enjoin this blatant abuse of prosecutorial power in violation of citizens’ First Amendment rights is simply wrong,” he added.

In its decision, the appeals court panel found Randa’s ruling halting the investigation into Walker’s campaign and 29 conservative and Republican groups active during the 2011 and 2012 recall elections was “imprudent,” “unnecessary” and “an abuse of discretion.” The judges found the injunction violated a federal law that gives broad latitude to state courts to handle their own cases.

The ruling written by Judge Frank Easterbrook also poked holes in the plaintiffs’ argument that coordination between political campaigns and ostensibly independent groups was legally protected so long as those efforts did not expressly advocate for or against the election of any candidate. The court found that Randa’s decision “broke new ground” — but not in a good way.

“Until the district court’s opinion in this case, neither a state nor a federal court had held that Wisconsin’s (or any other state’s) regulation of coordinated fund-raising and issue advocacy violates the First Amendment,” Easterbrook wrote. “The (U.S.) Supreme Court has stated repeatedly that although the First Amendment protects truly independent expenditures for political speech, the government is entitled to regulate coordination between candidates’ campaigns and purportedly independent groups.”

The judges also rejected the arguments by O’Keefe and Club for Growth that the prosecution, including John Doe prosecutor Francis Schmitz and Milwaukee County District Attorney John Chisholm, should be held personally liable for allegedly violating their civil rights. “Public officials can be held liable for violating clearly established law,” the judge wrote, “but not for choosing sides on a debatable issue.”

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Schmitz’s attorney, Randall Crocker of Milwaukee, said the ruling vindicated the prosecution team’s position. O’Keefe and Club for Growth had alleged the investigation was a partisan witchhunt designed to weaken conservative political groups in Wisconsin.

“The Court adopted in their entirety the arguments we have asserted since the outset of this case,” Crocker said. “The decision confirms that our client has acted in accordance with his oath as a special prosecutor and in good faith. ... Moreover, the court found, as we have asserted, that the government is entitled to regulate coordination between candidates’ campaigns and purportedly independent groups.

“As we have maintained from the outset, no constitutional rights have been violated.”

Various challenges to the investigation and an earlier decision by Peterson quashing subpoenas and questioning the basis for the criminal investigation also are pending in the state Court of Appeals and the Wisconsin Supreme Court.

Outcome up
to state courts

Easterbrook, nominated to the court by Republican President Ronald Reagan, wrote that whether the investigation goes forward is a question for state courts to decide, not the federal judiciary.

“The Anti-Injunction Act embodies a fundamental principle of federalism: state courts are free to conduct their own litigation, without ongoing supervision by federal judges, let alone threats by federal judges to hold state judges in contempt,” he wrote.

Walker’s campaign, in a statement, said the ruling doesn’t change anything since the probe was effectively stalled after Peterson quashed subpoenas after finding a lack of probable cause that a crime was committed.

“The Friends of Scott Walker campaign was not party to the federal lawsuit, but today’s ruling has no impact on the fact that Judge Peterson shut down this investigation in January,” the campaign said.

The three judges, including Chief Judge Diane Wood, an appointee of Democrat Bill Clinton, and William Bauer, nominated to the court by Republican Gerald Ford, also ruled that eight documents that had been sealed should remain that way.

A media group had sought to make all of the records public; O’Keefe and Club for Growth argued to keep eight documents containing the names of their donors and other confidential information secret.

“Once again, federalism supplies the reason,” Easterbrook wrote. “The documents that the litigants want to disclose, or conceal, were gathered as part of a state proceeding. Wisconsin, not the federal judiciary, should determine whether, and to what extent, documents gathered in a John Doe proceeding are disclosed to the public.”

Capital W: Plug in to Wisconsin politics

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Contact Dee J. Hall at dhall@madison.com or 608-252-6132. Contact Mary Spicuzza at mspicuzza@madison.com or 608-252-6122.