Federal Judge Blocks Paxton’s ActBlue Lawsuit, Citing First Amendment Retaliation

A federal judge has blocked Texas Attorney General Ken Paxton from continuing a state lawsuit against Democratic fundraising platform ActBlue, finding the organization was likely to prove the case was filed in retaliation for its work on behalf of Paxton’s U.S. Senate opponent.

U.S. District Judge Richard Stearns issued a preliminary injunctionpreliminary injunctionA preliminary injunction is a temporary court order issued before a case is finally decided that requires a party to take or stop an action while the litigation continues. Federal courts generally consider the likelihood of success, irreparable harm, the balance of equities, and the public interest before granting one.Read more → Thursday in Massachusetts. The order prevents Paxton, his employees, and his agents from pursuing the pending Texas case or bringing another state civil enforcement action based on the same conduct.

In granting the request, Stearns pointed to the timing of the investigation, the legal basis for the Texas lawsuit, and statements Paxton made while campaigning for the Senate. ActBlue was likely to succeed on its claim that the attorney general used his enforcement authority to punish protected political activity, the judge found.

Paxton sued ActBlue in Texas state court on April 20 under the Texas Deceptive Trade Practices Act, which bars false, misleading, and deceptive business practicesconsumer protection lawConsumer protection law is the body of federal and state laws designed to protect people from unfair, deceptive, fraudulent, or abusive practices in the marketplace. These laws regulate areas such as advertising, sales, lending, debt collection, credit reporting, warranties, financial services, and consumer products.Read more →.

His office accuses the fundraising platform of giving Congress a misleading account of its payment rules. ActBlue allegedly said it had stopped accepting gift cards and foreign prepaid debit cards before later allowing some gift card transactions.

Texas also claims that those payment methods could allow foreign nationals to hide their identities and make illegal campaign contributions. The state is seeking civil penalties and an order preventing ActBlue from accepting gift card donations.

Stearns did not decide whether the platform violated campaign finance law or whether any prohibited foreign contributions were made. Those issues were not before the Massachusetts court.

ActBlue responded to the state action by filing its federal lawsuit on May 1. The organization claims the consumer protection case was brought to punish it for processing donations to Democrat James Talarico, Paxton’s opponent in the Senate race.

Investigators from the Texas attorney general’s office began examining ActBlue in December 2023 and later demanded records involving donor identification and payment policies. According to the federal order, the inquiry remained largely inactive for about a year and a half.

Talarico announced on February 18 that his campaign had raised $2.5 million in one day, including about $2.2 million through ActBlue. An investigator made a small gift card donation through the platform the following day, followed by additional test transactions.

Five days after Talarico reported his first-quarter fundraising totals to the Federal Election Commission, the attorney general filed the Texas lawsuit.

Public statements following the filing also played a central role in the ruling. Podcast appearances and campaign emails connected the enforcement effort to Democratic fundraising, ActBlue’s work for Talarico, and Paxton’s own Senate campaign.

Paxton framed ActBlue’s payment rules and statements about gift cards as deceptive business practices covered by Texas consumer law. Stearns questioned that theory, finding the platform mainly allows donors to support political candidates and causes and therefore involves activity at the center of First Amendment protections.

Government officials may enforce the law against political organizations, but they cannot bring a case because of an organization’s protected speech or fundraising work. Stearns found the First Amendment covered both ActBlue’s choice of candidates and causes to feature on its platform and the decisions donors make when supporting those campaigns.

Before issuing the injunction, the court also had to decide whether a federal judge could block an active state enforcement case.

Under a rule known as the Younger abstention doctrine, federal courts generally allow state proceedings to continue even when constitutional objections are raised. A narrow exception applies when a state case was brought in bad faith or to harass the target.

The dormant investigation, its revival after Talarico announced his fundraising results, Paxton’s public comments, and the lack of a clearly identified consumer injury persuaded Stearns that the bad faith exception applied.

A preliminary injunction does not end the federal lawsuit or amount to a final ruling that Paxton violated the Constitution. The order temporarily stops the state case because Stearns found that ActBlue was likely to succeed and that allowing the litigation to continue could restrict its First Amendment rights.

Under the June 11 order, Paxton’s Texas civil enforcement case cannot move forward while ActBlue’s constitutional challenge proceeds in the U.S. District Court for the District of Massachusetts.