Judge rejects challenge to Arizona predatory debt initiative

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A judge has rejected a challenge to a voter initiative aimed at limiting so-called predatory debt collection, finding that opponents of the measure did not prove a summary provided to voters who signed qualifying petitions was misleading.

The ruling by Maricopa County Superior Court Judge Frank Moskowitz also turned away an argument by the attorney for a newly created group funded by Arizona debt collection agencies that alleged that paid petition circulators were improperly registered with the secretary of state’s office.

Moskowitz said the Predatory Debt Collection Protection Act qualifies to appear on the November ballot. His ruling is not the last word, however. Attorney Kory Langhofer, who represents a newly formed group called Protect Our Arizona that was funded by debt collection agencies, said Wednesday he has already filed an appeal with the Arizona Supreme Court.

The secretary of state also still needs to certify that proponents turned in enough signatures, although the group backing the measure, Healthcare Rising, turned in more than twice the nearly 238,000 signatures, meaning it is nearly certain it has enough to make the ballot. Healthcare Rising is primarily funded by the California-based Service Employees International Union, which represents nurses and other healthcare workers, government employees, and others in that state.

The ruling is the first issued in a series of legal challenges that aim to keep the three voter initiatives whose backers submitted petitions last month from appearing on the November ballot. Such legal challenges have become increasingly common in recent years because the Republican-controlled Legislature generally objects to initiatives allowed under the state constitution and has made it easier to challenge them in court.

The other measures include one that requires disclosure of who is funding political campaigns and a second rolling back or blocking efforts by Republicans to tighten voting rules. They are also being challenged by pro-business groups. Those challenges allege that paid petition circulators made errors or omitted required information on their registrations with the secretary of state on petitions.

In the debt measure challenge, Langhofer argued that the part of the 100-word summary voters see when they agree to sign qualifying petitions was inaccurate or misleading and that the measure should be disqualified as a result. He pointed to the last sentence, which specifically says that the measure “does not change existing law regarding secured debt.”

The initiative would raise the amount of a home’s value shielded from creditors under the “homestead exemption” from $150,000 to $400,000 and boosts the value of vehicles, cash, and other possessions shielded from creditors. It also caps interest rates on medical debts and adds yearly inflation adjustments. Langhofer argued that changing those amounts would affect “involuntary” secured debt, such as those targeted by judgment liens obtained by a creditor.

Moskowitz rejected that arguments, saying “secured debt” is commonly understood to only include debt that is voluntarily secured and that the summary was not misleading.

Langhofer also argued that the secretary needed to require a separate affidavit from paid circulators swearing they met the requirements to gather signatures for each initiative they planned to circulate petitions for, while the secretary only required one. But Moskowitz said that was misreading the law.

“If the Legislature intended that all non-Arizona residents and all paid circulators must register more than one time and submit registration applications and affidavits each time, it could have said so expressly in the statute, but it did not do so,” the judge wrote in his ruling.

The SEIU and Healthcare Rising failed to get another initiative on the ballot in 2020 after a judge ruled its summary was misleading and that it was short of signatures after a legal challenge tossed many signatures. That measure targeted surprise medical billing and mandated raises for some health workers.

Republished with the permission of The Associated Press.