The ruling is not a final finding on behalf of the group, but U.S. District Judge Rudolph T. Randa found that it was likely to ultimately prevail in the case and therefore the state investigation should be halted while the legal proceeding moves forward.
Special Prosecutor Francis Schmitz, who has led the probe on behalf of Wisconsin district attorneys in five counties, told the Milwaukee Journal Sentinel that he was "virtually assured" to appeal the ruling.
The ruling is a victory for Walker, neutralizing a state criminal proceeding that had hung over him as he began moving to the national stage and considering a run for president in 2016.
Because of unusual secrecy rules in preliminary state investigations in Wisconsin, Walker and his conservative allies had been severely constrained in their ability to speak out and defend themselves while the probe plodded ahead. The exact nature of the criminal investigation had likewise remained shrouded in secrecy.
The investigation had grown out of an earlier probe of the Milwaukee County Executive's Office, which Walker ran until his election as governor in 2010. Six Walker aides and allies were convicted of various offenses as a result, though no allegations were ever made against Walker.
According to Randa, that investigation sparked a more wide-ranging examination of campaign finance in 2011 and 2012, a tumultuous time in Wisconsin politics that saw Walker lead an effort to end collective bargaining for many public workers and then survive a recall attempt.
Randa wrote that sheriff's deputies raided the homes of, among others, R.J. Johnson -- a close Walker political adviser who also consulted for the Club for Growth in October 2013 -- seizing documents, computers and cell phones. They also issued subpoenas to seize, he wrote, "more or less all of the Club's records from March 1, 2009 to the present."
The Wall Street Journal has reported that 29 separate groups, all conservative, received similar subpoenas. The judge wrote that state prosecutors were attempting to pursue criminal charges against the groups for making undisclosed in-kind campaign contributions through expenditures on "express advocacy" on behalf of Walker and his allies. But the judge wrote that he found that interpretation of their actions "simply wrong" since the group and O'Keefe advocated on behalf of issues but not directly on Walker's behalf.
Meanwhile, he said he believed the investigation was chilling O'Keefe's ability to engage in political advocacy.
"The plaintiffs have been shut out of the political process merely by association with conservative politicians," Randa wrote. "This cannot square with the First Amendment and what it was meant to protect."