Disclosure Digest: Washington AG announces settlement in campaign finance case

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Washington AG announces settlement in campaign finance case

On March 2, Washington Attorney General Bob Ferguson (D) announced a settlement with a grocery trade group, ending nine years of litigation over the group’s alleged failure to disclose their donors’ identities in a campaign against a 2013 ballot initiative. Under the terms of the settlement, the group will pay a reduced fine in return for accepting responsibility for violating Washington’s disclosure laws and agreeing not to pursue an appeal.

Background

On Nov. 5, 2013, voters rejected the Washington Mandatory Labeling of Genetically Engineered Food Measure (Initiative 522) 51% to 49%. The initiative would have required foods and seeds containing genetically modified organisms (GMOs) to be labeled. If these foods were not labeled correctly, a penalty of up to $1,000 per day per mislabeled item could have been assessed on the violator.

The Consumer Brands Association, then called the Grocery Manufacturers Association (GMA), spent more than $11 million against the initiative. Ferguson, who took office on Jan. 16, 2013, sued the group in Thurston County Superior Court in October 2013 alleging it had failed to disclose the identities of some of its largest corporate donors, including Coca-Cola, General Mills, and Nestlé. According to Ferguson, the GMA was required to reveal whether it asked members to donate for the specific purpose of opposing the measure under Washington’s Fair Campaign Practices Act. If so, the GMA was required to register as a political committee and disclose donor names. Ferguson said the association was attempting to shield members from scrutiny for opposing the initiative, which was “precisely the conduct our campaign disclosure laws are designed to prevent.”

Ferguson’s office initially sought a $44 million dollar fine against the group. In November 2016, Thurston County Superior Court Judge Anne Hirsch ordered the GMA to pay $18 million after determining that the group intentionally concealed its donors in violation of Washington campaign finance laws. Hirsch also granted the state’s request that it be compensated for legal fees, ordering the GMA to pay an additional $1.1 million. According to the Capital Press, the fine was the largest ever levied against an organization for campaign finance violations in the U.S., exceeding the previous record of $3.8 million in fines that the Federal Elections Commission imposed on the Federal Home Loan Mortgage Corp. in 2006. The GMA appealed the case to the Washington Supreme Court, which granted review of the case on June 4, 2021. 

Washington Supreme Court decision and settlement

On Jan. 20, the Washington Supreme Court upheld the $18 million fine, ruling  5-4 that the state did not violate the U.S. Constitution’s prohibition of excessive fines. Writing for the majority, Judge Steven Gonzalez (appointed by Gov. Chris Gregoire (D) in November 2011) said, “GMA has not shown that the trial court erred in imposing a punitive sanction under the FCPA based on the amount intentionally concealed. We affirm the courts below and remand for any further proceedings necessary and consistent with this opinion.”

The Consumer Brands Association said it would appeal the case to the U.S. Supreme Court on the grounds that the fine violated the Eighth Amendment of the U.S. Constitution. Stacy Papadopoulos, the group’s attorney, said “The state’s legal process has been tainted by partisan politics, and the ruling in this case will chill core political speech by legitimate organizations based on their viewpoints. The only winner in this decision is politics – not the law, the facts or the American public.” 

On March 2, Ferguson announced the state would settle the case for $9 million. Of that amount, $3 million would go to charitable organizations working to combat hunger, and $6 million would be deposited in the state’s Transparency Account, which funds the Washington Public Disclosure Commission. As part of the settlement, the Consumer Brands Association would not appeal the case to the U.S. Supreme Court and would formally apologize. 

In 2020, Ballotpedia published a study on how state supreme court justices decided the cases that came before them. The Washington Supreme Court decided 9.1% of all cases it decided in 2020 in 5-4 rulings, according to our 2020 study Ballotpedia Courts: Determiners and Dissenters. Ballotpedia Courts: State Partisanship, also published in 2020, studied the partisan affiliation of state supreme court justices. It found that the Washington Supreme Court included eight Mild Democrat justices and one justice with an indeterminate affiliation.

Reactions

In a press release, Ferguson said, “Illegal dark money has no place in Washington elections. My office will be relentless ensuring dark money special interests that intentionally violate our campaign finance laws will be held accountable — even if it takes a decade.” The Washington Supreme Court’s 5-4 decision and the risk of the U.S. Supreme Court striking down the fine influenced his decision to settle, Ferguson said: “I did not want to snatch defeat from the jaws of victory in this case. To have lost on that issue before the U.S. Supreme Court would have significantly altered our campaign-finance laws.”

In a statement, the Consumer Brands Association said, “We are pleased to successfully settle this nearly decade-old legacy litigation that was inherited by our new team and new organization. Our agreement with the state of Washington not only saves our association millions of dollars, it directs $3 million to hunger relief charities Food Lifeline and Northwest Harvest, causes aligned to our industry’s values.” 

As part of the settlement, the group accepted responsibility for violating state law and issued an apology: “The Grocery Manufacturers Association accepts responsibility for failing to disclose donors in a timely manner in a 2013 ballot initiative and failing to register as a political committee in accordance with Washington State campaign finance disclosure requirements. We acknowledge the ruling of the Washington Supreme Court and apologize to the voters of Washington State.”

Public Disclosure Commission Chair Fred Jarrett said, “This was a strong case, thanks in large part to the outstanding work by PDC investigators who uncovered the smoking gun documents. The excellent advocacy of the AGO has brought us to a reasonable resolution. It provides an opportunity for careful investments to support the crucial role of the PDC, as the Legislature intended when it created the Transparency Account just a few years ago, and a contribution to food security in our region.”

According to the Seattle Times, opponents of I-522 raised approximately $22 million, setting the record for the most money ever raised – in support or opposition – for a Washington ballot measure. In 2018, groups opposing the Washington Carbon Emissions Fee Measure (Initiative 1631) exceeded that amount, raising approximately $31.5 million. 

What we’ve been reading

• Reason, “Exposing Donations to Political Causes Can Chill Free Speech,” March 2, 2022
• The San Diego Foundation, “What to Know about Donor-Advised Funds in 2022: Rules, Tax Deductions, Comparisons and More,” March 3, 2022
• MarketWatch, “‘You should publicly announce where the money is going to’: Elon Musk gave $5.7 billion in Tesla stock to charity, but the beneficiaries may forever remain a secret,” Feb. 21, 2022

The big picture

Number of relevant bills by state: We’re currently tracking 118 pieces of legislation dealing with donor disclosure and privacy. Ninety-seven of these bills are primarily focused on disclosure, and 21 are primarily focused on privacy. To reflect this distinction, the charts in this section and the recent legislative actions below are divided between disclosure legislation and privacy legislation. On the maps below, a darker shade of green indicates a greater number of relevant bills. Click here for a complete list of all the bills we’re tracking. 

Donor disclosure legislation

Number of relevant bills by current legislative status: 

Number of relevant bills by partisan status of sponsor(s): 

Donor privacy legislation

Number of relevant bills by current legislative status: 

Number of relevant bills by partisan status of sponsor(s): 

Recent legislative actions

For complete information on all of the bills we are tracking, click here. 

Donor disclosure legislation

• Florida H0921: This bill would prohibit a foreign national from making or offering to make contributions or expenditures in connection with any election held in the state.
  • Republican sponsorship
  • This bill was referred to committee on March 2.
• Georgia SB580: This bill would prohibit political action committees affiliated with General Assembly members from accepting contributions during a legislative session.
  • Republican sponsorship
  • This bill was referred to committee on March 1.
• Idaho S1337: This bill would require any candidate who receives contributions or makes expenditures that total $500 or more to begin filing a monthly report by the 10th day of the month following the month being reported. This requirement would apply to both election years and non-election years. 
  • Republican sponsorship
  • This bill was referred to committee on March 1.
• Idaho S1367: This bill would require the disclosure reports to be publically available on the secretary of state’s website. 
  • Unknown sponsorship
  • This bill was referred to committee on March 4.
• Indiana SB0388:  This bill would require a postsecondary educational institution to submit a report to the Indiana commissioner for higher education disclosing gifts of at least $50,000 from a foreign source. 
  • Republican sponsorship
  • This bill was enacted on March 1.
• Kansas SB537: This bill would require state agencies, political subdivisions, state contractors and vendors to disclose certain contracts, gifts or grants received from foreign sources.
  • Unknown sponsorship
  • This bill was introduced on March 1.
• Kentucky HB301: This bill would require all costs and expenses related to election administration be paid for with public funds and prohibit a state governmental body employee from accepting contributions to assist with election administration unless entered into as a lawful contract.
  • Republican sponsorship
  • This bill was referred to committee on March 3.
• Kentucky HB740: This bill would require a candidate exempt from filing a campaign finance report to file a 30 day post-election report of receipts and disbursements. It would also require a candidate who is exempt from filing for the primary who advances to the regular election to refile for the filing exemption. 
  • Republican sponsorship
  • This bill was referred to committee on March 3.
• Louisiana SB227: This bill would require an entity applying for state grant funding to disclose the names of foreign donors who contribute more than $50,000 to the entity. 
  • Republican sponsorship
  • This bill was referred to committee on March 3.
• Missouri HB2891: This bill would require corporations and foreign non-profit organizations that make expenditures over $500 in support or opposition to a candidate or ballot measure to file a report disclosing the name and address of the person making the expenditure.  
  • Democratic sponsorship
  • This bill was introduced on March 1.
• Utah HB0346: This bill would prohibit a a higher education institution from accepting funding from a restricted foreign entity.
  • Republican sponsorship
  • This bill was referred to committee on March 4.
• Virginia HB492: This bill would require campaign committee treasurers to keep accounts of campaign contributions and expenditures and authorizes the Department of Elections to conduct reviews of a percentage of campaign committees. The Department of elections would report the results of the reviews to the State Board of Elections, the Governor, the and General Assembly and make them available on the Department’s website.
  • Democratic sponsorship
  • This bill was referred to committee on March 2.
• Wyoming HB0049: This bill would increase the penalty for failing to file disclosure reports.
  • Unknown sponsorship
  • This bill was referred to committee on March 1.
• Wyoming HB0080: This bill would require all campaigns and political action committees to file an itemized statement of contributions and expenditures.
  • Unknown sponsorship
  • This bill passed both chambers on March 4.

Donor privacy legislation

• Alabama HB432: This bill would provide exceptions to the prohibition on lobbyist contributions to public officials, including allowing lobbyists to make lawful donations to campaigns. 
  • Republican sponsorship
  • This bill was referred to committee on March 2.
• Alaska HB234: This bill would amend political contribution limits so that they do not apply to an individual, group, or entity contributing to a group or entity that only makes independent expenditures.
  • Unknown sponsorship
  • This bill was referred to committee on March 2.
• Kansas HB2495: This bill would prohibit a state agency from requesting or releasing the personal information of donors to 501(c) organizations.
  • Unknown sponsorship
  • This bill was referred to committee on March 1.
• Kansas HB2579: This bill would allow a candidate for state office to request an exemption from the electronic filing requirement for campaign finance reports.
  • Unknown sponsorship
  • This bill was referred to committee on March 2.
• Louisiana HB254: This bill would raise the contribution limit to a candidate for any office to $5,000 and the limit for contributions to a political action committee to $10,000.
  • Democratic sponsorship
  • This bill was referred to committee on Feb. 28.
• West Virginia HB4419: This bill would remove restrictions on candidate and campaign caucus committees’ donations to their affiliated state party executive committees or a caucus campaign committee.
  • Republican sponsorship
  • This bill was referred to committee on March 1.

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