Campaign finance penalty believed to be largest in U.S. history
OLYMPIA — As a result of Attorney General Bob Ferguson’s successful campaign finance lawsuit, the former Grocery Manufacturers Association (GMA), now known as the Consumer Brands Association, will pay $9 million and apologize for its intentional violations of Washington’s campaign finance law. The payment will include a $3 million donation to organizations that address food insecurity in Washington. Food Lifeline and Northwest Harvest will each receive $1.5 million as a result of the resolution.
This resolves eight years of litigation that resulted in the State Supreme Court upholding GMA’s intentional campaign finance violation. As a result, GMA is dropping its appeal to the United States Supreme Court. The Attorney General’s Office believes this is the largest federal or state campaign finance penalty in United States history. Click here for the stipulated judgment.
The trade organization, representing large corporations including PepsiCo, Inc, Nestle USA, Inc, and The Coca Cola Company, funneled millions of dollars into the state to oppose Initiative 522, regarding the labeling of genetically-engineered foods. If approved, the initiative would have required genetically engineered foods to be labeled “clearly and conspicuously” on the front of packaging.
Internal GMA documents obtained as a result of Ferguson’s lawsuit revealed an intentional, systematic effort to conceal the true sources of those contributions through GMA’s “Defense of Brands Strategic Account.” For example, meeting minutes from the GMA Board’s Finance and Audit Committee meeting revealed the purpose of this concealment, in GMA’s own words, to “provide anonymity and eliminate state filing requirements for contributing members.” In one GMA Executive Committee meeting, the Executive Vice President for Government Affairs noted that the fund would “shield individual companies from public disclosure and possible criticism.”
Ferguson filed a lawsuit in Thurston County Superior Court in 2013, where the judge found GMA violated the law, levying a $6 million penalty, which the judge then trebled because she found GMA’s violations intentional. The Court of Appeals largely affirmed the trial court’s decision, but held that the trial court had erred in finding GMA’s violations intentional, so it reversed the trebling of the penalty. The Washington State Supreme Court affirmed that GMA’s violations were intentional and reinstated the trial court’s $18 million penalty, remanding the case to the state Court of Appeals to consider GMA’s argument that the penalty was excessive under the state and federal constitutions.
In November 2020, the appeals court unanimously confirmed the penalty is not excessive based on GMA’s conduct. The Washington Supreme Court upheld that decision in a 5-4 ruling in January.
GMA then announced that it would file a petition for review before the United States Supreme Court, challenging not only its penalty, but also the constitutionality of significant portions of Washington’s voter-approved campaign finance law.
Today’s resolution requires GMA to:
- Drop its U.S. Supreme Court appeal;
- Pay the trial court’s $6 million penalty to the state;
- Pay $3 million to nonprofits addressing food insecurity in Washington; and
- Apologize for its conduct.
In the resolution, GMA gave the following 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.”
“Illegal dark money has no place in Washington elections,” Ferguson said. “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. This resolution requires GMA to finally accept responsibility for its intentional violation, pay a significant penalty and help put food on the table for Washingtonians in need.”
“This was a strong case, thanks in large part to the outstanding work by PDC investigators who uncovered the smoking gun documents,” Public Disclosure Commission Chair Fred Jarrett said. “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.”
Former Deputy Solicitor General Callie Castillo, former Senior Assistant Attorney General Linda Dalton, Senior Assistant Attorney General Garth Ahearn, Deputy Solicitor General Karl Smith and Solicitor General Noah Purcell handled this case for the state. Purcell argued the case before the state Court of Appeals and the Supreme Court.
The Office of the Attorney General is the chief legal office for the state of Washington with attorneys and staff in 27 divisions across the state providing legal services to roughly 200 state agencies, boards and commissions. Visit www.atg.wa.gov to learn more.
Brionna Aho, Communications Director, (360) 753-2727; Brionna.firstname.lastname@example.org
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