Grocery Manufacturers Association to pay state $18M for intentionally violating state campaign finance laws

Thursday, November 3, 2016

In a historic decision, a Thurston County Superior Court judge ordered the Grocery Manufacturers Association to pay $18 million in penalties and punitive damages, after Attorney General Bob Ferguson’s lawsuit revealed GMA intentionally violated Washington campaign finance laws.

The case arose from Ferguson’s investigation of the finances of opposition to voter Initiative 522, which would have required labeling of genetically modified organisms, or GMOs, in food sold to consumers. 

The ruling against GMA — a Washington, D.C.-based trade group representing major food, beverage and consumer companies — is believed to constitute the largest campaign finance judgment in United States history.

Ferguson filed the lawsuit against GMA in October 2013. Earlier this year, Judge Hirsch granted the Attorney General’s Motion for Summary Judgment and ruled that GMA violated state campaign finance laws when it failed to register and report its political committee, which opposed I-522.

GMA was identified as the largest contributor to the “No on 522” political committee in campaign disclosure filings. However, over 30 members of GMA actually financed the opposition campaign through a special, earmarked account but were not initially identified as individual donors.

Judge Hirsch then ordered a trial to determine whether GMA’s violations were intentional. Under Washington state law, penalties for campaign finance disclosure violations can equal the amount of money concealed from Washington voters. Where a court finds that the violation was intentional, the court has discretion to triple that penalty.

In Wednesday’s ruling, Judge Hirsch determined that GMA’s violations of law were intentional and tripled a $6 million penalty, for a total of $18 million, including punitive damages.

Judge Hirsch explained the factors in favor of imposing the penalty and punitive damages:

“Those factors include violation of the public’s right to know the identity of those contributing to campaigns for or against ballot title measures on issues of concern to the public, the sophistication and experience of GMA executives, the failure of GMA executives to provide complete information to their attorneys, the intent of GMA to withhold from the public the true source of its contributors against Initiative 522, the large amount of funds not reported, the large number of reports filed either late or not at all, and the latest of the eventual reporting just shortly before the 2013 election.”

In 2013, GMA raised over $14 million for a new “Defense of Brands” account. These funds came as a solicitation and were above and beyond regular member association dues. PepsiCo, for example, contributed nearly $3 million to the account. Nestle and Coca-Cola contributed nearly $2 million each.

GMA then contributed $11 million of that $14 million to “No on 522.” In an effort to shield individual companies from required disclosure, the money was listed as coming from GMA, not the actual donors, such as Pepsi, Nestle and Coke.

Internal GMA documents obtained as a result of Ferguson’s lawsuit revealed an intentional, systematic effort to conceal the true sources of those contributions to “No on 522.”

In 2013, the top 10 contributors to GMA’s Defense of Brands account and their contributions (as of 12/3/13) were:
  1. PepsiCo: $2.696 million
  2. Nestle USA, Inc.: $1.751 million
  3. The Coca-Cola Company: $1.742 million
  4. General Mills: $996,000
  5. ConAgra: $949,000
  6. Campbell Soup: $441,000
  7. The Hershey Company: $413,000
  8. J.M. Smucker: $401,000
  9. Kellogg: $369,000
  10. Land O’Lakes: $332,000
The ruling from Judge Anne Hirsch included the $18 million penalty plus an award of trial and investigative costs as well as attorney fees. Those costs and fees will be determined at a separate court hearing to be scheduled.



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