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:
- PepsiCo: $2.696 million
- Nestle USA, Inc.: $1.751 million
- The Coca-Cola Company: $1.742 million
- General Mills: $996,000
- ConAgra: $949,000
- Campbell Soup: $441,000
- The Hershey Company: $413,000
- J.M. Smucker: $401,000
- Kellogg: $369,000
- 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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