Originally published by the Seattle Times
November 2, 2016
by Jim Brunner
The Grocery Manufacturers Association has been ordered to pay a record-setting $18 million penalty for violating Washington campaign laws over an effort to defeat a 2013 food-labeling initiative.
In a record-setting penalty, a national grocery-industry group has been ordered to pay $18 million for violating campaign-finance laws to conceal the identities of corporations that poured $11 million into defeating a 2013 food-labeling initiative in Washington.
The 24-page ruling by Thurston County Superior Court Judge Anne Hirsch on Wednesday slammed the Grocery Manufacturers Association (GMA) for “intentional” violations of state law.
That allowed the $6 million fine she imposed to be tripled to $18 million for punitive damages. Additionally, the grocers group will have to pay the state’s trial costs and attorney’s fees.
The ruling was a major victory for state Attorney General Bob Ferguson, who had sued the D.C.-based trade group three years ago over the alleged violations. His office said it believes the $18 million fine is the largest campaign-finance penalty ever issued in the United States.
“It’s one of my happiest days as attorney general,” Ferguson said in an interview. “GMA’s conduct was just so egregious. They are sophisticated people and they set about to conceal these donations from the people of Washington state.”
In a statement, GMA criticized the judge’s ruling, saying there was “no basis in law or fact to support this unprecedented, inequitable and clearly excessive penalty — nearly 18 times higher than any other Washington state public-disclosure fine.”
It accused Ferguson of seizing what had started as a routine case before the state Public Disclosure Commission (PDC) and turning it into a crusade “to further his personal political ambitions.”
Ferguson, a Democrat elected in 2012, has been considered a likely future candidate for governor.
The case stems from the hard-fought and expensive 2013 campaign over Initiative 522, which would have required labeling of genetically modified organisms, or GMOs, in food products sold in Washington. Voters narrowly defeated the measure, with a record $22 million spent on the “no” campaign.
GMA was the largest donor, spending more than $11 million. But its donations were disclosed only as coming from the association, not the companies that bankrolled the effort, such as PepsiCo, Nestle and General Mills.
Internal GMA documents showed the trade group wanted to insulate individual companies from consumer blowback they might receive for opposing food labeling. The grocery industry believed it could evade disclosure and distributed talking points to members advising them to deny they were funding the anti-I-522 campaign.
After the state lawsuit was filed in late 2013, GMA agreed to disclose its donors, but Ferguson’s office argued the damage was done, as the group had succeeded in concealing donors for most of the campaign.
Hirsch ruled in March that the GMA’s actions violated state law.
The only question was the penalty, which attorneys for the state and the industry argued about in a trial that ended in August.
Attorneys for the grocery group had asked for a relatively modest $700,000 penalty, arguing that the group had made a good-faith effort to comply with Washington’s laws and that any violations were accidental.
Ferguson’s office had sought a penalty of at least $14.6 million, arguing that could be tripled as punitive damages.
Hirsch rejected the GMA’s arguments that its actions were unintentional as “not credible.”
The judge’s ruling was critical of the trial testimony of top GMA executives Pamela Bailey and Louis Finkel, describing them as “combative” and avoiding direct answers.
GMA’s statement said the group “intends to vigorously pursue its legal options to correct this injustice.”