Freedom Found. v. Wash. State Pub. Disclosure Comm'n

• Decision Date: 15 February 2022
• Docket Number: 55642-1-II
• Parties: FREEDOM FOUNDATION, a Washington nonprofit organization, Appellant, v. WASHINGTON STATE PUBLIC DISCLOSURE COMMISSION, a State of Washington government agency, and AMALGAMATED TRANSIT UNION LEGISLATIVE COUNCIL OF WASHINGTON STATE, an IRS 527 political organization, Respondent.
• Court: Washington Court of Appeals

FREEDOM FOUNDATION, a Washington nonprofit organization, Appellant, v. WASHINGTON STATE PUBLIC DISCLOSURE COMMISSION, a State of Washington government agency, and AMALGAMATED TRANSIT UNION LEGISLATIVE COUNCIL OF WASHINGTON STATE, an IRS 527 political organization, Respondent.

No. 55642-1-II

Court of Appeals of Washington, Division 2

February 15, 2022

UNPUBLISHED OPINION

LEE C. J.

The Freedom Foundation (Foundation) appeals the superior court's order dismissing the Foundation's petition for judicial review under the Administrative Procedure Act (APA), chapter 34.05 RCW, and denying its motion for leave to conduct discovery. The Foundation argues that the trial court erred in concluding that the Foundation did not have standing and by denying its motion for leave to conduct discovery as moot.

We hold that the trial court did not err in concluding that the Foundation did not have standing nor by denying the motion for leave to conduct discovery as moot. Accordingly, we affirm the superior court's order dismissing the Foundation's petition for judicial review and denying the Foundation's motion for leave to conduct discovery.

FACTS

The Amalgamated Transit Union Legislative Council of Washington State (ATULC) is an organization involved in protecting the rights of Amalgamated Transit Union members, lobbying for new legislation, cooperating with local unions, and encouraging members to be politically active in matters affecting the transportation industry. The ATULC has been registered with the Public Disclosure Commission (PDC) as a lobbyist employer since at least 1996.

The Foundation filed a complaint with the PDC, alleging that the ATULC violated the Fair Campaign Practices Act (FCPA) chapter 42.17A RCW, by failing to register as a political committee between 2014 and 2018. The Foundation argued that the ATULC should be registered as a political committee and should be required to meet the reporting requirements of political committees because one if its primary purposes is influencing electoral political activity. The ATULC responded to the complaint by sending a letter to the PDC, arguing that it was not a political committee. The Foundation sent another letter to the PDC in response to the arguments in the ATULC's letter.

The PDC opened a formal investigation and held an initial hearing on the allegations against the ATULC. The PDC reviewed several years of the ATULC's activities and found that "the totality of the evidence does not suggest that ATULC is a political committee, because the making of [political contribution] expenditures was not its primary purpose, or even one of its primary purposes." Clerk's Papers (CP) at 43.

The PDC sent a letter to the Foundation informing the Foundation that the PDC was dismissing the matter against the ATULC. The Foundation requested that the PDC reconsider its findings and dismissal of the complaint against the ATULC. The PDC then sent a letter to the Foundation informing the Foundation that the PDC did not find a reason to change its decision. The letter also stated, "As a reminder, neither the complainant nor any other person has standing to participate or intervene in any investigation or consideration of a complaint by staff. WAC 390-37-030. Nevertheless, staff provides this response as a courtesy to you." CP at 74 (underlining omitted).

The Foundation filed a petition for judicial review of the PDC's decision to dismiss the Foundation's complaint to the PDC regarding the ATULC. The Foundation also filed a motion for leave to conduct discovery. The PDC filed a motion to dismiss under CR 12(b)(6), arguing that the Foundation lacked standing to seek judicial review under the APA. The ATULC joined the PDC's motion to dismiss. The superior court held a hearing on the motions, granted the PDC's motion to dismiss, and denied the Foundation's motion for leave to conduct discovery as moot.

The Foundation sought direct review of this matter in our Supreme Court. Statement of Grounds for Direct Review, Freedom Foundation v. Public Disclosure Commission, No. 99281-9 (Wash. Dec. 15, 2020). Our Supreme Court transferred the appeal to this court. Order, Freedom Foundation v. Public Disclosure Commission, No. 99281-9 (Wash. Apr. 7, 2021).

ANALYSIS

A. Standing

The Foundation argues that it has standing because it suffered a competitive injury, because it was a party to the complaint that the PDC dismissed, and because it has associational standing on behalf of its supporters. We disagree.

1. Legal Principles

We review de novo a trial court's ruling on a CR 12(b)(6) motion to dismiss. Wash. Trucking Ass'n v. Emp't Sec. Dep't, 188 Wn.2d 198, 207, 393 P.3d 761, cert. denied, 138 S.Ct. 261 (2017). Dismissal is appropriate when it appears beyond doubt that the plaintiff cannot prove any set of facts that would justify recovery. Id. We presume the truth of the plaintiff's allegations and may consider hypothetical facts not included in the record. Id.

We also review standing de novo. City of Burlington v. Liquor Control Bd., 187 Wn.App. 853, 861, 351 P.3d 875, review denied, 184 Wn.2d 1014 (2015). The APA governs judicial review of agency actions. Patterson v. Segale, 171 Wn.App. 251, 258, 289 P.3d 657 (2012). A party has standing to obtain judicial review of an agency action if that party is aggrieved or adversely affected by the agency action. RCW 34.05.530. A party is aggrieved or adversely affected by the agency action only when three conditions are met:

(1)The agency action has prejudiced or is likely to prejudice that person;

(2)That person's asserted interests are among those that the agency was required to consider when it engaged in the agency action challenged; and

(3) A judgment in favor of that person would substantially eliminate or redress the prejudice to that person caused or likely to be caused by the agency action.

RCW 34.05.530.

The first and third requirements of this standing test are collectively referred to as the "'injury-in-fact' test." Patterson, 171 Wn.App. at 258 (quoting Allan v. Univ. of Wash., 140 Wn.2d 323, 327, 997 P.2d 360 (2000)). The second prong is the "zone of interest" requirement. Id. at 258 n.5. The person challenging the agency action has the burden of showing the presence of all three conditions to prove standing. Freedom Found. v. Bethel Sch. Dist., 14 Wn.App. 2D 75, 86, 469 P.3d 364 (2020), review denied, 196 Wn.2d 1033 (2021). Where a party fails to meet the injury-in-fact test, we need not determine whether the party's interests satisfy the zone of interest test. See Patterson, 171 Wn.App. at 258 n.5.

To satisfy the "injury-in-fact" test, a party must show prejudice by alleging facts that demonstrate the party is "'specifically and perceptibly harmed' by the agency decision." Id. at 258-59 (internal quotation marks omitted) (quoting Trepanier v. City of Everett, 64 Wn.App. 380, 382-83, 824 P.2d 524, review denied, 119 Wn.2d 1012 (1992)). The party must show an invasion of a legally protected interest. Snohomish County Pub. Transp. Benefit Area v. Pub. Emp't. Relations Comm'n, 173 Wn.App. 504, 513, 294 P.3d 803 (2013). And "a petitioner's interest 'must be more than simply the abstract interest of the general public in having others comply with the law.'" Thompson v. City of Mercer Island, 193 Wn.App. 653, 663, 375 P.3d 681 (quoting Chelan County v. Nykreim, 146 Wn.2d 904, 935, 52 P.3d 1 (2002)), review denied, 186 Wn.2d 1013 (2016).

"Conjectural or hypothetical injuries are insufficient to confer standing." Bethel Sch. Dist., 14 Wn.App. 2d at 86. To prove redressability, the party must show that it is "'likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.'" Patterson, 171 Wn.App. at 259 (internal quotation marks omitted) (quoting KS Tacoma Holdings, LLC v. Shorelines Hearings Bd., 166 Wn.App. 117, 129, 272 P.3d 876, review denied, 174 Wn.2d 1007 (2012)).

2. Competitive Harm

The Foundation argues that it suffered a competitive injury-in-fact because the PDC's dismissal of its complaint frustrates the Foundation's goal of informing and educating public employees about their rights not to subsidize a union.

Our Supreme Court has stated its intent to follow the United States Supreme Court, which "'routinely recognizes probable economic injury resulting from agency actions that alter competitive conditions as sufficient to satisfy' the injury-in-fact requirement." Wash. Indep. Tel. Ass'n v. Wash. Utilities & Transp. Comm'n, 110 Wn.App. 498, 512, 41 P.3d 1212 (2002) (quoting Seattle Bldg. & Const. Trades Council v. Apprenticeship & Training Council, 129 Wn.2d 787, 795, 920 P.2d 581 (1996)), aff'd, 149 Wn.2d 17 (2003). A party may suffer a competitive injury-in-fact when it loses a bargaining chip or loses the benefit of a rule that affects its negotiating leverage. See Snohomish County Pub. Transp. Benefit Area, 173 Wn.App. at 514. An organization's ideological disagreement with another's activity is not an injury sufficient to confer standing. See Valley Forge Christian College v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 485-86, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982).

Here the Foundation argues that the PDC's dismissal of the ATULC matter renders the Foundation "unable to communicate with public employees concerning ATULC's political expenditures" and "affects it every day in its outreach and lobbying efforts." Br. of Appellant at 19. But the Foundation does not show how the PDC's dismissal of the ATULC matter altered the Foundation's competitive conditions, took away a bargaining chip, or affected its negotiating leverage. The Foundation implies that the ATULC is an "opponent[]" but does not establish how their interests are adverse to each...