Or. Educ. Ass'n v. Otu-Pac

• Citation: 227 Or. App. 37,204 P.3d 855
• Decision Date: 01 April 2009
• Docket Number: 0012-12632; A126231 (Control); 0108-08942; A126235.
• Parties: OREGON EDUCATION ASSOCIATION, an Oregon nonprofit corporation, Plaintiff-Respondent, and State of Oregon, Intervenor-Respondent, v. OREGON TAXPAYERS UNITED PAC, an Oregon political committee, and Oregon Taxpayers United Education Foundation, an Oregon nonprofit corporation, Defendants-Appellants, and William Sizemore, Other-Appellant. American Federation of Teachers, Oregon, AFT, AFL-CIO, an Oregon unincorporated association, Plaintiff-Respondent, and State of Oregon, Intervenor-Respondent, v. Oregon Taxpayers United PAC, an Oregon political committee, and Oregon Taxpayers United Education Foundation, an Oregon nonprofit corporation, Defendants-Appellants, and William Sizemore, Other-Appellant.
• Court: Oregon Court of Appeals

204 P.3d 855

227 Or. App. 37

OREGON EDUCATION ASSOCIATION, an Oregon nonprofit corporation, Plaintiff-Respondent, and State of Oregon, Intervenor-Respondent, v. OREGON TAXPAYERS UNITED PAC, an Oregon political committee, and Oregon Taxpayers United Education Foundation, an Oregon nonprofit corporation, Defendants-Appellants, and William Sizemore, Other-Appellant.

American Federation of Teachers, Oregon, AFT, AFL-CIO, an Oregon unincorporated association, Plaintiff-Respondent, and State of Oregon, Intervenor-Respondent, v. Oregon Taxpayers United PAC, an Oregon political committee, and Oregon Taxpayers United Education Foundation, an Oregon nonprofit corporation, Defendants-Appellants, and William Sizemore, Other-Appellant.

0012-12632; A126231 (Control); 0108-08942; A126235.

Court of Appeals of Oregon.

Argued and Submitted August 13, 2008.

Decided April 1, 2009.

Gregory W. Byrne, Portland, argued the cause and filed the briefs for appellants.

Gregory A. Hartman, Portland, argued the cause for respondents Oregon Education Association and American Federation of Teachers, Oregon, AFT, AFL-CIO. With him on the brief were Michael J. Morris and Mark S. Toledo, General Counsel for Oregon Education Association.

Denise G. Fjordbeck, Senior Assistant Attorney General, argued the cause for respondent State of Oregon. On the brief were Hardy Myers, Attorney General, Mary H. Williams, Solicitor General, and Robin Rojas McIntyre.

Before LANDAU, Presiding Judge, and BREWER, Chief Judge, and SCHUMAN, Judge.

BREWER, C.J.

Defendants Oregon Taxpayers United PAC (OTU-PAC), Oregon Taxpayers United Education Foundation (OTU-EF), and William Sizemore appeal from an order holding them in contempt and awarding attorney fees to plaintiffs.¹ In the contempt order, the trial court determined that defendants had willfully violated an injunction that the court previously entered in the underlying case. We affirm.

The Supreme Court described the facts of the underlying case in American Fed. of Teachers v. Oregon Taxpayers United, 345 Or. 1, 189 P.3d 9 (2008). We will discuss only those facts that are relevant to the contempt determination. OTU-PAC is a political action committee that primarily sponsors initiative petitions for the Oregon ballot. Until the trial court dissolved it, OTU-EF operated as a charitable organization that was exempt from taxes under 26 USC § 501(c)(3) and that was required to file reports with the state Attorney General as a charitable trust. On September 27, 2002, a jury entered a verdict awarding plaintiffs damages against both organizations for violations of the Oregon Racketeer Influenced and Corrupt Organization Act (ORICO), ORS 166.715 to 166.735. The factual foundation for the verdict consisted of the jury's findings that the defendant organizations had forged signatures to qualify two ballot measures for the 2000 general election, that OTU-PAC had filed false statements of its expenditures and contributions, and that OTU-EF had filed false reports with the state to conceal the fact that it had spent tax-exempt money to support OTU-PAC's political activities. The jury also found that those actions damaged plaintiffs and awarded them substantial damages, which the trial court trebled when it entered judgment. See ORS 166.725(7)(a).

Immediately after the verdict was entered, the trial court entered an order requiring OTU-PAC and OTU-EF to show cause why they should not be dissolved and, among other things, restraining them from "transferring, selling or conveying any assets other than in the ordinary course of business" pending the show cause hearing. The court held the hearing on February 3, 2003. On April 30, 2003, it entered findings of fact, conclusions of law, and an injunction order (the injunction). On June 30, 2003, the court entered a money judgment and equitable decree (the judgment) that, among other adjudications, entered judgment on the jury's verdict and restated in their entirety the provisions of the injunction. Because this contempt proceeding is based on violations of the injunction, we will describe it in some detail.²

The injunction first recited the procedural background:

"This matter having come before the Court for a trial by jury on certain law issues between September 9, 2002 and September 27, 2002 and for a trial to the Court on certain equitable issues on February 3, 2003; the Court having received and considered all of the evidence and submissions of the parties in the trials as well as subsequent submissions, and the Court being fully advised in the premises * * *."

After that recital, the injunction took a number of actions. It dissolved OTU-EF and enjoined any successor organization, for a period of five years from the date of the judgment, from making contributions "or providing anything of value, including loans or in-kind contributions," to any political action committee. It defined a successor organization as one in which Sizemore is "a manager, officer, director, trustee, or controlling person * * * or otherwise participates, directly or indirectly, in the direction or control of the activities of the * * * organization." The injunction did not dissolve OTU-PAC, but it enjoined that organization and any successor political action committee, for five years from the date of the judgment in the case, from receiving any contribution of anything of value from a tax-exempt organization. It again defined a successor political action committee as one in which Sizemore played a role. Finally, the injunction enjoined OTU-PAC, OTU-EF, and their successors from engaging in a number of illegal activities related to the misconduct in which they had previously engaged, specifically including enjoining OTU-EF from any violation of Oregon law in connection with reporting its activities on Attorney General's form CT-12. The injunction also enjoined both organizations from "transferring or destroying any of the assets, whether cash, personal property or real property, and including documents, computers, and computer hardware, software and files," until the judgment in the action is fully satisfied. The court entered extensive findings of fact and conclusions of law in support of the injunction. The injunction provided that it was effective immediately on its entry.

During the February 3, 2003, hearing that preceded the injunction, Sizemore testified that, after the jury's verdict, he formed a new political action committee, which eventually took the name Oregon Taxpayers Union (OTU2-PAC). Sizemore moved his operations, including both the old and the new organizations, to a new physical location but continued to use the same computers, furniture, and supplies that he had used for OTU-PAC and OTU-EF. He used those organizations' mailing lists to send a fundraising appeal in which he indicated that OTU2-PAC would continue OTU-PAC's activities. OTU2-PAC also adopted OTU-PAC's website and relied on its predecessor's accomplishments for fundraising purposes. The prohibition in the injunction against transferring assets of OTU-PAC and OTU-EF was designed, in part, to prevent the actions that Sizemore described in his testimony.

Following the entry of the injunction, Sizemore continued to use defendants' mailing list to solicit contributions for OTU2-PAC and to use defendants' computers and office equipment for OTU2-PAC's activities. The only exceptions were that he replaced the hard drives on the computers and put defendants' office furniture in storage. On July 7, 2003, plaintiffs filed a motion in which they alleged that Sizemore's activities violated the court's September 27, 2002, order and sought an order holding defendants in contempt.

Plaintiffs subsequently amended their contempt motion to add an allegation that OTU-EF had violated the April 30, 2003, injunction and the judgment by filing a false, misleading, and incomplete form CT-12 and that the use of defendants' computers and mailing list for OTU2-PAC constituted a transfer of those assets that violated that injunction's prohibition on transfers. In their response, defendants admitted that Sizemore had solicited donations to OTU2-PAC from persons on defendants' mailing list, that he had used their photocopier, telephone, mailing list, and office space to do so, and that OTU2-PAC had thereby raised $32,460.50. They also admitted that Sizemore had placed assets in storage and had replaced the computers' hard drives. Defendants denied that those actions violated the injunction and the judgment.

Before the show cause hearing on the contempt motion, the Attorney General, over defendants' objections, moved pursuant to ORS 166.725(5) to participate in the contempt proceeding.³ The court held a three-day hearing on the contempt motion in May and June 2004. The testimony at the hearing was consistent both with plaintiffs' allegations and with defendants' admissions; Sizemore did not deny his actions but gave explanations for them. After the hearing, the trial court granted the Attorney General's motion to participate and denied the motion to hold defendants in contempt for violations of the September 27, 2002, order on the ground that any violations of that order were the subject of the February 3, 2003, bench trial and the April 30, 2003, injunction. In an order dated September 2, 2004, the court found defendants in contempt for violating the injunction and imposed sanctions against them. Finally, it awarded plaintiffs the attorney fees that they incurred as a result of the contempt, in an amount to be determined in accordance with ORCP 68. The court made a number of oral findings of fact as part of its decision.

After he entered the contempt order, Judge LaBarre, who had presided over the case until that point, recused himself from further participation. Judge Wilson, who replaced him, then held a hearing and awarded plaintiffs attorney fees in the amount of $125,000. Wilson did not make findings of her own but, instead,...