State v. Grocery Mfrs. Ass'n
| Decision Date | 10 November 2020 |
| Docket Number | C/w No. 50188-1-II,No. 49768-9-II,49768-9-II |
| Citation | 475 P.3d 1062,15 Wash.App.2d 290 |
| Court | Washington Court of Appeals |
| Parties | STATE of Washington, Respondent, v. GROCERY MANUFACTURERS ASSOCIATION, Appellant. Grocery Manufacturers Association, Appellant, v. State of Washington, Respondent. |
Robert Bertelson Mitchell Jr., Aaron Edward Millstein, K&L Gates LLP, 925 4th Ave. Ste. 2900, Seattle, WA, 98104-1158, for Appellant.
Linda Anne Dalton, Atty. Gen. Office Campaign Finance, Callie Anne Castillo, Noah Guzzo Purcell, WA State Attorney General Office, 1125 Washington St. Se., Po Box 40100, Olympia, WA, 98504-0100, Olympia, WA, 98504-0100, Garth Ahearn, Office of the Attorney General-Tacoma, 1250 Pacific Ave. Ste. 105, Po Box 2317, Tacoma, WA, 98401-2317, Karl David Smith, Attorney at Law, Po Box 40100, Olympia, WA, 98504-0100, for Respondent.
Ryan P. McBride, Lane Powell PC, 1420 5th Ave. Ste. 4200, Seattle, WA, 98101-2375, for Amicus Curiae on behalf of Institute for Free Speech.
Daniel J. Dunne Jr., Orrick Herrington & Sutcliffe, 701 5th Ave. Ste. 5600, Seattle, WA, 98104-7045, for Amicus Curiae on behalf of Professors Michael Munger and Jeffrey Milyo.
PUBLISHED OPINION
Maxa, J. ¶1 The State filed a complaint alleging that the Grocery Manufacturers Association (GMA) failed to comply with the Fair Campaign Practices Act (FCPA), chapter 42.17A RCW, relating to a failed 2013 Washington ballot initiative, Initiative 522 (I-522). I-522 would have required all packaged food products to identify ingredients containing genetically modified organisms (GMOs). The trial court found on summary judgment that GMA had committed multiple FCPA violations by not registering as a political committee and failing to disclose the source of millions of dollars of donations GMA made to the "No on I-522" campaign. After a bench trial, the court imposed a $6 million civil penalty against GMA for multiple violations of the FCPA and trebled the penalty to $18 million based on a finding that GMA's violation of the law was intentional.
¶2 GMA appealed, raising a number of statutory and constitutional issues. This court affirmed the trial court's ruling that GMA violated the FCPA by failing to register as a political committee and rejected GMA's constitutional challenges. However, the court held that the trial court erred in ruling that GMA did not need to subjectively intend to violate the law to be subject to treble damages under the FCPA. The court remanded the penalty for reconsideration under the proper legal standard without reaching GMA's argument that the total $18 million penalty was an excessive fine under the Eighth Amendment to the United States Constitution.
¶3 On review, the Supreme Court affirmed that GMA violated the FCPA by failing to register as a political committee and also by concealing the source of contributions, and affirmed this court's constitutional holdings. But the court reversed on the requisite intent for treble damages, holding that the trial court had statutory authority to award treble damages. The court remanded the case to this court for consideration of GMA's Eighth Amendment excessive fines claim.
¶4 GMA argues that the $18 million penalty constitutes an excessive fine because it is grossly disproportionate to the gravity of the FCPA violations, which GMA characterizes as solely a reporting offense that did not harm the voting public. The State argues that the penalty is not an excessive fine because GMA not only failed to register as a political committee, it intentionally concealed its members’ contributions to the No on I-522 campaign. The State asserts that these actions harmed the public by preventing Washington voters from knowing the identity of the companies that were spending millions of dollars to defeat the initiative.
¶5 We hold that the $18 million penalty does not violate the Eighth Amendment's excessive fines clause. Therefore, we affirm the trial court's imposition of an $18 million civil penalty on GMA.
FACTS
Background
¶6 Some of the relevant facts in this case are set out in this court's opinion and the Supreme Court's opinion in GMA's first appeal. State v. Grocery Manufacturers Ass'n , 5 Wash. App. 2d 169, 425 P.3d 927 (2018) ( GMA I ), rev'd in part , 195 Wash.2d 442, 461 P.3d 334 (2020) ( GMA II ). In addition, the trial court made extensive findings of fact before imposing the civil penalty. GMA did not challenge those findings, so they are verities on appeal.
¶7 GMA is a nationwide trade association that represents hundreds of food, beverage, and consumer product companies. Generally, GMA seeks to promote reasonable and national food labeling requirements.
¶8 In 2012, GMA opposed a ballot proposition in California, Proposition 37, which would have required producers of packaged food products to label products containing GMOs. Later that year, GMA learned about a similar proposed ballot initiative in Washington, I-522. In January 2013, GMA began planning for an aggressive campaign in Washington to oppose I-522 while at the same time avoiding state financial disclosure requirements. As part of the opposition campaign, GMA created the Defense of Brands (DOB) account to collect funds from some of its member companies and to use them to oppose I-522. Two purposes of the account were to "shield the contributions made from GMA members from public scrutiny" and to "eliminate the requirement and need to publicly disclose GMA members’ contributions on state campaign finance disclosure reports." Clerk's Papers (CP) at 4059.
¶9 GMA made its first contribution to the No on I-522 campaign from the DOB account in May 2013. GMA solicited over $14 million in contributions from its member companies for the DOB fund and paid $11 million of that amount to the No on I-522 political committee. The payments to the No on I-522 campaign were attributed solely to GMA, with no indication of which member companies had provided the funds. In fact, contributing GMA members were instructed how to respond if they received inquiries about GMA's contributions, "in part to divert attention from the true source of the funds, namely, the individual GMA members." CP at 4061. And in June, GMA removed the names of its members from its website.
¶10 Until October 17, GMA did not register with the Public Disclosure Commission (PDC) as a political committee or file any required political committee reports that would have disclosed the contributing members. GMA registered only after receiving a violation notice from the PDC. GMA first disclosed the members who contributed to the DOB account on October 17, a few weeks before the election. And GMA never fully disclosed the total contributions to the DOB account. The trial court found that there were at least 47 reports required under the FCPA that GMA failed to timely or properly file.
Procedural History
¶11 The State sued GMA for failing to register as a political committee, failing to report financial contributions, and concealing the true source of contributions. The State sought a base penalty of $14,622,820 trebled to $43,868,460. This amount apparently was based primarily on the amount in the DOB fund that GMA failed to timely disclose.
¶12 On summary judgment, the trial court ruled that GMA was required to register as a political committee under former RCW 42.17A.005(37) (2011) when it created the DOB account, that GMA violated various FCPA reporting and disclosure requirements for political committees, and that GMA violated RCW 42.17A.435 by concealing the source of the contributions it made to oppose I-522.
¶13 After a bench trial on the issue of penalties, the court imposed a $6 million civil penalty against GMA based on (1) GMA's concealment of the amount in the DOB account, (2) GMA's concealment of the source of the contributions to the DOB account, (3) the multiple disclosure reports that were not timely or properly filed regarding finance activities of the DOB account, and (4) the number of days the required reports were late. The court then trebled the penalty to $18 million based on a finding that GMA's violation of the law was intentional.
¶14 GMA appealed. GMA I, 5 Wash. App. 2d at 182, 425 P.3d 927. In GMA I, this court held that the trial court did not err in granting summary judgment in favor of the State as to whether GMA qualified as a political committee under former RCW 42A.17.005(37) by receiving contributions for the DOB account to oppose I-522. Id. at 191, 425 P.3d 927. The court also rejected GMA's constitutional challenges. Id . at 191-206, 425 P.3d 927.
¶15 However, the court held that the trial court erred in ruling that GMA did not need to subjectively intend to violate the law in order to be subject to treble damages under former RCW 42.17A.765(5) (2010). Id . at 208-09, 425 P.3d 927. The court remanded for further proceedings for the trial court to determine whether GMA was subject to treble damages under the proper standard. Id . at 209, 425 P.3d 927. Because the court vacated the treble damages award, it did not address GMA's argument that the $18 million penalty was an excessive fine in violation of the Eighth Amendment.
¶16 Both parties petitioned for review in the Supreme Court, which granted review. GMA II, 195 Wash.2d 442, 461 P.3d 334. The Supreme Court affirmed that GMA constituted a political committee and also that GMA intentionally violated the FCPA's prohibition on concealment by using the DOB account to shield the names of contributing members. Id. at 453-61, 469-70, 461 P.3d 334. The court also held that the FCPA's registration and disclosure requirements did not violate the First Amendment to the United States Constitution as applied to GMA. Id. at 461-69, 461 P.3d 334. But the court reversed this court on the issue of the required intent for FCPA violations and held that the FCPA "requires only the intent to accomplish an illegal act," affirming the legal standard applied by the trial court. Id . at 475, 461 P.3d 334. The court remanded...
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State v. Grocery Mfrs. Ass'n
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