Politics blog

Wash. high court hears echo of 2008 governor’s race in BIAW money case

OlympianMay 27, 2014 

Candidate Dino Rossi speaks to a Mason County senior center audience on Nov. 1, 2008, during his second campaign for governor.

INGRID BARRENTINE — Special to The Olympian / file photo

The Washington state Supreme Court ventured nearly into the political catacombs Tuesday, hearing arguments in a case involving the long-since-decided governor’s race from 2008. It dealt with actions by a subsidiary of the Building Industry Association, which took $584,000 from builder groups around the state in 2007 and unlawfully waited a year before reporting it

At issue six years later is whether a citizen’s lawsuit filed back in 2008 by two former Supreme Court justices could proceed against BIAW. The court will have to decide whether the lawsuit was barred – as a trial court determined – once the Public Disclosure Commission and attorney general investigated then determined that the BIAW itself did not need to register as a political action committee. 

Several labor groups including the Washington State Labor Council filed a friend of court brief in the case, siding in part with BIAW on one key issue. They noted that an Appeals Court ruling in the case included language that could potentially require unions – and not just PACs they have created for political committees – to file as political committees and it could impede their ability to educate members about election issues.

IN THE CASE THE PDC DID PURSUE against BIAW, money was funneled into a PAC that tried to boost Republican Dino Rossi’s second bid for governor.  The PAC – known as It’s Time for a Change PAC – ultimately spent more than $6 million. Rossi lost to then-Gov. Chris Gregoire, a Democrat.

State campaign-finance watchdogs eventually settled their complaint against BIAW by imposing a $584,000 sanction ($342,000 of it suspended for good behavior) against BIAW’s Member Services Corp. for failing to register as a political committee and failing to make timely campaign disclosures of industrial insurance rebate money that was collected by BIAW-MSC and concealed for later donation to the PAC. 

Knoll Lowney, a Seattle lawyer who pulled Rossi into depositions over the money during the late days of the 2008 campaign, has long contended that BIAW itself should have registered as a PAC. He again made those arguments in the high court on behalf of former justices Robert Utter and Faith Ireland, who filed the original citizen’s lawsuit.

“It is clear the BIAW hoodwinked the PDC,” Lowney asserted to the Supreme Court. Lowney added that it was a “tale” that BIAW told to campaign finance investigators in saying its subsidiary – and not BIAW – carried out the campaign finance actions. 

Harry Korrell, a Seattle lawyer who helped in Rossi’s legal bid to get a revote in the 2004 governor’s race and on other cases involving BIAW and Rossi, said the case at hand had nothing to do with campaign finance. Rather, he said, it was about whether private groups could “usurp” the powers of the PDC during the heat of an election by being granted the ability to move ahead with a citizen action suit. 

The key issue, he said, is whether a citizen’s lawsuit is permitted in state courts once the same case has been investigated and acted on by state authorities.

Korrell also said BIAW never had the money in question, which was always in the hands of the subsidiary MSC. Korrell also said “every dime” raised or spent by MSC has been reported. 

Both sides cited federal appeals court rulings – Lowney from the 9th Circuit in San Francisco; Korrell from the 4th in Richmond, Virginia – that supported their views. 

But several justices appeared skeptical of Lowney’s claim that a primary purpose of BIAW was ever to conduct campaigns. Skeptics included Justice Charles Wiggins, who prior to his election to the bench had been a critic of outside groups like BIAW spending huge sums in court races. 

“It seems to me that is not the primary purpose of the BIAW,’’ Wiggins said at one point.

The case drew friend-of-the-court briefs from both ends of the political spectrum – from the right-of-center Institute for Justice and from left-leaning unions that included state locals of the Service Employees International Union. 

“BIAW’s ordeal demonstrates the danger of participating in elections in an environment where confusing campaign finance laws can be joined with politically motivated prosecution,” the Institute for Justice said in a press release ahead of Tuesday’s court hearing.

Our report on BIAW’s settlement with the PDC is here. Not long after the legal fights, BIAW’s board shook up the leadership and staff at the Olympia-based trade group, which had a reputation for hard-nosed lobbying and campaign tactics. Our report on the shakeup, including BIAW paying its former leader $1.25 million when he agreed to resign, is here.

The court did not say how long it would take in issuing a ruling. But six to nine months is common, and some thorny cases have taken well over a year.

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