Election fallout: Judge says AG’s lawsuit against Grocery Manufacturers can move ahead

Staff writerJune 13, 2014 

Thurston County Superior Court Judge Christine Schaller

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A Thurston County judge rejected a motion Friday by the national Grocery Manufacturers Association to dismiss a campaign finance complaint stemming from the 2013 initiative fight over labeling genetically modified foods in Washington.

In court, GMA lawyer Michael Ryan argued that the state’s campaign registration rules were unconstitutional infringements on the trade group’s First Amendment rights. He said the organization raised money for its "Defense of Brand" efforts in states across the country, including Washington, but it now could be fined under the state’s unconstitutional rule for "perhaps $30 million."

Superior Court Judge Christine Schaller refused GMA’s request to toss the state’s campaign finance reporting requirement under which GMA ultimately registered as a political committee. But she did scrap the state’s requirement that political committees collect at least $10 from 10 different registered voters in state before spending in a Washington campaign. Schaller ruled in an oral decision that the 10-donors provision - which took effect in 2012 - was unconstitutional, the Attorney General’s office said in a news release.

The GMA, based in Washington, D.C., solicited contributions from members in early 2013 and used that money to make $11 million in contributions to the No on 522 campaign, which fought against mandatory labeling. The “no” campaign committee raised more than $22 million and spent almost $21.7 million to defeat the labeling measure, which was backed by organic food groups and out of state interests such as Dr. Bronner’s Magic Soaps of California.

Ryan told Schaller that GMA ultimately disclosed its member donors’ identities before ballots ever went out for the November election. So "every voter had the information," Ryan said.

But by collecting the funds and donating it as a chunk, GMA initially avoided identifying individual companies. Eventually, after Attorney General Bob Ferguson sued the GMA, the company disclosed that donors of more than $1 million included Pepsico, Nestle USA, and The Coca-Cola Co.

Senior assistant attorney general Linda Dalton represented the Public Disclosure Commission, and she disputed the First-Amendment claim, saying the case was only about compliance with state rules for participating in elections.

Ferguson’s office said he was taking the ruling on the $10 contributions from 10 voters under review to decide his next step. The provision was part of a reform package passed by the Legislature a few years ago in response to 2010 campaign complaints about political committees that were hiding funds and donors under shell PACs.

Ferguson has never said how big of a penalty he’ll seek against the GMA if he wins the rest of the lawsuit.

"Today’s ruling is an important step in our work to hold the Grocery Manufacturers Association accountable for the largest campaign finance concealment case in Washington history," Ferguson said in a statement. "We intend to send a strong message to all: If you want to engage in political campaigns in Washington, you have to play by the rules."

In the end voters rejected the GMO measure in Washington, which came a year after California voters rejected a nearly identical measure. But unlike in California, where some donors faced a reported backlash from consumers for donating against the labeling campaign, Grocery Manufacturers’ leaders staked out a strategy of collecting contributions in house and avoiding singling out individual firms as donors.

The trade group’s latest battleground is in Vermont. On Thursday, the GMA joined other trade groups in a federal lawsuit seeking to overturn Vermont’s new GMO labeling law that takes effect in July 2016.

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