Grocery Group Hit With Record Fine for Hiding Campaign Donations

The Washington Supreme Court has reinstated an $18 million fine against the Grocery Manufacturers Association for violating the state’s campaign finance laws.

It’s the largest such penalty ever assessed by the state.

The Washington, D.C.-based trade group, which represents food and consumer products manufacturers, has been fighting the fine since 2017.

Attorney General Bob Ferguson (D) filed the suit after the trade group concealed the source of about $11 million spent to defeat a state ballot initiative that would have required labeling of food containing genetically modified organisms.

(Photo by ROBYN BECK/AFP via Getty Images)

An example of the type of labeling at issue in the 2013 election in Washington state.

More than 30 GMA member companies had funded the 2013 effort, including Coca-Cola Co., ConAgra Brands Inc., General Mills Inc., Nestle USA Inc., and PepsiCo.

The ballot issue was defeated by a 51% to 49% margin.

“Today’s Supreme Court ruling constitutes a tremendous victory for fair and transparent elections,” Ferguson said in a prepared statement. “My philosophy is straightforward — penalties must be more than a cost of doing business for those, like GMA, who intentionally violate our transparency laws.”

Identities Hidden

The GMA, which has since changed its name to Consumer Brands Association, got the approval of its board to create a “Defense of Brands” account to hide the source of the campaign contributions, according to the court opinion.

The board wanted secrecy because “some of GMA’s staff and member companies were threatened and boycotted” after the association spent $22 million to stop a similar measure in California in 2012, the opinion said.

The justices upheld the violations of the state Fair Campaign Practices Act and reversed a lower appellate court, which had overturned the trial court’s imposition of a treble penalty. Two justices concurred with the finding of violations but wrote in a dissent that treble damages shouldn’t apply.

Consumer Brands Association President and CEO Geoff Freeman said in an email that the association will “review the ruling on this legacy issue in due time, but right now we, and our industry, are rightly focused on providing Americans with the essential products they need to stay home and stay safe.”

The case is Washington v. Grocery Manufacturers Association, Wash.en banc, No. 96604-4, opinion filed 4/16/20

To contact the reporter on this story: Paul Shukovsky in Seattle at pshukovsky@bloomberglaw.com