State v. Grocery Mfrs. Ass'n

FILE THIS OPINION WAS FILED
FOR RECORD AT 8 A.M. ON
JANUARY 20, 2022
IN CLERK’S OFFICE
SUPREME COURT, STATE OF WASHINGTON
JANUARY 20, 2022
ERIN L. LENNON
SUPREME COURT CLERK
IN THE SUPREME COURT OF THE STATE OF WASHINGTON
)
STATE OF WASHINGTON, )
)
Respondent, ) No. 99407-2
)
v. )
)
GROCERY MANUFACTURERS )
ASSOCIATION )
Petitioner. ) Filed: January 20, 2022
_______________________________)
GONZÁLEZ, C.J.—Voters have a right to know who funds their elections. To
enforce that right, candidates and political committees are required to disclose their
contributors or face a penalty for failing to do so. We are asked today whether the
penalty for intentionally concealing the source of political contributions may be
based on the amount concealed. We conclude that it may and accordingly affirm.
BACKGROUND
Washington voters have the constitutional right to propose laws and, when
the legislature does not enact their proposals, vote on final passage. WASH. CONST.
art. II, § 1. Using this power, Washington voters proposed and passed
Washington’s Fair Campaign Practices Act (FCPA or act), ch. 42.17A RCW. The
FCPA is an attempt to make elections and politics as fair and transparent as
State v. Grocery Mfrs. Ass’n, No. 99407-2
possible; and to accomplish that goal, the act requires candidates, political
committees, and lobbyists to disclose their campaign contributions and spending.
LAWS OF 1973, ch. 1 (codified in part at chapter 42.17A RCW); see also Voters
Educ. Comm. v. Pub. Disclosure Comm’n, 161 Wn.2d 470, 479-80, 166 P.3d 1174(2007). The FCPA establishes that it is “the public policy of the State of
Washington . . . [t]hat political campaign and lobbying contributions and
expenditures be fully disclosed to the public and that secrecy is to be avoided” and
“[t]hat the public’s right to know of the financing of political campaigns . . . far
outweighs any right that these matters remain secret and private.” LAWS OF 1973,
ch. 1, § 1(1), (10) (currently codified at RCW 42.17A.001(1), (10)).
The FCPA compels disclosure and “compelled disclosure may encroach on
First Amendment rights by infringing on the privacy of association and belief.”
Voters Educ. Comm., 161 Wn.2d at 482 (citing Buckley v. Valeo, 424 U.S. 1, 64,
96 S. Ct. 612, 46 L. Ed. 2d 659 (1976)). To guard against infringing on these First
Amendment rights, laws mandating disclosure “must survive ‘exacting scrutiny.’”
Id. (quoting Buckley, 424 U.S. at 64). FCPA’s compelled registration and
disclosure requirements have been upheld by state and federal courts many times
over the years. See id. at 497-98; State v. Evergreen Freedom Found., 192 Wn.2d
782, 801, 432 P.3d 805 (2019); Human Life of Wash. Inc. v. Brumsickle, 624 F.3d
990, 994-95, 1005 (9th Cir. 2010) (rejecting an initiative-opponent’s First
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Amendment challenge to FCPA under the exacting scrutiny standard of Citizens
United v. FEC, 558 U.S. 310, 130 S. Ct. 876, 175 L. Ed. 2d 753 (2010); U.S.
CONST. amend. I).
We are not the only state where the voters have the power to propose and
pass legislation. In 2012, Proposition 37 was presented to California voters. This
proposition would have required some manufacturers to disclose whether packaged
food contained genetically modified organisms (GMO). The Grocery
Manufacturer’s Association (GMA) and many of its member companies
successfully campaigned against Proposition 37, and some received negative
responses from the public for doing so.
In the wake of the Proposition 37 campaign, Washington sponsors filed
Initiative 522. Like Proposition 37, this initiative would have required GMO
labels on packaged food and like Proposition 37, GMA opposed it. GMA
developed a campaign strategy to work against the initiative while shielding its
member companies from the sort of negative public response that happened in
California. As part of that campaign strategy, GMA created a segregated “Defense
of Brands” strategic account that would hold and disburse contributions raised to
oppose labeling requirements. GMA staffers explained that “‘state GMO related
spending will be identified as coming from GMA which will provide anonymity
and eliminate state filing requirements for contributing members.’” Clerk’s Papers
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(CP) at 4054 (quoting Ex. 15). Nothing in the record or briefing suggests GMA
brought a declaratory judgment action under chapter 7.24 RCW to determine
whether and how the FCPA would apply to its campaign work.
GMA raised more than $14 million to oppose GMO labeling efforts. GMA
in turn contributed $11 million to the “No on 522” campaign from the Defense of
Brands strategic account. Despite its political activities in Washington, GMA did
not register as a political committee with the Public Disclosure Commission (PDC)
and did not make any PDC reports until after this lawsuit was filed. In response to
the suit, GMA registered “under duress” but, as of the time of trial, still had not
filed all of the required reports.
The State sued, contending that GMA intentionally, flagrantly, and
repeatedly violated the FCPA. GMA filed a separate lawsuit against the State for
injunctive and declaratory relief, arguing that the State was unconstitutionally
attempting to enforce Washington’s fair campaign laws. The suits were
consolidated. At summary judgment, the trial court found that GMA was a
political committee subject to the FCPA and that it had broken the law by failing to
register with the PDC and failing to file disclosure reports. Concluding there were
factual issues about whether GMA had intentionally violated the law (which would
permit statutory punitive treble damages), the judge reserved the penalty for trial.
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After a bench trial, the trial court found that GMA had intentionally violated
Washington’s campaign finance laws. It found that GMA and its board intended to
use the Defense of Brands account “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.” CP at 4059. It also concluded that GMA concealed the
amount and source of contributions, registered 224 days late, and did not properly
or timely file at least 47 reports. The trial court specifically rejected testimony
from GMA officers that they had not intended to violate the law, finding “it is not
credible that GMA executives believed that shielding GMA’s members as the true
source of contributions to GMA’s Defense of Brands Account was legal.” CP at
4068.
The State asked for a base penalty of $14,622,820 based largely on the
amount of campaign funds that GMA had collected and concealed. Basing the
penalty on the amount intentionally concealed is explicitly authorized in the FCPA.
RCW 42.17A.750(1)(g). The State also asked the trial judge to impose punitive
treble damages for a total of $43,868,460, which is also explicitly authorized under
the act. RCW 42.17A.780. GMA asked for “a [m]odest, [p]artially [s]uspended,
[p]enalty.” CP at 3476.
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The trial court rejected both approaches. It entered several relevant
unchallenged findings of fact:
106. In exercising its discretion in determining an appropriate penalty in this
case, the court should and did review the applicable statutes, administrative
code provisions, case law and penalties imposed by other courts. Although
the court would not allow testimony or argument on penalties in other cases,
the court has reviewed all of the briefing submitted, including GMA’s
briefing and arguments regarding penalties imposed in other cases. The
court has considered all of that in making its determination regarding a
penalty.
107. Mitigating factors in this case include lack of any prior violations by
GMA, that GMA is not a repeat violator and that GMA cooperated with the
PDC once this case was filed. Those factors weigh in favor of a smaller
penalty.
108. There are also factors that weigh in favor of the court imposing a more
substantial penalty, including trebling of damages. Those factors include:
violation of the public’s right to know the identity of those contributing to
campaigns for or against ballot title measures on issues of concern to the
public, the sophistication and experience of GMA executives, the failure of
GMA executives to provide complete information to their attorneys, the
intent of GMA to withhold from the public the true source of its contributors
against Initiative 522, the large amount of funds not reported, the large
number of reports filed either late or not at all, and the lateness of the
eventual reporting just shortly before the 2013 election.
CP at 4069.
Based on these aggravating and mitigating factors, and based on former
RCW 42.17A.750(1)(f) (2013), 1 the trial court imposed a $6 million base penalty.
1
Former RCW 42.17A.750(1)(f) (2013) has been recodified without change at RCW
42.17A.750(1)(g). LAWS OF 2018, ch. 304, § 12. For convenience, we will refer to the current
code provision unless otherwise noted.
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Since the violation was intentional, the trial court imposed treble damages. See
RCW 42.17A.780 (allowing for punitive treble damages for intentional violations
of FCPA). It also imposed attorney fees.
GMA appealed both liability and damages, arguing, among other things, that
it was not a political committee and that, even if it was, requiring it to register and
disclose contributions and expenditures violated Washington’s campaign financing
laws and several constitutional provisions. State v. Grocery Mfrs. Ass’n, 195
Wn.2d 442, 454, 461, 461 P.3d 334 (2020) (GMA II). The Court of Appeals
affirmed the trial court’s decision that GMA was a political committee subject to
FCPA and that FCPA was constitutionally applied, but it found that treble damages
were inappropriate under the act. State v. Grocery Mfrs. Ass’n, 5 Wn. App. 2d
169, 176-77, 209, 425 P.3d 927 (2018) (GMA I) (citing former RCW
42.17A.765(5) (2010)). GMA I did not reach GMA’s argument that the penalty
violated the excessive fines clauses of the state and federal constitutions. Id. at 177
n.2.
This court largely affirmed the trial court, holding that Washington’s
campaign finance laws were constitutional as applied to GMA, that the trial court
had applied the correct standard to determine whether GMA had intentionally
violated the law, and that treble damages were permissible under the statute. GMA
II, 195 Wn.2d at 448-49. We remanded the case to the Court of Appeals to
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consider whether the penalty was based on constitutionally permissible
considerations and whether it violated the excessive fines clauses. Id. at 449. On
remand, the Court of Appeals affirmed the constitutionality of the penalty. State v.
Grocery Mfrs. Ass’n, 15 Wn. App. 2d 290, 294, 475 P.3d 1062 (2020). We
granted review. Order, No. 99407-2. Amici briefs in support of GMA have been
filed by the Building Industry Association of Washington (joined by Enterprise
Washington, Washington Farm Bureau, Washington Retail Association, National
Electrical Contractors Association, and Washington Food Industry Association)
(BIAW), the Institute for Free Speech, and the National Association of
Manufacturers (joined by the Chamber of Commerce of the United States of
America). Seven current and former Washington State legislators (CFWSL) have
filed an amici brief urging the court to adopt additional factors when considering
whether a penalty that has potential First Amendment implications violates the
excessive fines clause and urging the court to consider the impact of recent
legislation on this case.
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ANALYSIS
A. EXCESSIVE FINES
Both the Eighth Amendment to the United States Constitution and article I,
section 14 of the Washington Constitution prohibit excessive fines. 2 This
limitation on the government’s power to punish arose from the backlash against the
heavy fines levied by English kings and their judges to raise revenue and to punish
the king’s enemies for their political disagreements. Browning-Ferris Indus. of Vt,
Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 267, 109 S. Ct. 2909, 106 L. Ed. 2d 219(1989) (citing LOIS G. SCHWOERER, THE DECLARATION OF RIGHTS, 1689, at 91-92
(1981)). The prohibition on excessive fines was part of the 1689 English Bill of
Rights. Id. at 266-67. Under the excessive fines clauses, “[p]unitive fines should
not be sought or imposed ‘to retaliate against or chill the speech of political
enemies’ or as ‘a source of revenue.’” GMA II, 195 Wn.2d at 476 (internal
quotation marks omitted) (quoting Timbs v. Indiana, 586 U.S.__, 139 S. Ct. 682,
689, 203 L. Ed. 2d 11 (2019)).
GMA argues that both the $6 million base penalty and the treble damages
are unconstitutional excessive fines. It argues it should be fined, at most, $622,800
2
While GMA has raised article I, section 14, it has devoted no separate argument to it.
Accordingly, we will not consider whether a different result would be compelled under an
independent state constitutional analysis. See Saunders v. Lloyd’s of London, 113 Wn.2d 330,
345, 779 P.2d 249 (1989) (declining to reach arguments unsupported by sufficient argument and
authority).
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State v. Grocery Mfrs. Ass’n, No. 99407-2
based on a per-day/per-violation theory. Suppl. Br. of Pet’r GMA at 3 (citing
RCW 42.17A.725(1)(c) and (d) 3). The trial court rejected this argument and
instead based the penalty on the amount of money intentionally concealed in
violation of the act as authorized by RCW 42.17A.750(1)(g). The trial court
reduced the penalty in recognition of the mitigating factors and then trebled it as
punitive damages.
The United States Supreme Court has stressed two overarching principles in
its articulation of the proper analytical test for whether a fine is excessive. “The
first . . . is that judgments about the appropriate punishment for an offense belong
in the first instance to the legislature.” United States v. Bajakajian, 524 U.S. 321,
336, 118 S. Ct. 2028, 141 L. Ed. 2d 314 (1998) (citing Solem v. Helm, 463 U.S.
277, 290, 103 S. Ct. 3001, 77 L. Ed. 2d 637 (1983)). The second principle is “that
any judicial determination regarding the gravity of a particular criminal offense
will be inherently imprecise.” Id. To show appropriate respect to both principles,
the Court held that a fine is excessive “if it is grossly disproportional to the gravity
of a defendant’s offense.” Id. at 334.
3
The citation to RCW 42.17A.725 is likely a scrivener’s error on GMA’s part. A section .725
does not appear in current or former versions of the FCPA. See chapters 42.17A and 42.17
RCW dispositions at https://app.leg.wa.gov/rcw/dispo.aspx?cite=42.17A and
https://app.leg.wa.gov/rcw/dispo.aspx?cite=42.17. We assume GMA meant RCW 42.17A.750,
which governs penalties.
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Bajakajian identified four factors to determine whether a fine is grossly
disproportional: “‘(1) the nature and extent of the crime, (2) whether the violation
was related to other illegal activities, (3) the other penalties that may be imposed
for the violation, and (4) the extent of the harm caused.’” GMA II, 195 Wn.2d at
476 (quoting United States v. $100,348.00 in U.S. Currency, 354 F.3d 1110, 1122
(9th Cir. 2004)). We also consider the individual’s ability to pay the fine. City of
Seattle v. Long, 198 Wn.2d 136, 173, 493 P.3d 94 (2021).
Whether a penalty is grossly disproportional is reviewed de novo.
Bajakajian, 524 U.S. at 336-37. Courts apply the Bajakajian analysis to punitive
civil fines. See Long, 198 Wn.2d at 163.
(1) NATURE AND EXTENT OF THE OFFENSE. The State contends GMA
“perpetrated the largest campaign finance violation in Washington’s history,
intentionally concealing the true source of over $10 million in campaign spending”
and directly violating the core principles of the FCPA. State’s Suppl. Br. at 1.
GMA contends it merely committed “a commonplace FCPA violation.” Suppl. Br.
of Pet’r GMA at 11. We agree with the State’s characterization of the nature and
extent of the offense.
Again, it is the public policy of the state of Washington:
(1) That political campaign and lobbying contributions and
expenditures be fully disclosed to the public and that secrecy is to be
avoided.
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....
(10) That the public’s right to know of the financing of political
campaigns and lobbying and the financial affairs of elected officials and
candidates far outweighs any right that these matters remain secret and
private.
(11) That, mindful of the right of individuals to privacy and of the
desirability of the efficient administration of government, full access to
information concerning the conduct of government on every level must be
assured as a fundamental and necessary precondition to the sound
governance of a free society.
The provisions of this chapter shall be liberally construed to promote
complete disclosure of all information respecting the financing of political
campaigns.
RCW 42.17A.001. Washington voters, by initiative, have firmly established that
they have the right to know who is paying for political campaigns, including
initiatives, in this state. Id. The voters and the integrity of the electoral process are
harmed when that right is violated, especially when that information is
intentionally concealed. Id. As the Ninth Circuit Court of Appeals observed when
rejecting a challenge to the FCPA, “‘[t]he people in our democracy are entrusted
with the responsibility for judging and evaluating the relative merits of conflicting
arguments. They may consider, in making their judgment, the source and
credibility of the advocate.’” Human Life, 624 F.3d at 994 (quoting First Nat’l
Bank v. Bellotti, 435 U.S. 765, 791-92, 98 S. Ct. 1407, 55 L. Ed. 2d 707 (1978)).
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In this case, the trial court’s unchallenged findings of fact underscore the
harm caused when campaign contributions are concealed. It found these factors
that weighed in favor of a significant penalty:
violation of the public’s right to know the identity of those contributing to
campaigns for or against ballot title measures on issues of concern to the
public, the sophistication and experience of GMA executives, the failure of
GMA executives to provide complete information to their attorneys, the
intent of GMA to withhold from the public the true source of its contributors
against Initiative 522, the large amount of funds not reported, the large
number of reports filed either late or not at all, and the lateness of the
eventual reporting just shortly before the 2013 election.
CP at 4069. Since GMA did not challenge this finding, it is a verity on appeal. See
Opening Br. of Appellant at 1-2 (Wash. Ct. App. No. 49768-9-II (2017)); In re
Dependency of MSR, 174 Wn.2d 1, 9, 271 P.3d 234 (2012) (citing State v. Rankin,
151 Wn.2d 689, 709, 92 P.3d 202 (2004)). These factors show the nature of the
offense was grave and the extent was broad.
GMA attempts to analogize the nature and extent of the offense here to the
one before the Court in Bajakajian. We do not find the two offenses analogous.
Bajakajian concerned the violation of federal statutes that require people to report
if they are taking more than $10,000 in cash out of the country and required
forfeiture of the cash as a penalty. 524 U.S. at 324 (citing 18 U.S.C. § 982(a)(1)).
Hosep Bajakajian had attempted to leave the country carrying about $360,000 in
cash to pay a lawful debt. Id. at 324, 326. The cash was not connected to any other
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crime. Id. at 326. The Supreme Court found that forfeiting the entire amount of
cash violated the excessive fines clause because it was grossly disproportional to
the gravity of Bajakajian’s offense. Id. at 337.
On a facile level, both the crime in Bajakajian and the violation of campaign
laws could be described as reporting offenses. But GMA’s decision to conceal the
identities of its campaign contributors struck at the core of open and transparent
elections. Under the FCPA, voters have the right to “know of the financing of
political campaigns,” RCW 42.71A.001(10), and “‘may consider, in making their
judgment, the source and credibility of the advocate,’” Human Life, 624 F.3d at
994 (quoting Bellotti, 435 U.S. at 791-92). By contrast, Bajakajian’s failure to
report “affected only one party, the Government, and in a relatively minor way.
There was no fraud on the United States, and respondent caused no loss to the
public fisc. Had his crime gone undetected, the Government would have been
deprived only of the information that $357,144 had left the country.” Bajakajian,
524 U.S. at 339. Bajakajian’s offense was minor. The GMA’s offense struck at
the core of open elections. The grave nature and broad extent of GMA’s offense
suggests the penalty is not grossly disproportional. 4
4
For these reasons, we respectfully disagree with the dissent’s suggestion that the federal
currency reporting statutes at issue in Bajakajian are meaningfully analogous to the FCPA, or
that GMA’s offense should be treated merely as a reporting offense. The federal statutes simply
required reporting to allow the federal government to know when large amounts of currency
were being moved outside of our borders. Our FCPA, by contrast, is designed to allow voters to
make informed choices about candidates and ballot measures. The amount concealed is directly
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(2) WHETHER THE VIOLATION WAS RELATED TO OTHER ILLEGAL ACTIVITIES.
GMA characterizes itself as being punished for a unified course of conduct.
Without specific citation to Bajakajian, GMA argues that “Bajakajian requires
examining whether the conduct in question relates to other illegal activity, not
whether it violates multiple laws.” Suppl. Br. of Pet’r GMA at 13. Since, GMA
contends, it “spent lawfully acquired funds on core political speech, a lawful—
indeed, a constitutionally protected—activity,” this factor weighs against a
significant penalty. Id.Bajakajian offers at best weak support for GMA’s argument that its
violations were not related to other illegal activity. Bajakajian pleaded guilty to
failing to report as required by 31 U.S.C. § 5316(a)(1)(A). Bajakajian, 524 U.S. at
325. The court observed that Bajakajian did “not fit into the class of persons for
whom the statute was principally designed: He is not a money launderer, a drug
trafficker, or a tax evader,” and he could have lawfully carried the whole amount
out of the country if he had reported it. Id. at 337-38. Bajakajian does not address
correlated to the harm caused because GMA was able to fund more campaign speech without the
proper disclosure than if it had concealed less money. The federal and state statutes are also not
analogous because the federal law required forfeiture of the whole amount. Bajakajian, 524 U.S.
at 326 (citing 18 U.S.C. § 982(a)(1)). By contrast, the FCPA allows only a fine based on the
amount concealed if the trial judge determines, given the facts of the individual case, such a fine
is warranted. RCW 42.17A.750, .780. Nothing in Bajakajian prohibits the court from
considering the harm caused to the integrity of an election when a political committee willfully
conceals the source of campaign contributions and spending.
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whether “other illegal activities” had to be found in a separate chapter of statutory
law.
GMA’s conduct involved several illegal activities that together amounted to
failing to register and intentionally concealing the true source of donations. That is
exactly the conduct the FCPA was designed to prevent. The currency statutes that
Bajakajian violated were not designed to catch people who were merely taking
cash to pay a lawful debt. See id. at 337-38. While this factor does not weigh as
strongly as the others, it supports a conclusion that the penalty is not grossly
disproportional. 5
(3) THE OTHER PENALTIES THAT MAY BE IMPOSED FOR THE VIOLATION. A
base penalty of the amount concealed has always been a potential statutory penalty
under FCPA. LAWS OF 1973, ch. 1, § 39(1)(e), currently codified as RCW
42.17A.750(1)(g). The FCPA has always authorized trial judges to impose treble
damages for intentional violations of our state’s campaign disclosure laws. LAWS
OF 1973, ch. 1, § 40(5); RCW 42.17A.780.
5
We respectfully disagree with the dissent that anything in Bajakajian prevents the trial judge
from considering the policy considerations underlying the FCPA when setting the penalty.
Nothing in Bajakajian limits the trial court to the elements of the offense when setting the
penalty. Unlike in the criminal setting, the Supreme Court has never required that the State
charge and prove beyond a reasonable doubt the facts on which a civil penalty may be based.
Additionally, the Bajakajian court noted that Bajakajian “does not fit into the class of persons for
whom the statute was principally designed: He is not a money launderer, a drug trafficker, or a
tax evader.” 524 U.S. at 338. Here, by contrast, the GMA fits precisely into the class for whom
this statute was principally designed—candidates and political action committees.
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GMA suggests that the fact the legislature authorized lesser penalties shows
that this fine was grossly disproportionate. GMA stresses that if the trial judge had
imposed the maximum per-violation/per-day penalties set forth in RCW
42.17A.750(1)(c) and (e), it would be subject to a $622,820 penalty. Trebled, that
penalty would be about $1.87 million. But courts look to all the penalties,
especially the maximum penalties, authorized by the legislature. $100,348.00 in
U.S. Currency, 354 F.3d at 1122 (citing United States v. 3814 NW Thurman St.,
164 F.3d 1191, 1197 (9th Cir. 1999)); Bajakajian, 524 U.S. at 338. GMA’s
argument ignores this case law.
RCW 42.17A.750(1)(g) authorizes a civil penalty equal to the amount
concealed. RCW 42.17A.780 authorizes treble damages for intentional
violations—here, more than $43 million dollars. This factor strongly suggests the
$18 million fine was not grossly disproportional.
(4) THE EXTENT OF THE HARM CAUSED. GMA argues that concealing its
contributors caused minimal harm because voters knew that grocery manufacturers
opposed the initiative. But the harm was substantial and struck at the heart of the
principles embodied in the FCPA. See RCW 42.17A.001. Voters are entitled to
know who is contributing to political committees and paying for political
campaigns by name, not just by category. Id.17
State v. Grocery Mfrs. Ass’n, No. 99407-2
GMA contends that “[t]o assume a one-to-one ratio between the amount of
funds involved and resulting harm is to repeat the error of the district court in
Bajakajian.” Suppl. Br. of Pet’r GMA at 15. But it points to no error committed
by the district court in Bajakajian. The federal district court rejected the
government’s attempt to seize the entire amount of currency Bajakajian attempted
to take from the country without reporting. Bajakajian, 524 U.S. at 326. Both the
Court of Appeals and the United States Supreme Court affirmed that judgment. Id.
at 327, 344. Nothing in Bajakajian suggests that forfeiture would not have been
constitutionally appropriate had the crime been more than a mere reporting
violation.
GMA also suggests that the reporting requirements of the FCPA have less
force in the context of initiatives because there is no risk of quid pro quo
corruption. But both this court and the Ninth Circuit have found that the public’s
interest in disclosure of campaign contributions “apply equally for voter-decided
ballot measures.” Evergreen Freedom Found., 192 Wn.2d at 799 (citing Human
Life, 624 F.3d at 1006. Plainly, the drafters of Initiative 276, which created the
FCPA, were aware initiatives existed and could have imposed a lesser penalty for
failing to properly report spending on initiative campaigns. Nonetheless, the
initiative did not create a separate penalty structure.
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Finally, GMA argues that the trial court assumed the harm caused by the
failure to report was the same as the amount of donations it failed to report. But it
is the judgment of the people that this penalty is appropriate in these type of cases.
LAWS OF 1973, ch. 1, § 39(1)(e), currently codified as RCW 42.17A.750(1)(g).
Bajakajian instructs us to give considerable deference to the legislature’s judgment
on damages. 524 U.S. at 336 (citing Solem, 463 U.S. at 290). Washington voters
determined that treble damages for intentional violations of the FCPA were
appropriate, and that judgment has been endorsed by our legislature many times
since. LAWS OF 1973, ch. 1, § 40(5); RCW 42.17A.780. This factor strongly
suggests the penalty is not grossly disproportional. 6
Under the two principles and four factors identified in Bajakajian, this
penalty is not grossly disproportional to GMA’s conduct.
(5) ADDITIONAL ISSUES. GMA seems to suggest that the penalty is grossly
disproportional because it is larger than the penalties imposed on other candidates
and political committees. See Suppl. Br. of Pet’r GMA at 5, App. A-1
(demonstrating graphically that it received a large fine in comparison to other
6
Amicus CFWSL suggests that there was no harm here because the State did not attempt to
show GMA’s failure to disclose affected the outcome of the election or prevented a voter from
being able to determine the financial support for the “No on Initiative 522” campaign. Br. of
Amici Curiae CFWSL at 5-6. But the FCPA specifically recognizes the harm caused by
concealing the source of campaign funding regardless of whether that concealment changed the
outcome of the election. See RCW 42.17A.001.
19
State v. Grocery Mfrs. Ass’n, No. 99407-2
violators). But Bajakajian’s test analyzes whether the penalty is grossly
disproportional to the defendant’s bad conduct. It does not analyze whether the
penalty is disproportional to the one imposed in other (and in this case, starkly
dissimilar) cases. Other legal doctrines, like equal protection of the law, constrain
the State from treating similar cases differently based on impermissible
characteristics. See United States v. Batchelder, 442 U.S. 114, 125 n.9, 99 S. Ct.
2198, 60 L. Ed. 2d 755 (1979) (“The Equal Protection Clause prohibits selective
enforcement ‘based upon an unjustifiable standard such as race, religion, or other
arbitrary classification.’” (quoting Oyler v. Boles, 368 U.S. 448, 456, 82 S. Ct. 501,
7 L. Ed. 2d 446 (1962))). GMA has not raised an equal protection claim. 7
GMA also suggests that it has been treated differently from other political
committees and candidates who have violated Washington’s fair campaign laws. It
has not shown the factual predicate for this argument. GMA received a large
penalty because it intentionally concealed the source of a large amount of
contributions. It does not bring to our attention any other candidate or political
committee that intentionally concealed a remotely similar amount of campaign
contributions. The fact that other political campaigns and candidates received
7
Equal protection of the law prohibits the State from bringing charges “‘deliberately based upon
an unjustifiable standard such as race, religion, or other arbitrary classification.’” State v. Judge,
100 Wn.2d 706, 713, 675 P.2d 219 (1984) (quoting Oyler, 368 U.S. at 456). GMA has not
squarely brought a selective prosecution claim, though we acknowledge the extent to which the
doctrine applies against the FCPA is unsettled.
20
State v. Grocery Mfrs. Ass’n, No. 99407-2
smaller penalties for negligently concealing smaller amounts of money than GMA
intentionally concealed does not make the penalty here disproportionate. GMA
makes no meaningful effort to show its misconduct is comparable to the
misconduct of those who received smaller penalties.
Several of the amici ask us to adopt additional factors to the Bajakajian
analysis. Based on the arguments before the court, we decline to do so. Amici
CFWSL argues that courts should either “rigorously analyz[e] evidence related to
the violation at hand or . . . carefully compar[e] the violation in question to other,
previously-adjudicated violations” before imposing a penalty. Br. of Amici Curiae
CFWSL at 4. But while the penalty imposed in other cases might certainly be
relevant to the trial court’s determination of the appropriate penalty, the question
here is whether the penalty imposed is grossly disproportional to the defendant’s
bad conduct, not whether the penalty is different from the one imposed in different
cases—especially when, as here, the cases are starkly dissimilar. CFWSL also
makes no attempt to show that analyzing these two factors would have led to a
different result in this case.
Similarly, amici BIAW asks us to adopt a rule that trial courts must
specifically consider the risk of chilling speech and the risk of selective
prosecution in determining the proper penalty. But neither factor helps us
determine whether this penalty is disproportional to this conduct.
21
State v. Grocery Mfrs. Ass’n, No. 99407-2
Amici National Association of Manufacturers argue that this fine is grossly
disproportional under Americans for Prosperity Foundation v. Bonta, 594 U.S.
___, 141 S. Ct. 2373, 210 L. Ed. 2d 716 (2021). Relatedly, amicus the Institute for
Free Speech argues that the penalty itself, and not just the FCPA as a whole, must
survive the exacting scrutiny test under Bonta. But Bonta concerned the
constitutionality of a regulatory scheme, not the constitutionality of a penalty for
violating a constitutional regulatory scheme. See Bonta, 141 S. Ct. at 2383.
Neither amici suggests a principled way to apply exacting scrutiny to punishments.
We hold that the penalty imposed here was not grossly disproportional to the
offense under the Eighth Amendment.
B. FIRST AMENDMENT ARGUMENTS
GMA raises a number of First Amendment challenges to the penalty
imposed here. We find none of them persuasive.
First, GMA asserts that the penalty here is the product of viewpoint
discrimination because the State did not seek to prove Food Democracy Action!
(Food Democracy) intentionally violated FCPA, which would have made it
potentially subject to treble damages. GMA does not, however, show that the State
could have shown that Food Democracy intentionally violated the act or offer any
evidence that the State was motived by viewpoint discrimination. Accordingly, the
factual predicate for its argument is not established.
22
State v. Grocery Mfrs. Ass’n, No. 99407-2
Briefly, Food Democracy solicited and received almost $300,000 in
donations from 7,000 people to support Initiative 522. State ex rel. Pub. Disclosure
Comm’n v. Food Democracy Action!, 5 Wn. App. 2d 542, 544, 427 P.3d 699(2018). It donated $200,000 to the “Yes on Initiative 522” campaign under its own
name. Id. at 545. Food Democracy did not register with the PDC until the PDC
opened an investigation. Id. at 544. It did not appear for trial. Id. at 547. The trial
proceeded without it, and the State presented its case that Food Democracy had
violated the act, but the State did not seek to prove the violation was intentional.
Id. The trial court found that Food Democracy had violated the FCPA and
penalized Food Democracy the amount it had failed to disclose plus $1,000 for
each of the 18 reports it had filed late for about $320,000. Id. The Court of
Appeals affirmed. Id. at 544.
Nothing in the Food Democracy opinion, briefing, or record called to our
attention suggests the State could have established Food Democracy designed a
campaign strategy that intentionally violated the FCPA. The briefing describes the
Food Democracy as “a two-employee, Iowa-based organization with no prior
experience in Washington politics.” Opening Br. of Appellant Food Democracy
Action at 1 (Wash. Ct. App. No. 49932-1-II (2017)). Food Democracy admitted
the violation but consistently denied it was intentional. There is nothing in the
record that suggests Food Democracy intentionally designed its campaign strategy
23
State v. Grocery Mfrs. Ass’n, No. 99407-2
around shielding its 7,000 small donors. At most, the Food Democracy opinion
shows that by two weeks before the election, Food Democracy knew it would have
to disclose information about campaign contributors and asked contributors to
include that information with their donations. 5 Wn. App. 2d at 545 (quoting from
a copy of a fundraising e-mail sent by Food Democracy). This is simply not
comparable to the misconduct in the case before us.
There is also nothing in the State’s penalty arguments in the two cases that
suggests viewpoint discrimination. The State proposed the same statutory formula
for damages in both cases. See CP at 3453-54; Br. of Resp’t State of Wash. at 14
(Wash. Ct. App. No. 49932-1-II (2017)). The result was different because the base
amount concealed was different and because the State proved GMA intentionally
violated the FCPA. 8
8
Relatedly, GMA argues that “[t]he trial court did not consider penalties in other cases.” Suppl.
Br. of Pet’r GMA at 5. This assertion overlooks unchallenged finding of fact 106, which says
the trial court did consider “GMA’s briefing and arguments regarding penalties imposed in other
cases. The court has considered all of that in making its determination regarding a penalty.” CP
at 4069. GMA did not assign error to this finding of fact. Opening Br. of Appellant at 1-2
(Wash. Ct. App. No. 49768-9-II (2017)). Accordingly, the fact the trial judge did consider
penalties levied in the other cases brought to its attention is a verity on appeal. MSR, 174 Wn.2d
at 9 (citing Rankin, 151 Wn.2d at 709. Similarly, GMA challenges the fact that the trial court did
not consider the factors that guide the PDC in assessing penalties for violations of the FCPA.
Suppl. Br. of Pet’r GMA at 5; see WAC 390-37-182 (listing factors the PDC has promulgated for
itself to consider in imposing a penalty). But the trial court found in an unchallenged finding of
fact that “the court should and did review . . . administrative code provisions . . . [and]
considered all of that in making its determination regarding a penalty.” CP at 4069. This
unchallenged fact is a verity on appeal. MSR, 174 Wn.2d at 9 (citing Rankin, 151 Wn.2d at 709).
GMA is not entitled to challenge that finding of fact here.
24
State v. Grocery Mfrs. Ass’n, No. 99407-2
Second, GMA argues that “[t]he fine imposed in this case violates freedom
of speech and freedom of association” because “[p]unishing speakers more
severely for speaking more and for opting to speak collectively through a trade
association is antithetical to First Amendment values.” Suppl. Br. of Pet’r GMA at
18. It has not established the factual predicates for its argument. It has not
attempted to show that had each of its members who individually donated to the
Defense of Brands strategic account intentionally attempted to conceal its
contribution, they each would not have received a similar penalty. Nor has it
shown it is being punished for “speaking more.” Instead, it is being punished for
intentionally violating Washington’s fair campaign act. It was free to speak as
much as it wished, so long as it complied with the registration and reporting
requirements of the act so that Washington voters knew the source of the speech.
Third, GMA contends it cannot be subject to punitive damages under Gertz
v. Robert Welch, Inc., 418 U.S. 323, 349, 94 S. Ct. 2997, 41 L. Ed. 2d 789 (1974).
Suppl. Br. of Pet’r GMA at 20. We do not find this case helpful. Briefly, after
Chicago police shot and killed a young man, his family hired an attorney, Gertz, to
represent them in a civil suit. Gertz, 418 U.S. at 325. After a magazine falsely
claimed that Gertz was part of a communist “‘War On Police,’” among many other
things, Gertz sued for defamation. Id. at 326-27 (quoting record). The magazine
argued that it was entitled to the “actual malice” standard of New York Times Co. v.
25
State v. Grocery Mfrs. Ass’n, No. 99407-2
Sullivan, 376 U.S. 254, 84 S. Ct. 710, 11 L. Ed. 2d 686 (1964), which would have
required Gertz to prove the magazine published defamatory falsehoods either
knowing they were false or with reckless disregard of the truth. Id. at 327-28
(citing N.Y. Times, 376 U.S. at 279-80). The United States Supreme Court
declined to extend New York Times to publishers or broadcasters who defame
private citizens. Id. at 345-46. It did, however, limit damages to actual damages
“at least when liability is not based on a showing of knowledge of falsity or
reckless disregard for the truth.” Id. at 349.
The factual predicate for GMA’s reliance on Gertz is absent since the trial
court not only found GMA intentionally violated the law, it found that “it is not
credible that GMA executives believed that shielding GMA’s members as the true
source of contributions to GMA’s Defense of Brands Account was legal.” CP at
4068.9 That is analogous to a “showing of knowledge of falsity or reckless
9
We note that the trial court rejected GMA’s “advice of counsel” defense and entered a
conclusion of law that
GMA either intentionally failed to provide full and accurate information to counsel when
asking for advice on the legality of the Defense of Brands Account under Washington
law or, alternatively, created the Account without receiving any advice that such an
account was legal under Washington law. In either case, GMA does not make the
required showing that it is entitled to this defense, if it even is available at all under
Washington law.
CP at 4071. This is the one conclusion of law GMA did not challenge on appeal. Opening Br.
of Appellant at 2 (Wash. Ct. App. No. 49768-9-II (2017)). This further illustrates that GMA is
not substantially similar to the publisher in Gertz.
26
State v. Grocery Mfrs. Ass’n, No. 99407-2
disregard for the truth.” Gertz, 418 U.S. at 349. Gertz does not suggest a punitive
sanction is inappropriate under these facts.
We find none of these challenges availing.
C. REMAINING ISSUES
GMA complains that the trial court did not explain why it imposed a $6
million dollar base penalty rather than the $14 million sought by the State or some
other amount. But while the trial court did not offer a mathematical explanation, it
did enter a 24-page findings of fact and conclusions of law that listed the
aggravating and mitigating factors. GMA does not point to any authority that
would require the trial court to do more.
GMA complains that the trial court “disregarded GMA’s reference in its trial
brief to the standard of gross disproportionality [and] denied summarily GMA’s
post-trial motion to conform the judgment to the Eighth Amendment.” Suppl. Br.
of Pet’r GMA at 7-8. But only one footnote of GMA’s 25-page trial brief
addressed disproportionality, and it did so in a conclusory way. It said:
A civil penalty also must be “supported by the record,” “cogent,” and—to
avoid an Eighth Amendment violation—cannot be “grossly disproportional
to the gravity of the defendant’s offense.” State v. WWJ Corp., 88 Wn. App.
167, 175[, 941 P.2d 717] (1997), modified and affirmed on other grounds,
138 Wash. 2d 595, 603-604 (1999). See also Wn. Const., art. I, § 14; State v.
Witherspoon, 171 Wn. App. 271, 301[, 980 P.2d 1257] (2012) [(plurality
opinion)], aff’d, 180 Wn.2d 875, 329 P.3d 888 (2014), as corrected (Aug.
11, 2014) (describing the Washington Constitution’s limits on “grossly
27
State v. Grocery Mfrs. Ass’n, No. 99407-2
disproportionate” penalties); Wahleithner v. Thompson, 134 Wn. App. 931,
936[, 143 P.3d 321] (2006) (same).
CP at 3475 n.7. That footnote is not sufficient to prompt the trial court to do a
separate Eighth Amendment analysis. GMA’s “Motion to Conform the Penalty
Amount” was filed two months after judgment and a month after GMA filed its
notice of appeal. The trial court treated it as a motion for reconsideration and
rejected it as untimely without reaching the merits. GMA has not shown this was
error.
Amici CFWSL call our attention to an act that passed while this case has
been pending, Laws of 2018, chapter 304. 10 Among other things, chapter 304
added a list of nonexclusive factors for trial courts to consider when imposing civil
penalties on violators. LAWS OF 2018, ch. 304, § 12(1)(d) (codified at RCW
42.17A.750(1)(d)). 11 Amici CFWSL ask this court to consider these factors. But it
10
Chapter 304 is codified in scattered provisions of chapter 42.17A RCW. Most relevantly, the
act enumerated nonexclusive factors for courts to consider in imposing civil penalties. LAWS OF
2018, ch. 304, § 12(1)(d) (codified at RCW 42.17A.750(1)(d)).
11
These factors are
(d) When assessing a civil penalty, the court may consider the nature of the
violation and any relevant circumstances, including the following factors:
(i) The respondent’s compliance history, including whether the noncompliance
was isolated or limited in nature, indicative of systematic or ongoing problems, or part of
a pattern of violations by the respondent, resulted from a knowing or intentional effort to
conceal, deceive or mislead, or from collusive behavior, or in the case of a political
committee or other entity, part of a pattern of violations by the respondent’s officers,
staff, principal decision makers, consultants, or sponsoring organization;
(ii) The impact on the public, including whether the noncompliance deprived the
public of timely or accurate information during a time-sensitive period or otherwise had a
significant or material impact on the public;
28
State v. Grocery Mfrs. Ass’n, No. 99407-2
gives us no guidance on how these factors should be applied, it does not show that
the legislature intended that change to apply to cases pending on appeal, and it
does not attempt to show that the trial court would have come to a different
conclusion had it considered those factors. Perhaps more importantly, the
legislature had an opportunity to eliminate both RCW 42.17A.750(1)(g) and RCW
42.17A.780, which authorized this penalty, and it did not. This suggests the
legislature as a whole still approves of a penalty based on the amount of funds that
were concealed in violation of the act.
(iii) Experience with campaign finance law and procedures or the financing,
staffing, or size of the respondent’s campaign or organization;
(iv) The amount of financial activity by the respondent during the statement
period or election cycle;
(v) Whether the late or unreported activity was within three times the contribution
limit per election, including in proportion to the total amount of expenditures by the
respondent in the campaign or statement period;
(vi) Whether the respondent or any person benefited politically or economically
from the noncompliance;
(vii) Whether there was a personal emergency or illness of the respondent or
member of the respondent’s immediate family;
(viii) Whether other emergencies such as fire, flood, or utility failure prevented
filing;
(ix) Whether there was commission staff or equipment error, including technical
problems at the commission that prevented or delayed electronic filing;
(x) The respondent’s demonstrated good-faith uncertainty concerning commission
staff guidance or instructions;
(xi) Whether the respondent is a first-time filer;
(xii) Good faith efforts to comply, including consultation with commission staff
prior to initiation of enforcement action and cooperation with commission staff during
enforcement action and a demonstrated wish to acknowledge and take responsibility for
the violation;
(xiii) Penalties imposed in factually similar cases; and
(xiv) Other factors relevant to the particular case.
RCW 42.17A.750.
29
State v. Grocery Mfrs. Ass’n, No. 99407-2
CONCLUSION
GMA has not shown that the trial court erred in imposing a punitive sanction
under the FCPA based on the amount intentionally concealed. We affirm the
courts below and remand for any further proceedings necessary and consistent with
this opinion. The State’s motion for attorney fees is granted.
____________________________
WE CONCUR:
_____________________________ ____________________________
_____________________________ ____________________________
_____________________________ ____________________________
_____________________________ ____________________________
30
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
No. 99407-2
GORDON McCLOUD, J. (dissenting)—The majority begins with the
important observation that both this court and the federal courts have upheld the
“compelled registration and disclosure requirements” of Washington’s Fair
Campaign Practices Act (FCPA), ch. 42.17A RCW, “many times over the years.”
Majority at 2 (citing State v. Evergreen Freedom Found., 192 Wn.2d 782, 801, 432
P.3d 805, cert. denied, 139 S. Ct. 2647 (2019)); Human Life of Wash. Inc. v.
Brumsickle, 624 F.3d 990, 994-95 (9th Cir. 2010)). I agree, and I join the majority
in reiterating those holdings today.
The majority also reiterates that the trial court’s $6 million base penalty and
trebled $18 million final penalty in this case complied with the FCPA’s statutory
requirements. Majority at 7. I agree with that, also.
But the majority concludes that that substantial penalty also complies with
the Eighth Amendment. U.S. CONST. amend. VIII. I firmly disagree with that
holding. The Grocery Manufacturers Association (GMA) committed only the
regulatory violation of failing to comply with a reporting requirement. The FCPA
1
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
punishes just that—failure to report. It does not make the receipts, expenditures, or
political speech that the expenditures funded illegal, and it does not punish such
receipts, expenditures, or speech. Hence, under the Eighth Amendment, the penalty
imposed for the FCPA violation must be proportionate to the failure to report, not
to the amount of the receipts, expenditures, or speech that the expenditures funded.
The most recent, controlling United States Supreme Court precedent on
precisely this point—that is, the Eighth Amendment limits of a statutory penalty
for failure to report, even where the failure to report was knowing, willful, and
criminal—is United States v. Bajakajian, 524 U.S. 321, 118 S. Ct. 2028, 141 L.
Ed. 2d 314 (1998). Bajakajian clearly holds that when the transgression is a failure
to report, the Eighth Amendment requires that the penalty cannot be grossly
disproportionate to the failure to report. Measuring the penalty by the amount that
was unreported does not achieve that constitutionally required proportionality.
Following that logic, the penalty assessed in this case is even less proportionate
than the forfeiture sought in Bajakajian: the $6 million base penalty here is far
higher than the $357,144 of unreported funds that the government sought in
Bajakajian; the trebling of that $6 million to $18 million makes that penalty even
less proportionate to the violation than the penalty sought in Bajakajian; and the
2
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
$18 million penalty was imposed for a violation that was civil and regulatory, not
criminal and felonious as in Bajakajian.
The $18 million statutory penalty in this case therefore violates the Eighth
Amendment just as much as a $357,144 statutory penalty would have violated the
Eighth Amendment in Bajakajian. I therefore respectfully dissent.
ANALYSIS
I. Bajakajian holds that when the unlawful conduct is a failure to report, the
Eighth Amendment bars the trial court from imposing a penalty that is
grossly disproportionate to the failure to report—not to some other
unadjudicated conduct
31 U.S.C. § 5316(a)(1)(A) requires a person to “report” when they are
transporting more than $10,000 outside of the United States. Specifically, that
reporting statute provides:
(a) Except as provided in subsection (c) of this section, a
person… shall file a report under subsection (b) of this section when
the person, agent, or bailee knowingly—
(1) transports, is about to transport, or has transported,
monetary instruments of more than $10,000 at one time—
(A) from a place in the United States to or through a
place outside the United States . . . .
31 U.S.C. § 5316 (emphasis added). Under 31 U.S.C. § 5322(a), a “willful[]”
violation of this “knowing” failure to report statute carries a fine of “not more than
$250,000, or imprison[ment] for not more than five years, or both.” A separate
3
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
criminal statute requires the trial court to forfeit the entire amount “involved in
such offense.” 18 U.S.C. § 982(a)(1). 1
Hosep Bajakajian attempted to board a plane leaving the United States. A
customs inspector approached him and his wife and told them that they were
required to report all money in excess of $10,000 in their possession or in their
baggage. Bajakajian, 524 U.S.at 324. Bajakajian responded that he was carrying
$8,000 and his wife had another $7,000, but that they had no other currency to
declare. Id. at 324-25. The customs inspectors, however, found $357,144 in
currency that Bajakajian was carrying, much of it in a false-bottomed piece of
luggage. Id. at 325, 353 (Kennedy, J., dissenting) 2; United States v. Bajakajian, 84
F.3d 334, 335 (9th Cir. 1996), aff’d, 524 U.S. 321(1998).
The government charged Bajakajian with three felonies: “willfully” failing
to report that he was transporting more than $10,000 outside the United States in
1
“The court, in imposing sentence on a person convicted of an offense in violation
of section . . . 5316, . . . shall order that the person forfeit to the United States any
property, real or personal, involved in such offense, or any property traceable to such
property.” Former 18 U.S.C. § 982(a)(1) (1990).
2
The facts in that case were not in dispute, but their significance was. See
Bajakajian, 524 U.S. at 353 (Kennedy, J., dissenting) (“The majority ratifies the District
Court’s see-no-evil approach. The District Court ignored respondent’s lies in assessing a
sentence.”).
4
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
violation of 31 U.S.C. §§ 5316(a)(1)(A) and 5322(a), 3 making a material false
statement to the United States Customs Service in violation of 18 U.S.C. § 1001,
and for criminal forfeiture of the entire $357,144 pursuant to 18 U.S.C. §
982(a)(1). Id. at 325. The federal district court convicted Bajakajian of failing to
report, but it concluded that the statute at issue was a reporting statute and that full
forfeiture of the nonreported currency would violate the excessive fines clause of
the Eighth Amendment. Id. at 326. The Ninth Circuit Court of Appeals affirmed.
Id. The United States Supreme Court agreed and held that forfeiture of the amount
the government sought—that is, the entire amount that Bajakajian failed to
report—would have violated the excessive fines clause because it was “grossly
disproportional to the gravity of [the] defendant’s offense.” Id. at 334.
The statute in this case is the same type of reporting statute as the statute at
issue in Bajakajian. GMA violated the FCPA. 4 Specifically, the trial court ruled—
3
To violate section 5316(a)(1)(A) the person must have “knowledge” that they are
transporting over $10,000 in currency out of the United States—but the statute does not
require affirmative knowledge of the need to report. However, section 5322(a) creates
higher penalties if the person “willfully” fails to report. Bajakajian was alerted to the
need to report by the customs inspector and chose not to do so. Therefore, the
government charged him with, and he pleaded guilty to, a willful violation. Bajakajian,
524 U.S. at 325.
4
The trial court found, and we affirmed, that GMA committed five violations of
the FCPA, based on four separate provisions. State v. Grocery Mfrs. Ass’n, 195 Wn.2d
442, 451, 477, 461 P.3d 334 (2020). The violations were
5
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
and this Court affirmed—that GMA violated the mandatory reporting provision of
the FCPA:
(1) In addition to the information required under RCW 42.17A.205
and 42.17A.210, on the day the treasurer is designated, each
candidate or political committee must file with the commission a
report of all contributions received and expenditures made prior to
that date, if any.
Former RCW 42.17A.235(1) (2018) (emphasis added).
The statute in this case also carries the same kind of severe penalties for
intentional failures to report that the statutes in Bajakajian carried for willful
failures to report. Former RCW 42.17A.765(5) (2010). And the trial court followed
the FCPA statute: it determined GMA’s fine by starting with the amount that GMA
failed to report—$11 million. 5 RCW 42.17A.750(1)(e); former RCW
“a. Failing to timely register with the Public Disclosure Commission as a
political committee in violation of RCW 42.17A.205;
“b. Failing to timely identify a treasurer and [bank] account in violation
of RCW 42.17A.205;
“c. Failing to timely and regularly disclose contributions it received from its
members in the Defense of Brands Account in violation of RCW
42.17A.235;
“d. Failing to timely and regularly disclose expenditures it made from the
Defense of Brands Account in violation of RCW 42.17A.240; and
“e. Concealing the true sources of the contributions it received and
expenditures it made in opposing Initiative 522[]”
in violation of RCW 42.17A.435. Id. (footnote omitted).
5
The trial court based this fine specifically on GMA’s failure to report:
6
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
42.17A.765(5); Majority at 6-7. The trial court then reduced that fine because it
found significant mitigating factors—imposing a base penalty of $6 million.
Clerk’s Papers (CP) at 4072. Finally, the trial court trebled that base penalty
because it found that GMA acted intentionally. Id. The trial court ultimately fined
GMA $18 million for its failure to report. Id.; former RCW 42.17A.765(5). The
majority now affirms.
This result stands in direct conflict with the result in Bajakajian. Bajakajian
was criminally charged, and the United States Supreme Court held that forfeiture
of the entire amount that he did not report would have been excessive under the
Eighth Amendment—because he could be punished only for the crime of
conviction, which was a failure to report. GMA violated a civil, regulatory statute
and is being fined for the entirety of the amount that it failed to report, plus $7
1. Defendant Grocery Manufacturers Association shall pay the amount of
$6,000,000.00 as a civil penalty for multiple violations of the state campaign
finance disclosure law, RCW 42.17A[,] specifically for
• concealing the amount accumulated in the Defense of Brands
Account;
• concealing the source of contributions to the Defense of Brands
Account;
• the 60 disclosure reports that were not timely or properly filed
identifying the finance activity of the Defense of Brands
Account; and
• the number of days required reports were filed late.
Clerk’s Papers at 4072.
7
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
million more. Bajakajian holds that when the unlawful conduct is a failure to
report, the Eighth Amendment bars imposition of a penalty that is grossly
disproportionate to the failure to report—no matter how knowing, willful, or
criminal the failure to report is.
II. The majority improperly weighs the Bajakajian factors by declining to
treat the FCPA violation at issue as a reporting violation
The Bajakajian Court noted that the main inquiry in an Eighth Amendment
excessive fines clause case is proportionality. The Court ruled that the “amount of
the forfeiture must bear some relationship to the gravity of the offense that it is
designed to punish.” Bajakajian, 524 U.S. at 334 (emphasis added).
Thus, the first question for an Eighth Amendment proportionality inquiry
under the excessive fines clause asks, What is the nature “of the offense that [the
fine] is designed to punish?” Id. We examine four factors to determine the answer
to this question and to the related question of whether the penalty is grossly
disproportionate to that “offense”: “‘(1) the nature and extent of the crime, (2)
whether the violation was related to other illegal activities, (3) the other penalties
that may be imposed for the violation, and (4) the extent of the harm caused.’” 6
The Bajakajian Court did not identify four distinct factors. But courts have
6
extrapolated factors based on the case. City of Seattle v. Long, 198 Wn.2d 136, 167, 493
P.3d 94 (2021). This court adopted the Ninth Circuit’s test to determine whether a fine is
grossly disproportional. Id. The four factors above are not exhaustive because
Bajakajian does not require the consideration of “any rigid set of factors in deciding
8
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
State v. Grocery Mfrs. Ass’n, 195 Wn.2d 442, 476, 461 P.3d 334 (2020) (quoting
United States v. $100,348.00 in U.S. Currency, 354 F.3d 1110, 1122 (9th Cir.
2004)).
In this case, the impermissible conduct was GMA’s failure to file a report. 7
This is the conduct that GMA should be fined for, not the amount of money that
GMA otherwise lawfully received and spent on campaign speech.
A. First factor: the nature and extent of the crime
To determine the nature and extent of the crime, we start as the United States
Supreme Court did: with the elements of the statute that the entity violated.
Bajakajian, 524 U.S. at 337. Bajakajian was convicted of “willfully” and
“knowingly” failing to file a currency transportation report in violation of 31
U.S.C. §§ 5316(a)(1)(A) and 5322(a). Those are felony, criminal statutes.
But those statutes did not make the currency transported illegal—they
punished only the failure to report. That was critical to the Bajakajian Court’s
decision. Id. (“It was permissible to transport the currency out of the country so
whether a punitive fee is” proportional to the offense. United States v. Mackby, 339 F.3d
1013, 1016 (9th Cir. 2003).
7
See supra note 5; former RCW 42.17A.235(1) (“In addition to the information
required under RCW 42.17A.205 and 42.17A.210, on the day the treasurer is designated,
each candidate or political committee must file with the commission a report of all
contributions received and expenditures made prior to that date, if any.”)
9
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
long as he reported it.”). The dissent accurately recited the legislative history and
purpose of that currency reporting and forfeiture statutes: it was undisputed that the
purpose of those statutes was to prevent money laundering, tax evasion, and drug
trafficking, serious criminal problems that garnered national, federal concern. 8 But
the reporting statute did not punish those crimes—separate criminal statutes did.
So the Bajakajian majority ruled that the failure-to-report crime was the one to
which the forfeiture must be compared, not the money laundering, tax evasion, and
drug trafficking that the failure-to-report crime was designed to combat. Id. at 338.
Here, the majority takes a different approach. It looks to the “declaration of
policy” in the FCPA to find that GMA’s offense “was grave and the extent was
broad.” Majority at 11-13. But the majority in Bajakajian did not look to the policy
8
The dissent in Bajakajian noted that
smuggling or failing to report cash is more serious than the Court is willing
to acknowledge. The drug trade, money laundering, and tax evasion all
depend in part on smuggled and unreported cash. Congress enacted the
reporting requirement because secret exports of money were being used in
organized crime, drug trafficking, money laundering, and other crimes. See
H. R. Rep. No. 91-975, pp. 12-13 (1970). Likewise, tax evaders were using
cash exports to dodge hundreds of millions of dollars in taxes owed to the
Government.
524 U.S. at 351 (Kennedy, J., dissenting). Additionally, the dissent noted that because
money laundering and drug smuggling are so difficult to prove, and “[o]ne of the few
reliable warning signs of some serious crimes is the use of large sums of cash,” Congress
made a strategic decision to punish all cash smuggling or nonreporting with heavy fines,
so long as the conduct was “willful.” Id. at 353-54.
10
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
provisions of 31 U.S.C. § 5316 to determine whether the fine was excessive. The
majority looked to the elements of the crime that Bajakajian was convicted of and
the specific conduct giving rise to that crime—failing to file a report. Bajakajian,
524 U.S. at 337 (despite differing facts emphasized by the majority and dissent, the
majority held that “Respondent’s crime was solely a reporting offense”). It was the
Bajakajian dissent that focused on the uncodified policy choices that convinced
Congress to pass the reporting crime and forfeiture statutes.
This court, of course, is bound by the Bajakajian majority. I therefore
conclude that the nature and extent of the crime in this case was a failure to report,
just like in Bajakajian. 9 This tends to show that the fine imposed in this case—
which related primarily to the amount of money that GMA failed to report rather
than to the failure to report itself—was excessive.
9
As the Supreme Court explained in Bajakajian, 524 U.S. at 334, under the Eighth
Amendment, “The amount of the forfeiture must bear some relationship to the gravity of
the offense that it is designed to punish. See Austin v. United States, 509 U.S. [602,] 622-
623[, 113 S.Ct. 2801, 2812 (noting Court of Appeals’ statement that “‘the government is
exacting too high a penalty in relation to the offense committed’”); Alexander v. United
States, 509 U.S. 544, 559[, 113 S. Ct. 2766, 2776, 125 L. Ed. 2d 441] (1993) (“It is in the
light of the extensive criminal activities which petitioner apparently conducted . . . that
the question whether the forfeiture was ‘excessive’ must be considered”)”. (Emphasis
added and fourth alteration in original.)
11
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
B. Second factor: whether the violation was related to other illegal
activities
A federal grand jury indicted Bajakajian on three counts, including making
false statements to a customs officer. Bajakajian, 524 U.S. at 325. In exchange for
his guilty plea to failure to report, the government dismissed the false statements
charge. Bajakajian, 84 F.3d at 335. The forfeiture count was then tried to the court.
Id. at 336-37. So Bajakajian’s crimes of conviction (failure to report and criminal
forfeiture) could be said to have been related to the false statements charge that the
government dismissed. They could even be said to have been related to the
problem of drug trafficking and money laundering, which the reporting statutes
were designed to attack.
But the majority of the Supreme Court did not say that. Instead, the majority
said that there were really no other crimes directly related to the crime of
conviction because it “was permissible to transport the currency out of the country
so long as he reported it.” Bajakajian, 524 U.S. at 337. “Thus, the essence of
respondent’s crime is a willful failure to report the removal of currency from the
United States.” Id. The clear lesson of that decision is that courts risk Eighth
Amendment violations if they compare huge fines to unadjudicated crimes and
harms, rather than to the elements of the violation itself.
12
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
Here, GMA violated only the civil FCPA. Similar to Bajakajian, if GMA
had filled out the reports, then all of its transactions and campaign activities would
have been permissible. Additionally, the trial court found that GMA had no prior
violations of the FCPA, that GMA is not a repeat violator, and that GMA
cooperated with the Public Disclosure Commission. Majority at 6 (citing CP at
4069).
The relationship to other related criminal activities in this case seems far
more questionable than the relationship to related criminal activities in
Bajakajian—especially since GMA’s campaign receipts, campaign expenditures,
and campaign speech, like Bajakajian’s transport of currency, was otherwise
totally lawful. This also tends to show that the fine imposed in this case was
excessive.
C. Third factor: the other penalties that may be imposed for the violation
Our next question asks, What other penalties that might be imposed for the
violation? That question is designed as another possible indicator of rough
proportionality.
Under the FCPA, the other penalties that might have been imposed on GMA
are all tethered to the actual conduct of failing to report. Former RCW
42.17A.750(1) (2011) identifies a range of possible civil penalties for violations of
13
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
any provision of the FCPA. One section provides for the civil penalty of “not more
than ten thousand dollars for each violation” of any provision of the FCPA. Former
RCW 42.17A.750(1)(c). Another section provides the civil penalty of “ten dollars
per day for each day” that a person fails to file a “properly completed statement or
report.” Former RCW 42.17A.750(1)(d). And the court has the option to enjoin or
compel performance of “any act required herein.” Former RCW 42.17A.750(1)(f).
To be sure, subsection (e) provides that “[a] person who fails to report a
contribution or expenditure as required by this chapter may be subject to a civil
penalty equivalent to the amount not reported as required.” Former RCW
42.17A.750(1) (emphasis added). But when analyzing this factor, even the
majority must acknowledge that the other penalties that the FCPA authorizes for
the violation are all more modest, measured by more specific statutory amounts,
and completely dependent on the conduct of failing to report.
Lower federal courts applying the Bajakajian decision have noted the
proportionality benefits that such definite statutory calculations produce. For
example, the D.C. Circuit court held that Bajakajian “was primarily concerned that
the potential penalty for illegal export of currency would be indefinite and
unlimited—and disproportionate to the offense—if the government could seize
whatever amount of currency the unwitting ‘exporter’ happened to be carrying
14
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
when caught.” Grid Radio v. Fed. Commc’ns Comm., 349 U.S. App. D.C. 365, 278
F.3d 1314, 1322 (2002). That problem is eliminated when a statute fixes fines and
“incorporates statutorily required factors for computation of fines.” Combat
Veterans for Cong. Political Action Comm. v. Fed. Election Comm’n, 983 F. Supp.
2d 1, 18-19 (D.D.C. 2013), aff’d, 417 U.S. App. D.C. 414, 795 F.3d 151 (2015).
Here, the legislature provided a more definite fine that calculates the penalty
based on the conduct itself, not just the amount that a violator failed to report. For
example, if the trial court had instead used the “ten dollars per day for each
violation” scheme, GMA would have received a $622,820 base fine that would be
trebled to about $1.87 million. Suppl. Br. of Pet’r GMA at 14 (citing RCW
42.18A.750(1)(c), (d)). This would still have been the largest FCPA fine ever
imposed in Washington State history. 10
In other words, the other penalties that might be imposed for the
nonreporting violations in this case are far less than $18 million. In fact, they are
far less than $6 million. Once again, this tends to show that the fine imposed in this
case was excessive.
10
Enforcement of Campaign Finance Laws, https://www.atg.wa.gov/enforcement-
campaign-finance-laws (last visited Jan. 13, 2022).
15
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
D. Factor four: the extent of the harm caused
The majority asserts that the “harm was substantial and struck at the heart of
the principles embodied in the FCPA.” Majority at 16 (citing RCW 42.17A.001).
And the majority is certainly correct that undermining democracy, campaign
fairness, and the integrity of the vote are “substantial” problems.
But that is not what GMA was adjudicated to have done. The government
alleged, and the trial court ruled, that GMA failed to report campaign
contributions. Failure to report campaign contributions can certainly cause harm.
But failure to report currency transport can also cause harm: the currency reporting
statutes were enacted for the purpose of deterring and catching drug dealers and
profiteers. But Bajakajian was not charged or convicted of money laundering or
drug trafficking, and so Bajakajian could not be fined for those offenses.
Bajakajian, 524 U.S. at 339, 353-55 (Kennedy, J., dissenting). Similarly, GMA
was not found to have violated a law that punishes the undermining of democracy,
so it cannot be fined for this alleged conduct.
A reporting offense is a reporting offense. That means that the extent of the
harm caused by the failure to report in this case is comparable to the extent of the
harm caused by the failure to report in Bajakajian: depriving the government, and
in this case the people, of information. If that harm did not meet the $357,144
16
State v. Grocery Mfrs. Ass’n, No. 99407-2
(Gordon McCloud, J., dissenting)
threshold sought by the government in Bajakajian, it certainly does not meet the
$18 million threshold imposed by the trial court here.
CONCLUSION
The majority concludes its review of the history of the FCPA by
summarizing, “This suggests the legislature as a whole still approves of a penalty
based on the amount of funds that were concealed in violation of the act.”
Majority at 29. The majority is likely correct.
But the question presented in this case is not whether the $18 million penalty
complied with the FCPA. The question is whether that penalty violated the Eighth
Amendment because it was grossly disproportionate to the civil FCPA reporting
violation. Following Bajakajian, the answer to that constitutional question is yes.
I therefore respectfully dissent.
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17