Big Food Illegally Hid Funders of Campaign to Kill GMO-Labeling Effort, Judge Rules
SupervaluThe grocery store network, which operates over 5,000 locations across the U.S., continues to push forward with its turnaround: an eight-pronged strategy to simplify its business and focus on the demands of each neighborhood. Getting there, however, is proving tough. Same-store sales fell across all three business segments -- traditional retail food, Save-A-Lot discount grocery chain, and independent businesses -- and this past March, Supervalu announced it was eliminating 1,100 jobs nationwide, or 3% of its workforce.
The nation’s largest food industry group broke the “spirit and letter” of the law when it concealed the backers of a multimillion dollar campaign to kill a food-labeling initiative, a state of Washington Superior Court judge ruled on Friday.
The pre-trial ruling, by Thurston County Superior Court Judge Anne Hirsch, found that the Grocery Manufacturer’s Association, the food industry group, violated the state’s campaign finance disclosure laws when it tried to hide the identities of the corporate funders. GMA had waged a fight against Washington’s 2013 food-labeling initiative, with $11 million in donations from PepsiCo (PEP) , Nestle (NESTLE-S-A)and Coca Cola (KO).
The state Initiative 522, which would have required food labels for genetically modified ingredients, was narrowly defeated.
“There is one, and only one, reasonable inference that can be drawn from the facts before this court: that the GMA intentionally took steps to create and then hide the true source of the funds…from the voting public of Washington State,” the judge wrote.
The facts of the case are undisputed. The GMA created a special fund (called “Defense of Brands”) specifically to fight GMO labeling efforts, and they collected $14 million in payments from member companies, many of them the nation’s food giants. (See the funders here.) Meeting notes, memos, and other internal GMA documents clearly show that shielding member identities was one of the primary purposes of the fund.
“State GMO related spending will be identified as having come from the GMA, which will provide anonymity and eliminate state filing requirements for contributing members,” say the notes from one meeting.
The state of Washington’s attorney general Bob Ferguson had filed the suit, seeking $14 million from GMA, alleging the GMA created an “elaborate scheme” to secretly fund the campaign.The State’s lawsuit contended that the GMA was required to register with the Public Disclosure Committee, an oversight group, and report contributors. Although the GMA finally did both those things (“under duress,” according to the ruling) just a few weeks before the election, the ruling found that the GMA nevertheless violated both the spirit and the letter of the law.
The GMA maintained both that the law was “unconstitutionally vague,” and that the enforcement effort had unfairly singled out the group. The ruling found that “both of these arguments fail.”
The court did not determine the penalty amount because it will depend on whether the GMA’s violation was intentional, a question to be settled at trial.
GMA CEO Pam Bailey has said that it was not, and the court ruling notes that, “there is some evidence that GMA believed that such concealment was appropriate under Washington law.” Some internal GMA documents indicate that the group believed the fund, and the concealment of contributors, were legal, and the group also consulted a lawyer specializing in campaign finance law. If the violation is found to be intentional, as the State contends, penalty amounts could be tripled.
In a GMA statement responding to the ruling, the group said, “we believe the facts will show that the GMA always intended to comply with the law.” The statement also criticized the ruling, claiming it “will hurt the constitutionally protected right of trade associations to engage in political debate in the state.”
In a statement, Ferguson said the ruling makes clear that “big money donors cannot evade Washington law and hide from public scrutiny.”
The chair of the Public Disclosure Commission, Katrina Asay, strongly supported the decision in a statement, saying that it “sends a strong message that the Commission will not tolerate efforts to conceal the truth about who is funding campaigns and attempting to influence elections.”