AGO wins unanimous appeals court decision in Freedom Foundation campaign finance case

Appeals court: Foundation’s position ‘would create a large loophole’ in reporting requirements

OLYMPIA — A Washington state appeals court unanimously ruled in favor of Attorney General Bob Ferguson’s campaign finance lawsuit against the Freedom Foundation, overturning the trial court’s decision to dismiss the case. The court sent the case back to the lower court for further proceedings.

“This ruling is a victory for transparency in our democracy,” Ferguson said. “Voters have a right to know who is influencing their elections, and I am committed to enforcing the campaign finance laws that protect that right.”

The unanimous decision issued yesterday by the state Court of Appeals, Division 2, completely rejects the Foundation’s position and sends the case back to the trial court.

“The Foundation’s interpretation of [the relevant statute] would lead to an absurd result,” the court writes.

“As the State points out, adopting the Foundation’s position would create a large loophole in the [Fair Campaign Practices Act’s] reporting requirements,” the court continues. “The public would be precluded from receiving information regarding the financing of local initiatives at the most critical time — when signatures in support of the initiatives are being collected. On the other hand, the State’s position is consistent with the primary purpose of the FCPA — to fully disclose to the public political campaign contributions and expenditures.”

The case relates to a 2015 lawsuit, alleging the Freedom Foundation failed to properly and timely file independent expenditure reports disclosing the value of the legal services it provided to support ballot propositions in the cities of Sequim, Chelan and Shelton, as required under the state’s campaign finance laws.

In 2014, the Freedom Foundation staff created a set of sample ordinances and ballot propositions to change local laws related to collective bargaining between municipalities and their employee bargaining representatives. These drafts were publicly available via the Freedom Foundation’s website.

Using the draft documents from the website, community activists from Sequim, Chelan and Shelton gathered signatures from citizens in their communities and filed ballot propositions. None of the ballot propositions were accepted for submission to voters.

In response, Freedom Foundation staff served as counsel for the community activists and filed separate lawsuits against those cities. The lawsuits requested that the courts order the propositions be placed on their corresponding ballots.

Throughout the lawsuits, the Freedom Foundation paid their staff attorney his normal salary, and the community activists did not pay the Freedom Foundation or its staff for legal counsel. Ferguson’s lawsuit argues that providing this legal counsel at no cost to the community activists constitutes an independent expenditure, which should have been reported to the Public Disclosure Commission under state law.

By not reporting its contributions to these efforts, the state argues, the Freedom Foundation inhibited the public’s right to know the source of funds supporting these proposed ballot measures.

This is unrelated to another campaign finance case pending against the Freedom Foundation. That case involves allegations that the Freedom Foundation paid its staff to engage in activities opposing an initiative and did not report the expenditure as required by law.

The Attorney General’s Office enforces the state’s campaign finance disclosure law to ensure free, open and fair elections in Washington state. A summary of campaign finance case resolutions is available here.

Among the campaign finance lawsuits filed by the office are the political party central committees for six counties: King, Pierce, San Juan, Kittitas and Spokane Democrats, and Clark County Republicans.


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