Freedom Found. v. Teamsters Local 117 Segregated Fund

197 Wash.2d 116

480 P.3d 1119

FREEDOM FOUNDATION, Petitioner/Plaintiff,

v.TEAMSTERS LOCAL 117 SEGREGATED FUND, an IRS 527(f)(3) political organization; Teamsters Local Union No. 117, an IRS 501(c)(5) labor organization; and John Does 1-10, Respondents/Cross-Appellants.

Freedom Foundation, Petitioner/Plaintiff,

v.Service Employees International Union Political Education and Action Fund, Respondent/Cross-Appellant.

Freedom Foundation, Petitioner/Plaintiff,

v.Jay Inslee, State of Washington Department of Social and Health Services, and Service Employees International Union 775, Respondents.

NO. 97109-9

C/w 97111-1

C/w 97394-6

Supreme Court of Washington.

Argued May 26, 2020

Filed February 18, 2021

Robert Alan Bouvatte Jr., Attorney at Law, Po Box 552, Olympia, WA, 98507-0552, Eric Rolf Stahlfeld, Attorney at Law, 145 Sw 155th St., Ste. 101, Burien, WA, 98166-2591, for Appellant.

Dmitri L. Iglitzin, Darin M. Dalmat, Benjamin Daniel Berger, Barnard Iglitzin & Lavitt LLP, 18 W. Mercer St., Ste. 400, Seattle, WA, 98119-3971, Susan Sackett Danpullo, Margaret C. McLean, Office of the Attorney General, 7141 Cleanwater Dr. Sw, Po Box 40145, Olympia, WA, 98504-0145, Alicia O. Young, WA State Attorney General's Office, Po Box 40100, Olympia, WA, 98504-0100, for Respondent.

Eric Rolf Stahlfeld, Attorney at Law, 145 Sw 155th St., Ste. 101, Burien, WA, 98166-2591, Robert Alan Bouvatte Jr., Attorney at Law, Po Box 552, Olympia, WA, 98507-0552, for Appellant/Cross-Respondent.

Dmitri L. Iglitzin, Darin M. Dalmat, Benjamin Daniel Berger, Barnard Iglitzin & Lavitt LLP, 18 W. Mercer St., Ste. 400, Seattle, WA, 98119-3971, for Respondent/Cross-Appellant.

STEPHENS, J.

¶ 1 The integrity of our democracy depends on the fairness of our elections. To that end, Washington's Fair Campaign Practices Act (FCPA), ch. 42.17A RCW, requires all candidates, campaigns, and contributors to play by the same basic rules. One of those rules requires the public disclosure of contributions and expenditures in political campaigns and lobbying efforts. To help enforce these rules, the FCPA allows private citizens to alert the government of potential violations and, in limited circumstances, to bring enforcement actions—known as "citizen's actions"—against suspected violators in court.

¶ 2 These consolidated appeals have one central question in common: whether the Freedom Foundation satisfied the FCPA's prerequisites before filing these citizen's actions. In each case, the superior courts ruled the Foundation failed to meet a 10-day deadline required by the FCPA and, accordingly, entered judgment for respondents. We agree and affirm.

¶ 3 We also address the Foundation's arguments specific to its suit against Teamsters Local 117. Though the superior court erred by granting judgment on the pleadings to the union, we affirm because the court's entry of judgment would have been proper as summary judgment. This result precludes the Foundation's other challenges to the superior court's rulings, which we therefore do not address.

¶ 4 As to Teamsters Local 117's cross appeal of the dismissal of its counterclaim against the Foundation under 42 U.S.C. § 1983, we affirm the superior court because the Foundation is not a state actor, is not wielding powers traditionally and exclusively reserved to the State, and therefore is not subject to suit under § 1983.

¶ 5 Finally, we affirm the superior courts’ denial of various fee petitions and deny the Foundation's request for attorney fees and costs.

FACTS AND PROCEDURAL HISTORY

¶ 6 The Freedom Foundation is a nonprofit organization that describes itself as committed to "advanc[ing] individual liberty, free enterprise and limited, accountable government in the Evergreen State." Clerk's Papers (CP) (97109-9) at 619. It developed a "Union Transparency and Reform Plan," which seeks to " ‘enforce campaign finance laws against unions through investigations, complaints, and lawsuits.’ " Id . at 623. Consistent with this plan, the Foundation brought citizen's actions against Teamsters Local 117; Service Employees International Union Political Education and Action Fund (SEIU PEAF); and Governor Inslee, the Department of Social and Health Services, and Service Employees International Union 775 (SEIU 775) for various alleged violations of the FCPA.

Freedom Foundation v. Teamsters Local 117 Segregated Fund et al.

¶ 7 Teamsters Local 117 is a labor union representing over 16,000 workers at approximately 200 employers across Washington. The union established a separate segregated fund to make political contributions in 2011.

¶ 8 In early August 2017, the Foundation notified the attorney general and prosecuting attorneys of its allegations that Teamsters Local 117 and its separate segregated fund were operating in violation of the FCPA. The government officials did not respond within 45 days, so the Foundation issued the second notice required by the FCPA on September 21, 2017. That notice gave the government an additional 10 days to act, until October 2, 2017. RCW 42.17A.765(4)(a)(iii)¹ . The government did not commence an enforcement action during that period, but on October 19 the Attorney General's Office (AGO) responded that it had investigated the Foundation's allegations and found them meritless.

¶ 9 The AGO noted in its letter that Washington's definition of "political committee" does not encompass the separate segregated fund on its own, but the activities of that fund could be attributed to Teamsters Local 117. The AGO concluded Teamsters Local 117 was not an unregistered political committee operating in violation of the FCPA because less than one percent of its total spending went to political activities, so political activities could not be considered a primary purpose of Teamsters Local 117.

¶ 10 Disagreeing with the AGO's conclusions, the Foundation filed a citizen's action against Teamsters Local 117 on December 14, 2017—74 days after the government's second enforcement period ended. Teamsters Local 117 moved to dismiss the Foundation's claims, which the superior court granted as to the claims alleging that the separate segregated fund was a political committee, that Teamsters Local 117 was a political committee under the contributions prong of Washington's definition, and that the Foundation was entitled to attorney fees.

¶ 11 In February 2019, Teamsters Local 117 moved for judgment on the pleadings, arguing the Foundation had not complied with the FCPA's prerequisites to filing a citizen's action. The superior court granted judgment on the pleadings for Teamsters Local 117, concluding the Foundation's failure to comply with the FCPA's prerequisites to a citizen's action was a jurisdictional bar to its suit.² Specifically, the superior court ruled that RCW 42.17A.765(4)(a)(ii) required the Foundation to file its citizen's action within 10 days after the government failed to commence an enforcement action during its second enforcement period, which ended on October 2, 2017. Because the Foundation waited until December 2017 to file its suit, the superior court concluded it had not complied with that statutory prerequisite and therefore could not maintain its citizen's action.

¶ 12 Teamsters Local 117 filed a counterclaim under 42 U.S.C. § 1983, arguing the Foundation's selective enforcement of the FCPA through citizen's actions against its perceived ideological opponents violated Teamsters Local 117's rights to free speech and equal protection under the United States Constitution. The superior court dismissed the counterclaim, concluding the Foundation had not acted under color of state law for the purposes of § 1983 by bringing FCPA citizen's actions.

¶ 13 Teamsters Local 117 also petitioned the superior court for an award of attorney fees under RCW 42.17A.765(4)(b), arguing the Foundation brought its citizen's action without reasonable cause. The superior court denied the fee petition, explaining it could not render a finding on whether the Foundation's claims lacked reasonable cause because it had not reached the merits of the arguments before dismissing the citizen's action on procedural grounds.

¶ 14 The Foundation sought this court's direct review, which we granted. Order, Freedom Found. v. Teamsters Local 117 , No. 97109-9, consolidated with No. 97111-1 (Wash. Aug. 7, 2019).

Freedom Foundation v. SEIU PEAF

¶ 15 SEIU PEAF is a separate segregated fund of the Service Employees International Union. In January 2018, the Foundation notified the attorney general and prosecuting attorneys of its allegations that SEIU PEAF was operating in violation of the FCPA. The government officials did not take action within 45 days, so the Foundation issued the second notice required by the FCPA on March 9, 2018. That notice gave the government an additional 10 days to act, until March 19, 2018. RCW 42.17A.765(4)(a)(iii). The government did not commence an enforcement action during that period. The Foundation filed its citizen's action on April 3, 2018—16 days after the government's second enforcement period ended.

¶ 16 SEIU PEAF moved to dismiss the Foundation's suit, arguing its citizen's action was barred because the Foundation had failed to comply with the FCPA's prerequisites to suit. The superior court agreed and dismissed the case, ruling the Foundation had failed to comply with the FCPA's requirement that citizen's actions be filed within 10 days after the government's second enforcement period, which here was March 29, 2018. The Foundation moved for reconsideration, which the superior court denied.

¶ 17 SEIU PEAF petitioned the superior court for an award of reasonable attorney fees under RCW 42.17A.765(4)(b), arguing the Foundation brought its citizen's action without reasonable cause. The superior court denied the fee petition, explaining it could not make a finding on whether the Foundation's claims lacked reasonable cause because it had not reached the merits of the Foundation's arguments before dismissing its citizen's action on procedural...