FedEx: Alleged violations of RCW 42.17A.345 and WAC 390-18-050 for failure to promptly provide documents and books of account concerning political advertising, upon request from any person (EY 19; Dec 19)

Case

#60811

Respondent

FedEx

Complainant

Stephen Finley

Description

On December 5, 2019, a complaint was filed with the PDC against FedEx, the printing/copying division, alleging violations of RCW 42.17A.345 for failing to provide the documentation or records as a commercial advertiser for political advertisements undertaken by Mercer Islanders for Sustainable Spending, a local political committee that engaged in independent expenditure activities that supported and opposed 2019 candidates for Mercer Island City Council.

During calendar year 2019, the Mercer Islanders for Sustainable Spending (MISS) filed with the Public Disclosure Commission (PDC) as a continuing political committee, selecting the Full Reporting Option and listing Michael Cero as the Committee Manager and Treasurer. MISS filed Summary Full Campaign Contributions and Expenditures reports (C-4 reports) and Independent Expenditure and Electioneering Communications reports (C-6 reports) disclosing expenditures made in support of, and opposition to, 2019 candidates seeking the office of Mercer Island City Council.

MISS made a number of expenditures to the FedEx office located in Bellevue, Washington, for political advertisements in the form of independent expenditures and/or electioneering communications during 2019.
Initial Request to FedEx.

On October 15, 2019, Bellevue’s FedEx office received an email from citizen Bob Brooks requesting an inspection of the records pertaining to a $1,433 expenditure made by MISS to FedEx to print a political advertisement that was paid for on October 3, 2019.
On October 18, 2019, citizen Steve Finley called the Bellevue FedEx location and requested records pertaining to mailers printed for Mike Cero of MISS.
On October 18, 2019, the Bellevue FedEx store manager confirmed having received requests for records from Mr. Brooks and Mr. Finley concerning the services provided to MISS.
On November 21, 2019, FedEx legal counsel acknowledged FedEx accepted political advertising from Mike Cero of MISS in an email to Mr. Finley and provided Mr. Finley with records responsive to the request. The service provided by FedEx was printing mailers that supported candidate Jake Jacobson for Mercer Island City Council, Position 7, for payments in the amounts of: $4,240.52; $2,815.18; and $1,433.30.

The documentation from FedEx in response to Mr. Finley’s initial request for inspection of the commercial advertiser provision was provided 34 days after Mr. Finley’s request for expenditures made by MISS, and 37 days after the request made by Mr. Brooks concerning the $1,433.30 expenditure made by MISS.

On November 21, 2019, Mr. Finley sent an email to FedEx legal counsel, stating there were additional advertisements that he would like to inspect, including the FedEx records for all mailers for all of the 2019 candidates seeking election to the Mercer Island City Council. He requested the cost of each mailer, the number of items printed, either a hard copy or a PDF of the mailer, the date ordered and paid, and the date delivered and mailed.
On December 17, 2019, FedEx legal counsel sent an email to Mr. Finley stating that she was attaching the FedEx receipts for Mike Cero and the MISS advertisements, based on his request. The copies included three FedEx receipts totaling $8,488.98, dated October 13, 24, and 29, 2019, which listed the customer name (Mike Cero), the employee that provided the service, the purchase date, the number of postcards or envelopes printed, the postage costs, and the number of items mailed.

The documentation from FedEx was provided to Mr. Finley 26 days after his follow-up request.

On December 18, 2019, Mr. Finley sent an email to FedEx legal counsel requesting information for services provided to MISS for two additional mailers, including a $4,835 expenditure made on October 15, 2019, and a $5,202 expenditure made on October 21, 2019. In addition, Mr. Finley provided other possible names to search for in relation to these expenditures, including Susan, Olivia, Sophia or William Cero, Daniel or Dan Thompson, George Osborne and Daniel or Jake Jacobson. Finally, Mr. Finley also requested a copy of the mailer for the $4,240.52 expenditure made to FedEx on October 23, 2020.
On December 19, 2019, FedEx legal counsel sent an email to Mr. Finley stating that his email request had been forwarded to the FedEx Office, noting that it was a busy time of the year for her client, and requesting patience while they reviewed their records for the documents. On January 9, 2020, FedEx sent an email to Mr. Finley stating that FedEx had conducted a search and no records were found for any of the names he had provided.
On May 8, 2020, PDC staff sent an email to FedEx legal counsel stating staff had reached out to MISS for documentation concerning their reported expenditures made to FedEx during the 2019 election.
The email from PDC staff to FedEx legal counsel requested additional documents be provided to the PDC no later than May 22, 2020. The email explained that there was a total of nine MISS expenditures made to FedEx during 2019, and that records pertaining to six of the expenditures had not been provided by FedEx to date.
On May 21, 2020, FedEx legal counsel sent an email to PDC staff indicating that FedEx has found responsive information concerning the services provided to MISS by FedEx for the six additional expenditures listed in the May 8th email from staff, and attaching three spreadsheets of data showing the services provided at the FedEx Office in Bellevue store for the MISS political advertisements.
On May 27, 2020, FedEx legal counsel sent an email to Mr. Finley, attaching the three spreadsheets and stating FedEx believed the production satisfied their obligation under the Washington commercial advertiser rules and regulations. As the spreadsheets listed “Michael Cero” as being associated with the expenditures of $4,835.43 and $5,201.90, they appear responsive to Mr. Finley’s request, although he was not provided with this information earlier.

The documentation from FedEx was provided to Mr. Finley 19 days after staff’s request for the expenditure information made by MISS, and 155 days after Mr. Finley’s email request dated December 18, 2019.

On January 27, 2022, an enforcement hearing was scheduled and conducted before the Commission concerning PDC's Motion for Summary Judgement concerning this matter. In the Order on Motion for Summary Judgement , the Commission found:

There were three requests for information that was required by law to be promptly provided. The October 18, 2019 request was fully complied with 34 days later. The November 21, 2019 request was fully complied with 26 days later. The December 18, 2019 request was fully complied with 155 days later.
The Commission is not making any exacting finding as to the number of days of impermissible delay (although the passing from the pre-election period into the post-election period has significance) but is simply concluding that, on the undisputed facts, each of the three responsive productions was not provided “promptly.”
This determination is not clouded by the fact that some of the delay may have been occasioned by FedEx’ good intentions in trying to protect client confidences, in diligently tracking down documents they had chosen to store in Texas and in engaging the PDC in extended dialogue over its responsibilities.
These circumstances may indeed constitute mitigation but do not provide any broad defense to the allegations. The Staff’s Motion for Summary Judgment is GRANTED.

FedEx was subject to the obligations that the law imposes on a commercial advertiser and it failed to comply with those requirements with respect to these MISS campaign materials in the 2019 election. Respondent FedEx violated RCW 42.17A.345.

On February 24, 2022, an enforcement hearing was scheduled and conducted before the Commission concerning this matter. In the Final Order for Civil Penalty , the Commission found in determining the appropriate penalty in this matter:

Aggravating factors include that the Respondent is a large and sophisticated company with ample resources and should have understood its legal obligations when performing commercial advertising services in Washington State.
Respondent had no policies or procedures in place to inform staff of their obligations; the extensive delay in providing the records to Mr. Finley; and that the information was requested before the election but was not provided until after it.
Mitigating factors in this matter include: that this is the first violation of campaign finance laws by FedEx and the first time they have dealt with these issues in Washington.
Some of the delay in responding was due to FedEx working in good faith with counsel and PDC Staff as FedEx learned about their responsibilities; and that there was no intentional effort to deceive the public or violate the law by FedEx.

The aggravating factors as cited, and as explained in oral comments on the record, outweigh the mitigating factors. The Commission has jurisdiction over this matter and the PDC laws and rules applicable to the allegations and to imposition of civil penalties.

On the facts as presented in this case, FedEx was acting as a commercial advertiser as defined by RCW 42.17A.005(10). FedEx violated RCW 42.17A.345 on three occasions by failing to maintain books of account and related materials as a commercial advertiser and to timely make them available to the public upon request.

The Commission has authority to impose a civil penalty of up to $10,000 per violation pursuant to RCW 42.17A.755 and WAC 390-37-182. The Commission concludes there were three separate violations in the lack of prompt statutory compliance with respect to the three public requests. Regardless of the number of violations found, the Commission’s conclusion as to the appropriate civil penalty would be the same.

Pursuant to these findings and conclusions and the Commission’s Order on Summary Judgment of January 31, 2022, and considering the briefing and argument provided at the penalty hearing, the Commission finds by a vote of 4-0 that Respondent FedEx is hereby ordered to pay a civil penalty of $1,500 for each of the three violations to total a $4,500 civil penalty, with $2,000 of that amount suspended based on the following conditions:

The non-suspended portion of the penalty ($2,500) is paid within thirty days of the date of the Final Order in this matter.
The Respondent is not found to have committed any further violations of chapter 42.17A RCW or Title 390 WAC within four years of the date of the Final Order in this matter. The suspended penalty shall not be assessed based solely upon any remediable violation, minor violation, or error classified by the commission as appropriate to address by a technical correction.
If the Respondent fails to comply with any of the conditions of this Order, the suspended portion of the penalty shall immediately become due without further action by the Commission.

Disposition

Violation Found by Commission

Date Opened

December 05, 2019

Areas of Law

RCW 42.17A.345, WAC 390-18-050

Documents

Penalties

Total penalties: $4,500

Balance Due: $0

FEDEX

Penalty

$4,500

Suspended

$2,000 (Pay within 30 days)

Payments

$2,500 on 03/18/2022 (PAID)