Antitrust Law Daily Wrap Up, RICO—OreCtApp: PAC Manager Liable For Willful Violations of Injunction , (Nov 8, 2012)

By Jody Coultas, J.D.

A trial court did not err in concluding that Oregon Taxpayers United, Oregon Taxpayers United Education Foundation, Give Seniors a Break PAC, and Bill Sizemore were precluded from challenging the constitutionality of an injunction against them and concluding that the defendants willfully violated the injunction, according to an Oregon appellate court. (Oregon Education Association v. Oregon Taxpayer United, November 7, 2012, Brewer, J.)

The defendants challenged two judgments holding them in contempt for violating the terms of an injunction issued pursuant to the Oregon Racketeer Influence and Corrupt Organizations Act (ORICO) stemming from a dispute concerning the Oregon Taxpayers United Political Action Committee and Oregon Taxpayers United Education Foundation’s efforts to place initiatives on ballots. In the underlying action, Oregon Education Association (OEA) and American Federation of Teachers (AFT) brought an ORICO claim against the defendants alleging forgery, fraud, and other violations concerning initiative ballot measure activities and election law filings. The trial court entered a money judgment in favor of OEA and AFT and issued the injunctions against the defendants and their successors in which Sizemore was a manager.

OEA and AFT filed contempt charges against the defendants’ successor organizations by virtue of those organizations’ campaign activities. The trial court concluded that the successor organization violated the court’s judgment and was in contempt of court when it transferred assets for rent and other overhead expenses and personal services, such as signature gathering, and held that the defendants were precluded from further litigating the constitutionality of the injunction and its appropriate construction.

The defendants argued that the trial court erred in holding them in contempt for violating an injunction that they assert was invalid for lack of jurisdiction, violated the Oregon and United States constitutions in its interpreting provisions of the injunction, erred in finding the defendants' constitutional challenges were precluded, and that the defendants did not willfully violate the injunction.

Because a party cannot collaterally attack an injunction for the first time on appeal from a judgment of contempt, the court declined to address defendants' statutory authority argument.

The doctrine of claim preclusion barred Sizemore and his privies, including OTU2-PAC and Give Seniors a Break PAC, from challenging the constitutionality of the injunction in the contempt proceedings, according to the court. OEA and AFT argued that the doctrines of claim preclusion, issue preclusion, and law of the case barred the defendants from raising issues that they previously litigated or could have litigated in prior proceedings. Under the doctrine of claim preclusion, no party or entity in privity with the parties could litigate a claim that was encompassed within that adjudication. Although the judgment was being appealed, it remained in full force and effect. Also, the defendants had a full opportunity to litigate whether the injunction was unconstitutional as applied to Sizemore and his successor organizations.

The constitutional challenges were barred by the law of the case doctrine, according to the court. The law of the case doctrine precludes relitigation or reconsideration of a point of law decided at an earlier stage of the same case. The prior rulings, as well as the contempt proceedings, were adjudicated in the same action as the underlying judgment that contained the injunction.

Evidence supported the trial court's findings that the defendants willfully violated the terms of the injunction, according to the court. A party with actual knowledge of the issuance of an injunction is bound by its terms and can be held in contempt for its violation. Sizemore knew what the court meant by the terms of the injunction, that the appellate court's opinion in a previous proceeding did not negate the willfulness of Sizemore's actions, and Sizemore could have sought a stay of the injunction pending review of that decision by the supreme court. The violations, continuing to raise and spend money on initiatives before and after filing a motion for clarification of the injunction, were willful.

The case is No. A143460.

Gregory A. Hartman (Bennett, Hartman, Morris & Kaplan, LLP) for Oregon Education Association. Judy C. Lucas (Senior Assistant Attorney General) for the State of Oregon.

Cases: RICO OregonNews