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Before the District of Columbia Board of Elections and Ethics In re: Challenge to Initiative No. 68, "Video Lottery Terminal Initiative of 2004" Administrative Hearing No. 04-020 REPLY STATEMENT IN MITIGATION OF THE CITIZENS COMMITTEE FOR THE D.C. VIDEO LOTTERY TERMINAL INITIATIVE AND JOHNNY CLINTON HYATTThe Citizens Committee for the D.C. Video Lottery Terminal Initiative (the "Committee") and its treasurer, Johnny Clinton Hyatt, submit this reply statement in mitigation pursuant to the January 3, 2005 letter from the General Counsel of the Board of Elections and Ethics (the "Board") to Mr. Hyatt, advising that the Board had initiated this proceeding to determine who "should be held responsible for the determined violations (in connection with the Video Lottery Terminal Initiative of 2004 ("Initiative 68")] and how the Board should determine the amount of the fines to be assessed for such violations," and the revised schedule prescribed by the Board and described in a January 12, 2005 letter from the Board's General Counsel to counsel for the Committee and Mr. Hyatt. INTRODUCTION AND SUMMARYThe Board should dismiss this proceeding without assessing any civil penalty against the Committee, its officers, or the proponents of Initiative 68. There is no basis in the record before the Board for assessing civil penalties against the Committee, its officers, or the proponents. As described in the Statement in Mitigation of the Committee and Mr. Hyatt (the "Committee Statement"), assessing civil penalties against the Committee, its officers, or the proponents of Initiative 68 without evidence of intentional wrongdoing or other blameworthy conduct would impermissibly burden constitutionally protected conduct. Committee Statement at 14-17; see Brown v. Hartlage, 456 U.S. 45, 61 (1982) (state statute voiding an election on the ground that a candidate had promised to serve without salary in violation of state law was unconstitutional, because "[t]he chilling effect of such absolute accountability for factual misstatements in the course of political debate is incompatible with the atmosphere of free discussion contemplated by the First Amendment in the context of political campaigns").1 The initiative statute, the campaign finance statute, and the Board's implementing regulations provide no guidance as to what duties, if any, a proponent or a political committee may have to supervise the collection of signatures in support of an initiative.2 In any event, the Committee, its officers, and the proponents took reasonable steps under the extraordinary circumstances presented to attempt to qualify Initiative 68 for inclusion on the ballot in compliance with all aspects of District of Columbia election law. See Committee Statement at 4-10, 17-24. Notwithstanding those efforts, the Board (1) found that the signatures of 8 of 79 circulators associated with the Stars and Stripes operation falsely attested that they had witnessed each of the signatures on the petition sheets on which their names appeared, (2) credited testimony that other unnamed District resident circulators associated with Stars and Stripes had engaged in similar conduct with the knowledge of or at the direction of non-resident professionals associated with the Stars and Stripes operation, and (3) credited testimony of two other circulators associated with Stars and Stripes that their signatures had been forged on many of the circulator affidavits on which their names appeared.3 Contrary to the major premise of the submissions of Ronald L. Drake and DC Watch, however, neither the Board nor the District of Columbia Court of Appeals has yet found that the Committee, its officers, or the proponents of Initiative 68 violated any law. The Board expressly rejected the challengers' assertion that the Committee, its officers, or the proponents participated in any deliberate scheme to violate District of Columbia election laws: "Notwithstanding allegations of a scheme or plot to violate the District's election laws, the Board found no evidence in the context of these proceedings that the Proponents set out to intentionally flout the District's election laws, or that they encouraged Stars and Stripes to do so." Ronald Drake et. al. v. Citizens Committee for the D.C. Video Lottery Terminal Initiative of 2004 (Aug. 13, 2004) ("Aug. 13 Decision"), Slip op. at 3 (emphasis added) (footnote omitted). The Board expressly reserved its right to consider whether penalties should be assessed against the Committee, id, at 3 n.1, but the important point here is that the Board clearly has not yet found any violation of District of Columbia law by the Committee, its officers, or the proponents. Instead, as the court of appeals explained, the Board found that "irregularities in the petition circulation process so `polluted' the signature-gathering operation conducted by a subcontractor, Stars and Stripes, Inc., as to require invalidation of all petition sheets circulated and signatures gathered by the Stars and Stripes circulators." Citizens Committee for the D.C. Video Lottery Terminal Initiative v. District of Columbia Board of Elections and Ethics, No. 04-AA-957 (Dec. 28, 2004) ("CCVLT v. BOEE"), Slip op. at 2. Since the signatures remaining after exclusion of those gathered by circulators associated with Stars and Stripes were insufficient to qualify Initiative 68, the Board declined to certify the Initiative for inclusion on the November ballot. The court of appeals concluded that the evidence was sufficient to support the Board's decision to exclude all the signatures collected by Stars and Stripes circulators, and therefore affirmed the Board's decision not to certify Initiative 68. Although there is ample evidence of wrongdoing by some circulators and at least one manager associated with the Stars and Stripes operation and the court of appeals has affirmed the Board's decision to exclude all the signatures collected by circulators associated with Stars and Stripes, none of the circulators and managers associated with the Stars and Stripes operation were employees or agents of the Committee, its officers, or the proponents.4 The Committee, its officers, and the proponents had no right or power to control the day-to-day activities of any Stars and Stripes circulator or manager. Under controlling principles of District of Columbia law, wrongdoing by individual circulators and managers associated with the Stars and Stripes operation cannot be attributed to the Committee, its officers, or the proponents of Initiative 68 on any theory of respondeat superior or agency. Each of the individuals as to whom the Board heard evidence of wrongdoing was hired, paid, and supervised by someone or some entity other than the Committee, its officers, or the proponents. Accordingly, evidence of wrongdoing by those individuals provides no basis for assessing civil penalties against the Committee, its officers, or the proponents. UNDER CONTROLLING PRINCIPLES OF LAW, WRONGDOING BY THE INDIVIDUALS WHO TESTIFIED AND THOSE ABOUT WHOM THEY TESTIFIED CANNOT BE ATTRIBUTED TO THE COMMITTEE, ITS OFFICERS, OR THE PROPONENTS ON THE RECORD BEFORE THE BOARD.In light of the arguments of Mr. Drake and DCWatch, at the outset, it is important to emphasize what is not in the record of these proceedings. None of the witnesses who testified about their own wrongdoing under grant of immunity and about the wrongdoing of others associated with Stars and Stripes testified to any wrongdoing by the Committee, its officers, or the proponents. There is no evidence in the record that the Committee, its officers, or the proponents of Initiative 68 ordered any of the wrongdoing that the Board found required the rejection of the signatures collected by individuals associated with the Stars and Stripes operation. There is no evidence that the Committee, its officers, or the proponents participated in any of the wrongdoing found by the Board. Finally, there is no evidence that the Committee, its officers, or the proponents even knew about the wrongdoing the Board found only after nine days of hearings and 80 hours of testimony. See DCWatch Statement at 6 ("The hearing on the challenges to the petition lasted more than eighty hours over nine days").5 The District of Columbia resident circulators and the managers associated with Stars and Stripes were not employees or agents of the Committee, its officers, or the proponents. "Generally an agency relationship results when one person authorizes another to act on his behalf subject to his control, and the other consents to do so." Judah v. Reiner, 744 A.2d 1037, 1040 (DC 2000) (emphasis added); see Safeway v. Kelly, 448 A.2d 856, 860 n.9 (DC 1982), quoting Restatement (Second) of Agency § 2(1) & (2) (emphasis added) ("(1) A master is a principal who employs an agent to perform service in his affairs and who controls or has the right to control the physical conduct of the other in the performance of the service. (2) "A servant is an agent employed by a master to perform service in his affairs whose physical conduct in the performance of the service is controlled or is subject to control, by the master"). The Committee, its officers, and the proponents "had no control over the hiring, firing, or supervision," Quiiada Corp. v. General Motors Corporation, 253 A.2d 538, 541 (DC 1969), of Stars and Stripes circulators and managers. See generally Giles v. Shell Oil Corporation, 487 A.2d 610, 611 (DC 1985). The Committee contracted with PCI to manage and organize the collection of the signatures of 17,599 registered voters of the District of Columbia, including 5% of the registered voters in five of eight wards, and left PCI free to use its expertise to accomplish the assigned task in compliance with applicable law and in accordance with industry practice. See generally Washington Air Compressor Rental, Co. v. National Union Insurance Co., 165 A.2d 482, 485 (DC 1960) (general contractor not liable for damage to property caused by its subcontractor, where the general contractor "only designated the work to be done" and "left [the subcontractor] free to use the means and methods of accomplishing the assigned task"). Under well-established principles of law in the District of Columbia, there are five factors that are relevant to determining whether a "master-servant (or principal-agent) relationship exists": "(1) the selection and engagement of the servant, (2) the payment of wages, (3) the power to discharge, (4) the power to control the servant's conduct, (5) and whether the work is part of the regular business of the employer." Moorehead v. District of Columbia, 747 A.2d 138, 143 (DC 2000), quoting District of Columbia v. Hampton, 666 A.2d 30, 38 (DC 1995); see Judah v. Reiner, 744 A.2d 1037, 1040 (DC 2000). "Of these factors, the determinative one is usually 'whether the employer has the right to control and direct the servant in the performance of his work and the manner in which the work is to be done." Judah v. Reiner, 744 A.2d 1037, 1040 (DC 2000); see District of Columbia v. Hampton, 666 A.2d 30, 38-39 (DC 1995); Safeway Stores, Inc. v. Kelly, 448 A.2d 856, 860 (DC 1982).6 Each of the five factors relevant to determining whether the Stars and Stripes circulators and managers were employees or agents of the Committee, its officers, or the proponents leads ineluctably to the same conclusion. The wrongdoing of the Stars and Stripes circulators and managers cannot be attributed to the Committee, its officers, or the proponents of Initiative 68 on any theory of respondeat superior or agency. The Stars and Stripes circulators and managers were "independent contractors," and neither the Committee, its officers, nor the proponents can be held responsible for the intentional wrongdoing of the Stars and Stripes circulators or managers. See Brown v. Argenbright Security, Inc., 782 A.2d 752, 759 (DC 2001) (absent evidence that Safeway had authority to "control and direct ... the performance of ... work and the manner in which the work is to be done," Safeway could not be held responsible on a respondeat superior theory for the wrongdoing of a security guard assigned to a Safeway store by the security guard's employer, Argenbright, an independent contractor); Moorehead v. District of Columbia, 747 A.2d 138, 142-48 (DC 2000) (special police officer licensed by DC and subject to extensive regulation as to duties by DC, but who was hired by a private employer and nominated for appointment as special police officer by that employer is not agent of the District, absent showing that the District exercised actual authority and control over the special police officer in his or her daily activities). Factor 1. The Committee, its officers, and the proponents had nothing to do with the hiring or payment of individual Stars and Stripes managers and circulators. The Committee contracted with a nationally-known professional petition circulation firm, Progressive Campaign Incorporated ("PCI"), to organize and manage the circulation effort. See Committee Statement at 4-5. PCI then subcontracted with three other professional circulation firms, Stars and Stripes, initiatives Plus, and Burkett Petition Management Company. Id. The subcontractors -- not PCI, the Committee, its officers, or the proponents -- then hired or retained other experienced petition circulation professionals as managers, who in turn recruited and hired individual District residents to work on the campaign in support of Initiative 68. Factor 2. The Committee contracted to pay PCI a management fee and a specified amount for each valid signature of a District of Columbia voter collected in support of Initiative 68. PCI -- not the Committee -- paid the three principal subcontractors. Each of the subcontractors in turn paid its managers, and the managers paid the individual District of Columbia resident circulators they had recruited. Factor 3. The Committee, its officers, and the proponents had no power or right to discharge Stars and Stripes circulators or managers. As described above, the Committee contracted only with PCI. PCI then contracted with Stars and Stripes and the other subcontractors. The Committee, its officers, and the proponents had no contractual right or power to control who the subcontractors employed in their work or whether anyone retained to participate in the effort would continue to participate. Similarly, the Committee, its officers, and the proponents had no right or power to determine who the individual managers retained by Stars and Stripes recruited to work with them. Factor 4. The Committee, its officers, and the proponents of Initiative 68 had no right or power to supervise the day-to-day activity of circulators or managers associated with Stars and Stripes. The Committee, its officers, and the proponents had no power or right to control (1) whether a circulator or manager would work, (2) what hours a circulator or manager would work, (3) the locations at which a circulator or manager would work within the targeted wards or otherwise, (4) whether a circulator would work alone, with a non-resident, or with any particular non-resident, or (5) how any circulator would solicit signatures. In short, the Committee, its officers, and the proponents had no right or power to control the daily activities of the Stars and Stripes operation. The efforts of the Committee, its officers, and the proponents to assure compliance with the law and the collection of valid signatures of registered voters is not sufficient to establish control of the day-to-day activities of the Stars and Stripes managers and circulators. See Moorehead v. District of Columbia, 747 A.2d 138, 14445 (DC 2000) (extensive regulation of special police officers by the District of Columbia not sufficient to make special police officers agents of the District of Columbia); District of Columbia v. Hampton, 666 A.2d 30 (DC 1995) (extensive regulation of the operation of foster care homes not sufficient to make foster mother agent of the District of Columbia). Similarly, the demand by the Committee that the circulators stop wearing the "Sign up! For jobs, Schools & Healthcare" T-shirts is not evidence of control over the day-to-day activities of the Stars and Stripes circulators and managers. See Moorehead. v, District of Columbia, 747 A.2d 138, 142-48 (DC 2000) (special police officers not agents of District of Columbia, although District regulations governed uniforms, badges, patches, and buttons). On the contrary, the T-shirt incident is further evidence that the Committee had no control over the Stars and Stripes circulators or what they did. The managers of Stars & Stripes distributed the T-shirts without consulting the Committee, its officers, or the proponents. When the Committee concluded that the T-shirts were inappropriate, they met with and advised the Stars & Stripes management that the T-shirts should be retrieved. Stars and Stripes management, not the Committee, retrieved the T-shirts. Factor 5. Neither the Committee, its officers, nor the proponents was in the business of petition circulation. The Committee hired PCI precisely because the Committee, its officers, and the proponents of Initiative 68 recognized that the "extraordinarily challenging" task of "gathering 17,599 valid signatures, constituting five percent of the District's registered voters both at the citywide level and in at least five of the District's eight wards," Aug. 13 Decision at 4, in six days, rather than the 180 days permitted by the initiative statute, required professional help. The Committee, its officers, and the proponents had neither the substantive expertise, the organizational skills, nor the manpower to supervise and track the results of the day-to-day activities of the massive undertaking required to meet the deadline for the November, 2004 ballot. PCI recruited other experienced professionals to participate in the effort. Because the Stars and Stripes circulators and managers were "independent contractors" - not employees or agents of the Committee, its officers, or the proponents -- the wrongdoing of the circulators and managers that the Board found cannot be attributed to the Committee, its officers, or the proponents for purposes of assessing any civil penalties.7 CONCLUSIONFor the foregoing reasons and the reasons in the Statements in Mitigation already filed in this proceeding, the Board should dismiss the penalty proceeding without assessing any penalties against the Committee, its officers, or the proponents of Initiative 68. Respectfully submitted, George W. Jones
Counsel for the Citizens Committee for the D.C. Video Lottery Terminal Initiative and Johnny Clinton Hyatt, Treasurer CERTIFICATE OF SERVICEI hereby certify that a copy of the foregoing Reply Statement in Mitigation of the Citizens Committee for the D.C. Video Lottery Terminal Initiative and Johnny Clinton Hyatt was served this 7h day of March, 2005 upon the following: BY HAND
Kenneth J. McGhie, General Counsel BY TELECOPY & FIRST CLASS MAIL
Ronald L. Drake, Esq. BY TELECOPY & FIRST CLASS MAIL
Reverend Dean J.
Snyder BY E-MAIL & FIRST CLASS MAIL
Francis D. Carter BY E-MAIL & FIRST CLASS MAIL
Dorothy A. Brizill BY E-MAIL & FIRST CLASS MAIL
Carol Colbeth 1. DC Watch argues that "assessing a fine for the outrageous conduct that has been proven in this case would discourage initiative committees from submitting fraudulent, forged, and improperly gathered petitions." Response to Statements in Mitigation and Statement of Factors in Exacerbation by DCWatch ("DC Watch Statement") at 2; see also Challenger Ronald L. Drake's Response to Proponents' Statements in Mitigation ("Drake Statement") at 3 ("Egregious wrongdoing has been found"). This argument ignores the essential first question in any proceeding to assess civil penalties against anyone, namely, who is guilty of any violation of law. Instead, DCWatch suggests that the Committee may be held strictly liable for any violation of law that occurred during the campaign in support of Initiative 68 by analogy to products liability law. See DC Watch Statement at 2 ("In law, a company is responsible for the product that it builds and sells, even though many of its component parts may have been built by subcontractors. The same principle applies here"). Principles of law developed in the area of products liability after years of public policy debate have absolutely no application in this context. First, the First Amendment to the United States Constitution limits the extent to which a state may regulate the circulation of initiative petitions. See, etc„ Buckley v. American Constitutional Law Foundation, 525 U.S. 182 (1999); Meyer v. Grant, 486 U.S. 414 (1988); Brown v. Hartlaoe, 456 U.S. 45 (1982). Second, the Committee produced no commercial product and consequently has no way of spreading the costs of the risk of injury from use of its product to all those who purchase the product. Thus, the policy considerations applicable in the product liability context have no application here. 2. Without reference to a single District of Columbia statutory provision or regulation, DCWatch asserts that "[t]he proponents and the initiative committee are and must be considered to be the responsible parties; that is the purpose of having an initiative committee, and of requiring it to register with the Board as the party proposing the initiative." DCWatch Statement at 1; see also id. at 2 ("the initiative committee is responsible for the actions of its contractors"; "[i]t is especially responsible for ensuring that the gathering of voters' signatures is done properly"; "[i]f the members of the committee do not perform the work themselves, they are responsible for supervising and overseeing the work, whether it is done by volunteers, by workers paid directly by the committee, or by companies that are contracted to perform the work or even, as in this case, by having multiple layers of subcontractors"). Whatever the merits of a regulatory scheme of the sort described by DCWatch, it is not the regulatory scheme established by the applicable statutory and regulatory provisions in the District of Columbia. Under District law a political committee has disclosure obligations with respect to funds it may collect and spend in support of an initiative; it has no statutory or regulatory responsibility for the collection of signatures in support of the initiative. Contrary to DCWatch, proponents, not political committees, submit petitions and supporting signatures. 3. The Stars and Stripes circulators the Board found had improperly signed circulator affidavits are (1) Danielle Campbell, (2) Tenisha Colbert, (3) Melissa Darnell, (4) Evelyn Gerst, (5) Antoine Jeffries, (6) Andre Rempson, (7) Antoinette Pitter, and (8) Shimeka Mack. Campbell, Colbert, Damell, Gerst, Jeffries, and Rernpson testified under a grant of immunity and admitted their wrongdoing. Pitter and Mack did not testify, but were implicated in the testimony of others as engaging in similar conduct. Colbert and Campbell also testified that other unnamed District residents associated with the Stars and Stripes operation had engaged in similar conduct. Stephen Atkins and Forrest Jackson testified that their names had been forged on many of the circulator affidavits on which their names appeared. In addition, the testimony implicated several non-District residents associated with Stars and Stripes: Darryl Bonner, Curtis Fuentes, Ray Kingsford, and Mike Jones . 4. Although Mike Jones may be properly characterized as a Stars and Stripes "manager," the other nonresident professionals associated with Stars and Stripes and identified in note 7 of the Board's Clarification Memorandum Opinion as possibly participating in wrongdoing, Darryl Bonner, Curtis Fuentes, and Ray Kingsford, were not managers, and may be more accurately described as submanagers. 5. To the extent Mr. Drake asserts that the Committee knew of any wrongdoing by Stars and Stripes circulators and managers, the assertion is baseless and false. See Drake Statement at 7 ("The Committee had knowledge of this practice"). Mr. Drake cites the Board's Clarification Memorandum Opinion at 20, where the Board commented that "[tjhe seemingly common nature of this practice [of false certifications] was not lost on members of the Citizens Committee, who met to discuss 'rumors of possibly non-D.C. residents petitioning' and responded with the drafting of a memorandum to 'all petitioners."' Knowledge of "rumors," of course, is not knowledge of facts, and, as we have previously noted, there was considerable confusion through much of the campaign as to the role that non-residents could play in the circulation process. There is simply no evidence in the record that the Committee, its officers, or the proponents knew of or condoned any violation of District law. 6. Without ever addressing any of the controlling legal principles, DCWatch incorrectly asserts that an "initiative committee is responsible for the actions of its contractors, who are acting on its behalf and at its behest." DCWatch Statement at 2. As explained in the text, that is not the law in the District of Columbia. 7. Since the Committee cannot be held responsible for the wrongdoing of Stars and Stripes circulators and managers, Mr. Drake's "alter ego" theory is not only wrong-headed, it is completely irrelevant to any issue in this proceeding. See Drake Statement at 4, 12-13, 23. In addition, of course, the Committee is not a corporation, and none of the "off-shore" supporters of Initiative 68 that Mr. Drake refers to with such contempt has any equity interest in the Committee. The "alter ego" doctrine has no application in the circumstances of this proceeding. Mr. Drake also asserts that the February, 2005 settlement agreement between the Board, the Committee, and its officers is relevant and admissible in this proceeding. See Drake Statement at 21-22. That assertion is both misguided and erroneous as a matter of law. The settlement agreement is neither admissible nor relevant to any issue in this proceeding. See Federal Rules of Evidence, Rule 408. Finally, there is no basis in law or common sense for the "presumptions" that Mr. Drake suggests the Board create. See Drake Statement at 22. None of the proposed "presumptions" is relevant to any issue in this proceeding. Moreover, Rule 301 of the Federal Rules of Evidence provides guidance as to the effect of presumptions created by other law; nothing in the plain language of the Rule even suggests that the Board can create presumptions out of whole-cloth, upon request. Finally, the third of the three "presumptions" is especially inappropriate and supported by nothing but Mr. Drake's wild, baseless speculation. |
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