It’s not often that both sides claim victory in a lawsuit. But such is the case in a suit brought by RE Sources for Sustainable Communities et al. against the Building Industry Association of Washington (BIAW).
The case, which began in 2007, was decided by Thurston County Superior Court Judge Carol Murphy Sept. 30, 2010.
The court ruled that Washington’s largest trade organization mishandled millions of dollars and committed several paperwork and accounting procedure violations for the trust account associated with its retrospective ratings program, Return On Industrial Insurance (ROII).
BIAW members who use that workers’ compensation program, such as RE Sources, can get rebates each year from the Washington State Department of Labor and Industries.
The total combined rebate amount for members could be as high as $50 million per year, said Bob Ferris, RE Sources executive director.
The BIAW received and distributed the rebates, but not right away. Before doling them out, it placed rebates into a for-profit Member Services Corporation account. Rebates should have been put in a trust account — trust moneys may not be commingled with others and Murphy found they had been. Also, the BIAW kept the interest earned while rebates were in the for-profit account.
“I couldn’t believe it — I was just flabbergasted when I heard some of the stuff they did,” Ferris said.
The bank account BIAW put $50 million into was only insured for $100,000 at a time when banks were failing, Ferris said.
Despite the ruling, BIAW claims this case as a victory, according to its Sept. 30 press release.
“After alleging BIAW staff and unpaid, volunteer trustees ‘skimmed’ and ’embezzled’ money and after spending three years and $3 million pursuing the lawsuit against BIAW, [their] only ‘victory’ was the judge’s determination that BIAW had committed some paperwork and accounting procedure violations of the trust associated with BIAW’s retrospective ratings program…” the press release said.
RE Sources views the outcome in another light. Ferris said this claim shows the BIAW doesn’t seem to understand what they were doing was wrong, and seems to show they don’t have any remorse.
Erin Shannon, BIAW’s public relations director, said very few organizations that handle millions of dollars per year could withstand the type of scrutiny the BIAW has been put under.
“What the judge found were accounting paperwork and procedural types of errors,” Shannon said. “What it means is we have to set up a separate checking account — big deal.”
Also, the judge did not award money to the plaintiffs. The amount of interest each member’s rebate gained while in the BIAW’s possession was small compared to the services members received, Shannon said, which is why the judge didn’t award the plaintiffs.
But Ferris said the amount of money is not the point, and that the BIAW was using its trust account illegally.
“It was our money,” Ferris said. “If your bank took $300 out of your account, what would you do? We take it very seriously when people take our money.”
The insult on top of the injury for RE Sources is how the BIAW uses some of its for-profit account. BIAW contributes money to conservative political candidates. Ferris said politicians BIAW supports argue against the very things RE Sources argues for, such as clean air and alternative transportation.
“That is their right to do that,” Ferris said. “We just don’t think it’s their right to do that with our money which is meant for a different purpose.”
RE Sources isn’t the only group that disagrees with the BIAW’s campaign financing. In late September, the Washington State Attorney General’s office fined the BIAW‘s Member Services Corporation $584,000 for violating the state’s campaign finance disclosure law. The organization only has to pay $242,000 unless it is found to have committed any new campaign law violations between now and Dec. 31, 2016.
“I think when you’re a group that does something — for lack of a better description — that puts a target on your back,” Shannon said.
Now, the parties are waiting for the judge’s written ruling to determine whether to appeal the case. And the word is still out on which party is responsible for legal fees.
“It’s kind of a David and Goliath sort of thing. It has been a bare-knuckle brawl the whole way,” Ferris said, explaining that the BIAW has spent millions of dollars on the case so far, and if RE Sources and the other plaintiffs end up having to pay BIAW’s legal fees, they would all go out of business immediately.