Sue Lani Madsen: Chickens, checks and conflicts of interest

Did you get your chicken check from the attorney general of Washington in December?

If so, then you are the beneficiary of a consumer protection lawsuit filed by Bob Ferguson to protect you from corporate price-fixing, fraud and deception. You would know that because the attorney general made sure his name was on the envelope, the check and the letter announcing cheerfully, “Good News! You are Receiving a Refund!”

No purchase necessary to win, although according to Ferguson he’s sure “you paid more than you should have for chicken and canned tuna” and he is happy to return “this money to Washingtonians, like you, who were most harmed” by this illegal conduct. Even vegetarians are eligible.

Ferguson announced the distribution in early December of approximately 402,200 checks to 1.2 million lucky low-income Washingtonians. The cutoff for low-income is 175% of federal poverty Level. Single-person households received $50, multiperson households were mailed $120 checks.

The letters were immediately denounced for fraud and deception by a candidate for governor using his office to distribute a self-celebratory direct mail piece during a political campaign. An ethics complaint was filed on Dec. 15 by former state legislator Toby Nixon, president of the Washington Coalition for Open Government from 2007 to 2021.

Implementation has been disastrous. Santa Ferguson contracted with a company that managed to send checks addressed to people who’ve been dead for years, to people who don’t exist, or mailed to addresses people have never lived at – based on experiences from a friend and current and former representatives on social media. The company also sent checks to people with household incomes exceeding the limit who are wondering if they should cash it anyway, or would that be committing fraud with a check from a fraud settlement?

We can be sure the deceased don’t exceed the income limit, but for every one else the question is how would the attorney general know who qualifies when we have no state income tax? And where did the database for the mismatched mailing come from?

According to an email response from Brionna Aho, communications director for the attorney general, “the data comes from the private sector. This project is a public-private partnership. Experian put together the list of recipients, including names and addresses.” Aho identified the claims administrator for the mailing as a company called Simpluris.

The good news is Simpluris didn’t use the state voter database and the state didn’t do the mailing. The bad news is Experian’s database was flawed, troubling when many consumers rely on them for accurate credit scores. Experian did not reply to inquiries regarding the scope of its involvement in the public-private partnership.

Experian was recently sued for causing financial harm to consumers by negligently reporting address information to lenders as high risk or identifying residential property as commercial. Experian did not admit to doing anything wrong but agreed to pay $22.45 million to settle the lawsuit. Consumers who were on record as having requested a credit report were sent checks, others who merely inquired had to file a claim form to receive a cash settlement in 2023.

A class-action lawsuit is supposed to pay out to those who were harmed, like the Experian suit. Tracking down everyone who bought overpriced chicken and canned tuna over the past two years would be unreasonable, so Ferguson negotiated a “cy pres” settlement. Pronounced “sigh pray,” it means trying to get as close as possible to benefiting those who were harmed.

It usually means making awards to charities related to the class of consumers in some way, and praying it benefits them. Cy pres awards are required to be reported to the Legislature and published on the attorney general’s website (www.atg.wa.gov/cy-pres-awards-and-grants). Such awards to charities have been commonly used by previous attorneys general Rob McKenna and Christine Gregoire as well as Ferguson.

For example, in 2021 Ferguson negotiated a cy pres settlement with Healing Heroes Network for deceptive advertising by awarding $95,000 to another veterans services nonprofit instead of tracking down donors who were deceived. In a 2019 settlement with a nonprofit health system on the Kitsap Peninsula, funds were awarded to a selection of health care-related nonprofits instead of to patients who had been affected, although one would think it would be possible to find patients.

In every case reported, cy pres awards were made to nonprofits instead of to individuals, until 2023, when the attorney general – aka candidate for governor – had an opportunity to put his name in front of several hundred thousand voters.

Court cases are working their way to the U.S. Supreme Court by attorneys seeking to settle the question of attorney conflict of interest in choosing how to distribute settlement funds. Cy pres has the potential to be abused when the chosen charities are hand-picked favorites of the attorneys on either side of the negotiation, or of the judge approving the settlement.

The attorney general’s team could have chosen a distribution to food banks hard-pressed to buy protein, clearly benefiting the class of people most affected by corporate chicken price-fixing. And Bob Ferguson still could have crowed about it.

Contact Sue Lani Madsen at rulingpen@gmail.com.