Thursday, April 8, 2004

In its first legal skirmish, Texans for a Republican Majority lost an attempt to reduce the $1 million sought by four Democratic candidates who lost in races targeted by the GOP group in the 2002 elections.

Judge refuses to limit potential damages if group lose lawsuit

By Laylan Copelin, Austin American-Statesman
Thursday, April 8, 2004

In its first legal skirmish, Texans for a Republican Majority lost an attempt to reduce the $1 million sought by four Democratic candidates who lost in races targeted by the GOP group in the 2002 elections.

State District Judge Darlene Byrne, in an order filed late Tuesday, refused to stop a lawsuit against former state Rep. Bill Ceverha, the group's treasurer from Dallas, or to limit the potential damages to a few thousand dollars. The lawsuit now moves toward a summer trial date.

Four Democrats, including former Austin state Rep. Ann Kitchen, sued Ceverha and Jim Ellis, who created the committee at the direction of Ellis' boss, U.S. House Majority Leader Tom DeLay of Sugar Land. The Democrats are accusing the GOP committee officials of failing to disclose on state campaign reports an estimated $600,000 in corporate money that the group spent during the 2002 legislative elections.

The corporate money is also the subject of a yearlong grand jury investigation. State law bars using corporate or union money to pay for campaign expenditures.

Austin lawyer Terry Scarborough, representing Ceverha, argued to Byrne that damages, if there are any, should be limited to double the amount of corporate money spent in the four plaintiffs' races. How much that might be has not been determined.

Byrne rejected that argument, saying the state law "is not designed to compensate the candidate for actual damages but rather to deter violators and encourage enforcement by candidates and others directly participating in the process rather than placing the entire enforcement burden on the govern- ment."

It's not unusual for a judge to refuse to stop a lawsuit on a motion for summary judgment, but it is fairly rare for a judge to write a two-page opinion in a preliminary round.

In Travis County, however, the rotating docket means a different judge could hear the case at different stages. Byrne might not preside over the trial.

"I'm extremely disappointed in that ruling but not deterred in my position," Scarborough said. "The denial of the summary motion does not mean I'm wrong. Ultimately, I believe the trial court will agree with me that the plaintiffs' damages are limited to their races."

Austin lawyer Joe Crews, representing the Democrats, said he was encouraged by the judge's ruling.

"In upholding the Texas Election Code, the court affirmed the validity of the plaintiffs' claims and acknowledged substantial penalties for secretly laundering corporate cash into Texas elections," Crews said in a written statement.

Though Scarborough focused on trying to limit potential damages, he has not conceded that his client did anything wrong by failing to report the $600,000 on state campaign finance reports. The Democratic candidates discovered the $600,000 when Texans for a Republican Majority had to file a one-time report with the IRS. Officials for Texans for a Republican Majority have argued that the $600,000 was spent on the political committee's administrative expenses. The group sometimes counted consultants, pollsters and phone banks among those expenses. Opponents argue that an administrative expense means routine expenditures, such as rent, a bookkeeper's salary and utilities.

Ellis did not participate in this early legal round because he was added as a defendant only recently. He is fighting jurisdiction, saying he lives in Virginia, works in Washington, owns no property in Texas and did not engage in a business in Texas. A judge must consider those and other factors before deciding whether Ellis will be included as a defendant.

As executive director of DeLay's Americans for a Republican Majority, Ellis helped create and fund the start-up of Texans for a Republican Majority, a political action committee modeled on DeLay's national fund-raising effort. As a paid consultant to the Texas committee, Ellis helped screen Republican candidates for the Legislature, deciding which ones to support with donations.

After Republicans won a majority in the 2002 election, Ellis became DeLay's point man at the state Capitol when the Legislature debated re-mapping the state's congressional districts to DeLay's liking.

Last year he registered in Austin to lobby on redistricting, transportation and charity issues.