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July 19-25, 2006

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Pat Dando

Ever Aftermath: San Jose Chamber of Commerce president Pat Dando says the legitimate content of COMPAC's mailers got lost in the subsequent finger-pointing.

Between the Sheets

As the SJ Chamber of Commerce takes San Jose to federal court over their controversial fliers, the question becomes: How did we get here, anyway?

By Vrinda Normand


TWO MONTHS ago, the San Jose Chamber of Commerce managed to incite the biggest fuss about "negative campaigning" in this year's entire election season thus far. In May, the Chamber's political arm, COMPAC, sent out 300,000 colorful fliers to San Jose residents, which critics from the labor movement condemned as "vitriolic mass mailings" and the "most massive violation of election law in San Jose's entire history." A hailstorm of indignant accusations rained down from the mainstream press and various groups supporting San Jose mayoral candidate Cindy Chavez. They attacked the fliers as "hit pieces" without disputing the actual content.

Meanwhile, Chamber leaders, including president Pat Dando, believe critics got lost in finger pointing and distorted the actual purpose of the fliers. Dando says that what people should have been asking is: "What happened to a fairly sedate organization like the Chamber of Commerce to inspire them to finally become more aggressive politically?"

Last week, COMPAC sued San Jose in federal court, claiming the city's finding that the fliers violated campaign regulations is unconstitutional. How did it come to this? We decided the best way to answer that question was to take a look back at how this widely misunderstood controversy actually played out. So we start our timeline in January, when the first seeds of the COMPAC campaign were planted.

Jan. 6
The board of directors for the San Jose Chamber of Commerce meets for a retreat at a classy, coastal resort in Aptos. While discussing a number of goals for the year to come, Chamber president Pat Dando brings up the San Jose mayoral race. She says she would like to see the Chamber take a more aggressive political role. In previous years, the organization's relatively timid tactics have not been successful in getting business-friendly candidates elected. Labor proponents back a majority of the current San Jose City Council, and Chamber spokesman Bob Hines says board members agreed with the need for a stronger influence in local government. Documents show that he and Dando had already begun communicating with their attorney, Russ Miller, about legal options for launching a campaign in this direction.

April 18-20
Hired by COMPAC, Sacramento-based political consultant Tab Berg takes the first step in orchestrating a campaign. His firm conducts a poll of 300 San Jose voters to get a sense of where local residents stand on certain issues. Berg says he found that voters seemed to have lost faith in their city government. "We realized that we had to try to create fundamental change in order to make a better environment for the business community," he says. That fundamental change, Berg says, could only come about with a bold wake-up call. "There's some risk in trying to make your voice heard," he says. "You have to create controversy. Somebody is going to be upset."

April 25
The Mercury News reports on San Jose Vice Mayor Cindy Chavez's secret meetings with Mayor Ron Gonzales and Grand Prix promoters. In January, the council had made a rushed decision to approve a $4 million subsidy for the downtown event—unaware that Chavez and Gonzales had discussed the matter five months earlier.

April 26
COMPAC leaders hold a special meeting with 27 members to vote on adopting a more aggressive strategy. Dando proposes an issues campaign based on facts. "We will not do hit pieces," she assures the group, although she does not specify what the effort will include. The goal: to help two business-friendly candidates make the runoff. Only afterward would board member Susanne Wilson realize what that meant: "They wanted to knock Cindy out, period," she says. Twenty-six members give their approval to spend up to $250,000 on the campaign. The one dissenter, Carl Guardino of the Silicon Valley Leadership Group, says he sensed the drive would be negative. "I was concerned that we were buying into something without knowing what it was going to be," he says.

May 12
Miller, the Chamber's attorney, reviews two fliers designed by the consultant. Berg says he distilled their short, punchy messages from over 300 pages of public documents. Shortly before this, eight members of COMPAC's executive committee had a brief opportunity to look over the mailers. Dando says the executives (herself included) were given at least a couple of hours' notice, but admits things had to move quickly. "We didn't want the mailers to be last-minute," she says. "We wanted to give people time to talk about them [before the election]. I dare say, there's probably not another campaign in the state that was as cautious." Miller gives the legal thumbs-up in a memo to his client: The mailers do "not contain express advocacy. There are no defamation or libel issues," he writes.

May 15
Berg's team drops the first group of mailers at the post office. One piece contains an image of the Mercury News article about Chavez's meetings with Grand Prix promoters. "Scandals, secret backroom deals and wasteful spending—that's just not the way to run a first-class city," the flier declares. "Why does Cindy Chavez want to spend money on a downtown car race, while cutting funding for parks, libraries, and community centers?" Another flier features an image of Jose Mendoza, a business owner in the Tropicana Shopping Center who almost lost his store to the San Jose Redevelopment Agency through eminent domain. "Cindy Chavez voted to take away my business and property so she could give it to a rich developer," his quote reads, "I think she was wrong." Over the next two weeks, 300,000 of these fliers will be mailed to San Jose voters.

May 17
The backlash from Chavez supporters hits. Leader of the local Democratic Party Steve Preminger files a formal complaint with the San Jose elections commission. "The Chamber of Commerce has engaged in ... massive and blatant violations of the city's campaign ordinances as well as state statues," he writes. The same day, the Mercury News reports on the mailers. Author Deborah Lohse notes that Dando had voted to support the Grand Prix subsidy; why was she suddenly attacking it? Lohse quotes South Bay Labor Council head Phaedra Ellis-Lamkins calling Dando's move hypocritical. (Dando says she supported the extra funding but was "shocked" to learn of Chavez's prior knowledge.) The daily newspaper publishes 17 more articles in the next two months, including two editorials chiding the Chamber for "abandoning the high ground." Mercury News editors proclaim: "The chamber's unethical campaign against mayoral candidate Cindy Chavez has shattered its unity." Chamber member Williams catches wind of the controversy, and her first response is that of concern. But when she actually sees the fliers, she is underwhelmed. "Oh, this is it?" she wonders.

May 19
The elections commission retains Mike Moye from a San Francisco law firm to investigate Preminger's complaint. The Chavez supporter has urged the commission to conduct a speedy hearing before the June 6 primary election. Only two days after the complaint is filed with the city clerk, Moye sends an email to Dando requesting an interview.

May 20
After three days of withholding comment, Chavez responds. She stages a press conference with her prominent endorsers: Anna Eshoo and Zoe Lofgren from the United States Congress, former San Jose Mayor Susan Hammer, and Wilson, the former county supervisor, who resigns from COMPAC in protest of the mailers. They all criticize the Chamber for being "unethical." Chavez calls the campaign "disrespectful and dishonest." As the controversy builds over the next few months, this is the closest she or her supporters come to addressing the messages contained in the fliers. Instead, the commotion centers on Dando and how the Chamber funded the campaign. Fox Jr. of COMPAC says: "If you can't attack the facts, then you attack the messenger."

May 24
Chavez airs a television ad calling for ethics reform at City Hall—the first time in almost a year of campaigning that she's adopted this platform. The same day, Mike Fox Sr. creates a stir by announcing that "he will resign from the chamber where he once served as chairman." Ironically, Fox Sr.'s son (of the same name) chairs the COMPAC board that sponsored the mailers. The two simply disagree. Nanci Williams of the Chamber's board says she is puzzled by Fox Sr.'s declaration. "You can't resign as a former chair," she says. Fox Sr. also says he will pull his business membership, M.E. Fox & Company, from the Chamber. Fox Jr. says he and his father have spoken for "less than five minutes" about the matter. "I will remain a member of the Chamber on my own," he adds, "I don't plan on leaving."

May 25
Williams reads Terry Austen's resignation statement at the Chamber board meeting. The board chair and Kaiser executive is forced to step down because his company does not want to be affiliated with political activity. Williams, who replaces Austen as the chair, says the Kaiser executive did not want to leave (Austen did not return Metro's phone calls). Kaiser, meanwhile, remains a high-paying member of the Chamber. Political consultant and former labor leader John Neece also announces his resignation from the Chamber and COMPAC boards. In a later interview, he tells Metro that the mailers represented a "dramatic shift" from the days that business and labor worked closely together. Neece has supported Chavez for mayor, although he says he tries to be "low-key" about it. He also admits that, after 15 years, he had been planning to quit the Chamber in August anyway because he's "worn out" on 7:30am meetings. Williams and Dando say turmoil among Chamber and COMPAC members has been "grossly exaggerated." Williams says, "The media was reporting on a pandemonium that just wasn't taking place."

Although they are saddened to see a handful depart, they point out that the great majority of the 45-member COMPAC board and 60-member Chamber board stayed. Dando says she's received mostly positive feedback from the business community, telling her "it's about time the Chamber stood up for what it believed in."

May 31
The elections commission puts the heat on COMPAC in a hearing that comes only 16 days after the mailers were sent to San Jose voters. The independent investigator Moye has completed his report. COMPAC's attorney Jim Sutton, an elections law professor, requests more time to prepare his response. Commission chair Thomas Mertens denies the request. The commission determines that COMPAC's mailers do not contain "express advocacy" (lobbying specifically for or against a mayoral candidate), which is defined by using certain key words and subject to strict spending and reporting laws. Chavez supporters had alleged that the business group broke these laws; Ellis-Lamkins of the South Bay Labor Council even appears at the hearing to ask that the commission fine the Chamber several million dollars in order to "send a serious message about how you campaign in San Jose." Although the decision supports COMPAC's defense, commissioners criticize the group for supposedly wiggling through a loophole in the law. So they respond with a similar tactic: they find COMPAC in violation of a municipal code that is worded slightly differently for campaign contributions. In a complicated legal dance, Moye explains how COMPAC should be guilty of violating contribution limits (set at $250 per donor). The commission doesn't take Ellis-Lamkins' suggestion for a multimillion-dollar fine (that would be politically motivated, Mertens says), but they slap COMPAC with a penalty of $5,000 for each contribution that surpasses the limit. The commission has yet to view financial documents in order to determine how many infractions occurred. Chavez supporters say they feel vindicated.

June 6
The primary election narrows the field of five major mayoral candidates. Two remain: Councilmember Chuck Reed, with nearly 29 percent of the votes, and Chavez, with 23 percent. Chamber-endorsed candidate Mulcahy (who had nothing to do with the COMPAC mailers) finishes in fifth place. Insiders speculate about the mailer's effect on Chavez's campaign. Berg, the COMPAC consultant, says he believes the mailers made a difference, despite the backlash from Chavez supporters. "Cindy's spin people should get an award for their campaign," he says. "Frankly, I'm surprised the Mercury News was so gullible as to buy into it." Looking back, would he have changed anything about the fliers? "Not a thing," he says.

July 11
The Chamber's political arm maintains that its mailers complied with state and federal law. In response to the commission's judgment, COMPAC files a federal lawsuit against San Jose for violating its constitutional right of free speech. "The city is taking a course that will effectively silence the discussion of contentious public policy issues in San Jose," the lawsuit alleges, in an attempt to challenge the local election ordinance that it claims is too vague. "The law has to be clear so everybody knows how to follow it," says Fox Jr. "San Jose needs to go back to the drawing board."


The San Jose Chamber of Commerce drew fire from Chavez's supporters after mailing out 300,000 fliers to San Jose voters. See eight of these fliers.
Flier 1
Flier 2
Flier 3
Flier 4
Flier 5
Flier 6
Flier 7
Flier 8


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