Legislature(2005 - 2006)CAPITOL 106
03/23/2006 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB383 | |
| SB86 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 383 | TELECONFERENCED | |
| += | HB 354 | TELECONFERENCED | |
| += | SB 86 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 86-STATE/MUNI LIABILITY FOR ATTORNEY FEES 9:48:36 AM CHAIR SEATON announced that the last order of business was CS FOR SENATE BILL NO. 86(CRA)(efd fld), "An Act relating to the liability of the state and municipalities for attorney fees in certain civil actions and appeals." 9:49:45 AM CRAIG TILLERY, Deputy Attorney General, Civil Division, Office of the Attorney General, Department of Law, introduced SB 86 on behalf of the Senate Rules Committee, sponsor by request of the governor. He paraphrased his written testimony, as follows: Since territorial days, Alaska has had a statutory policy of requiring a losing party in most civil cases to pay a portion of the prevailing party's attorney fees. Soon after statehood, this policy was embodied in Civil Rule 82 by the Alaska Supreme Court pursuant to a legislative delegation. ... SB 86 addresses the use of state and municipal funds to subsidize certain types of litigation through awards of attorney fees to prevailing parties that are higher than the partial fees that are the norm in Alaska. The legislation would limit those enhanced awards to instances in which the legislature has made the policy judgment to provide for them by statute. Enhanced fee awards against state and municipal governments, which [are] the amount above normal compensation, represent a significant impact on the state treasury and, on a more irregular basis, on municipal funds. Ordinarily, the basis for these enhanced awards has been the judicially created public interest litigant policy, whereby selected litigants, suing to advance ends deemed by the court to reflect strong public policies, are granted full fees as a subsidy from the state treasury. For the state alone, over last 10 or so years, this has averaged about $600,000 per year above normal compensation. SB 86 would address this by creating a new provision in a chapter of title 9 that is devoted to immunities. It relies on the legislature's constitutional authorities to regulate suits against the state and to confer immunities on the state and municipalities, as well as on the doctrine of sovereign immunity. It sets limits on liability that are similar and essentially identical to those limits found in Civil Rule 82 that courts have found for years to represent fair partial compensation to a prevailing party. The limits do not apply to condemnation proceedings - and that's because payment of full attorney fees in a condemnation proceeding is a constitutional requirement - or in instances where the legislature has provided for the enhanced fee awards, for example, in a fair business practices-type case. There is also an exception allowing courts to enhance attorney fees as a sanction for misconduct by a party or by counsel. The immunity created by SB 86 is intended to do two things: One, it will save the state significant money each year, but, most importantly what it does, is to reassert legislative control over state expenditures to encourage litigation on public concerns, based on policy priorities that are determined by the legislature. MR. TILLERY said the proposed legislation was introduced in 2005 and has come across to the House from the Senate. He noted that there is also a companion House bill that is in the House State Affairs Standing Committee. 9:53:09 AM MR. TILLERY said since the bill was introduced, a couple cases of relevance have occurred: the ACLU case and the Bachner case. He said what these cases tend to demonstrate is "the creeping nature of the court's award of attorney fees against governments, essentially headed towards what appears to be full liability any time that the government would lose." Initially, he said, public interest litigant doctrine came about as a shield to prevent public interest litigants from having to pay attorney fees under Civil Rule 82. Later, however, the idea of a public interest litigant doctrine as a sword - where "they were entitled to enhanced fees" - was put into the court's doctrine, he said. Subsequently, the court expanded that doctrine to say, "You not only get fees for ... those items that you win, but if you win on anything, you get full fees ... for ... all of your work on the case." Mr. Tillery indicated that was the [Dansereau v. Ulmer 955 P.2d 916] decision. He said the court then expanded that decision to say, "Well, you don't actually have to win if you bring the case and the state or the government reacts in such a way that suggests that you were the catalyst for that action, then you can get your full fee." MR. TILLERY said one of the factors that has been the most effective in making any public litigant make sense is the fact that "you had to show that it was not an independent, sufficient, economic incentive to bring the case." He said the ACLU case dealt with benefits for state employees, and the court was faced with the request that "they be accorded public interest litigant status." He continued: There the court stated that certainly "the plaintiffs below contended that they were denied valuable benefits. We have implicitly recognized the benefits to which they're entitled are economically valuable." Nonetheless, the court went on to find that it was not a sufficient economic incentive, for the reason that the plaintiffs might change their domestic status in the future, before they actually got a benefit, or they might cease to work for the state. In essence, the court has said, "If you can imagine a contingency by which you will not get this benefit, then you don't have a sufficient economic incentive." In effect, that means that public interest litigant status would be accorded in all prospective litigation against the state and municipalities. That concern was heightened for us shortly after that in procurement case, where the losing bidder in a procurement sued and was afforded public interest litigant status, again, on the assumption, "Well, maybe [we'll] get the bid next time if ... it is tossed out." 9:56:15 AM CHAIR SEATON surmised, "The procurement case was then basically challenging the procedures that were used to go through a bidding process but didn't actually change the award of the bid. Is that the rationale behind that, or not?" 9:56:26 AM MR. TILLERY answered, "It challenged a procurement ... for an office building, and it tossed out the procurement and said you have to go back and rebid." 9:56:40 AM CHAIR SEATON concluded, "So, ... the court found faulty procedures that were followed by the state or a municipality, but it didn't actually award a bid to the prevailing party." 9:57:07 AM MR. TILLERY responded, "No, they have to go back and go through it." He added, "And by the way, ... that was a superior court case; the first one I mentioned was a supreme court decision." 9:57:24 AM REPRESENTATIVE GRUENBERG asked if the superior court opinion was appealed. 9:57:34 AM MR. TILLERY said it will be appealed. In response to a follow- up question from Representative Gruenberg, he said he would provide the "slip opinion number." Mr. Tillery summarized that the bill attempts to do two things: control the fiscal impact on the state and municipalities, and return to the legislature the right to set the policies as to when litigation will be subsidized. He said it is the view of the administration that it is the legislature that should do that, not the court system. 9:59:05 AM CHAIR SEATON asked, "Did we put an exemption exception in so that if there was a constitutional challenge - if the basis of the challenge was based on constitutional grounds - then those fees would be awarded?" 9:59:34 AM MR. TILLERY answered that four or five years ago, the legislature introduced House Bill 145, which included a provision that "a party would be entitled to full fees in a constitutional case if they didn't have independent economic incentive." He said House Bill 145 would be "an exception to this bill." He noted that [House Bill 145] was struck down by the [Alaska] Superior Court and is currently being considered by the [Alaska] Supreme Court. 10:00:13 AM CHAIR SEATON spoke of a case in 2002 that challenged reapportionment under constitutional grounds and resulted in one of the two largest attorney fees paid by the state in a public interest litigant case. He mentioned an amount of $2 million. He asked if any analysis has been done related to how many public interest litigant fees have been granted in the past based on constitutional grounds and whether there would be a reduction in attorney fees paid by the state in public interest litigant cases should the bill pass. 10:01:37 AM MR. TILLERY said he has not. He said to do so would involve going back and reading the decisions, which would be difficult. He explained, "Because the other thing that the bill does is it deals with the Dansereau problem by providing that you'd only get them on the actual claims that you raise that were on constitutional grounds. ... That's what [House Bill] 145 did also." He offered an example as follows: If you were to have ... an apportionment, or whatever, and you raised four grounds - two of them constitutional [and] two of them statutory - and you only won on the constitutional ground, then you would only get your fees for that portion. 10:02:23 AM CHAIR SEATON suggested that the year 2002 would readily show that "almost all of it was based on the challenge by a ... political party to the redistricting based on a constitutional challenge." He asked if that is correct. 10:02:47 AM MR. TILLERY replied that he is not familiar with that case; however, he offered his believe that redistricting has some statutory elements to it. 10:02:57 AM RANDY RUARO, Assistant Attorney General & Legislative Liaison, Legislation & Regulations Section, Civil Division (Juneau), Department of Law, confirmed, "There are statutes on it." 10:03:19 AM REPRESENTATIVE GRUENBERG directed attention to page [6] of 8 on the handout entitled, "Legislative Research Report February 17, 2006, Report Number 06.097" [included in the committee packet]. He pointed out the O'Callaghan v. Coghill case listed on the page and revealed that that was his case, which he won. He stated, "I do have a conflict of interest, having from time to time taken these cases, and I guess I should ask to be excused from participating ...." 10:03:48 AM REPRESENTATIVE LYNN stated his objection. 10:03:58 AM REPRESENTATIVE GRUENBERG, in response to a question from Chair Seaton, confirmed that the O'Callaghan v. Coghill case was on constitutional grounds. He added that subsequently the U.S. Supreme Court reversed that decision. REPRESENTATIVE GRUENBERG said if a public interest litigant loses, attorney fees cannot be awarded against that litigant. He offered his understanding that that is the current state of the law. MR. TILLERY responded that actually the legislature essentially abolished the public interest doctrine, "as the court had done," through House Bill 145. In response to a follow-up question from Representative Gruenberg, he confirmed that that doctrine was ruled unconstitutional by the superior court, but is the current state of law until the supreme court rules on it. 10:06:29 AM REPRESENTATIVE GRUENBERG said, "If you win, you get full attorney's fees under the current state of the law." He added that that is both at the trial court level and on appeal. He offered further details. 10:07:00 AM MR. TILLERY confirmed that Representative Gruenberg's statements were correct. 10:07:08 AM REPRESENTATIVE GRUENBERG said cases where there is a money judgment are not public interest cases, but are just run of the mill civil lawsuits. MR. TILLERY said that's correct. REPRESENTATIVE GRUENBERG proffered that normally under Rule 82, if it is a nonmoney judgment, the attorney gets a percentage of his/her actual attorney fees. He offered his understanding that the amount is 20 percent if the case does not go to trial and 30 percent if the case goes to trial and is won. REPRESENTATIVE GRUENBERG said on appeal the situation is quite different. He continued: The supreme court, on an appeal, is under an appellate rule, not Rule 82, and the appellate rule gives total discretion to the supreme court. ... They award very few attorney fees to anybody in a nonpublic interest case; ... it's generally somewhere between $500 and $1,000 .... So, it's almost a token, because it's a lot more expenses to take an appeal .... They determine whether you win an appeal as an appellate. Generally, if you prevail on a single issue, they would hold you as a prevailing party. They might not award you the full $1,000 - you might only get half of it, or something like that. REPRESENTATIVE GRUENBERG directed attention to page 2, lines 22- 24, which read as follows: (3) in an appeal in which the prevailing party does not recover a money judgment, 20 percent of the prevailing party's reasonable actual attorney fees that were necessarily incurred in litigating issues upon which the party prevailed. REPRESENTATIVE GRUENBERG explained: In an appeal now, if you're a prevailing party - even against the state - in an injunction or a declaratory judgment action, you'd only get something less than $1,000, which is far less than 20 percent. So, this, I believe, Mr. Tillery, ... might significantly increase the amount a prevailing party would get in a run-of-the-mill declaratory judgment appeal against the state. ... A typical appeal might cost $8-10,000 in attorney fees [for] actual time. ... Let's say there's a mine and they've closed the road, and you want an injunction to require the state to change their administrative decision so the road to the mine goes open. [You] pay $10,000 [and] you win on the appeal. Now you would only get $1,000 against the state, but you've spent ten grand in your ... successful appeal. Under this, you double the amount you'd get against the state, ... which I would support, by the way. You might actually find prevailing appellate in ... nonmoney judgment cases getting a higher amount against the state than you do under the current appellate rule. 10:11:17 AM MR. TILLERY responded to Representative Gruenberg's statements by saying, "This wouldn't affect that; this is only ... a cap on what the state will pay." He added that in cases where it would have given a thousand dollars, the supreme court presumably will continue to give a thousand dollars. He said, "What this would deal with was the situation where they ... might provide for full fees." 10:11:45 AM REPRESENTATIVE GRUENBERG asked Mr. Tillery if the intent of the bill is not to change court rules. 10:12:10 AM MR. TILLERY responded: [What] it basically finds is a matter of sovereign immunity - that the state will not be liable for more than this amount. Then the amounts that it has in here, as I'm sure you've noted, mirror Civil Rule 82. REPRESENTATIVE GRUENBERG said, "Except it doesn't mirror the appellate rule in the case I'm talking about." MR. TILLERY mentioned Appellate Rule 508. He said, "Courts have been ... a little bit all over the board, but the normal practice is to, by analogy, apply Civil Rule 82 standards ... to administrative appeals." He added, "And 508 applies to both of those." 10:13:07 AM REPRESENTATIVE GRUENBERG asked, "So, you're saying that in administrative appeals they apply Rule 82 both at the superior court and the supreme [court]?" 10:13:20 AM MR. TILLERY answered not on the supreme court; it would more typically give the $1,000, except in the case of public interest litigants. He explained, "This would simply set a cap on liability; it wouldn't change the court's normal practice." 10:13:40 AM CHAIR SEATON asked Representative Gruenberg to meet with the Office of the Attorney General on "these points that are really somewhat off the bill." He asked Mr. Tillery if public interest litigants have to win on the main issue, or if they can win on some small subsidiary issue and receive full attorney fees as if having won the main issue. He mentioned Hillman v. Nationwide. 10:14:59 AM MR. TILLERY replied that under Dansereau "you don't have to be the primary prevailing party." He said in that case, the court awarded full fees, even though the party won on only one of its three claims. He offered a couple other examples in: State v. Alaska Civil Liberties Union - a 1999 case, and another 1999 case involving the Cook Inlet areawide lease sale. 10:17:49 AM SCOTT A. BRANDT-ERICHSEN, Attorney at Law, Ketchikan Gateway Borough, said he is testifying on behalf of himself, using his 18-year experience in litigation and advice giving. He indicated that although it would make his job more frustrating if SB 86 "did away with the shield presented by the public interest litigant status," he thinks the way the bill is structured in "just doing away with the sword aspect" is a reasonable compromise. He told the committee that in his experience representing municipalities he has had six to seven cases over the years that have involved public interest litigant issues. MR. BRANDT-ERICHSEN described one case involving a two-way lawsuit. He said, "We were sitting in the middle with public interest litigants on both sides, assured that we would lose to at least one of them and have to pay full attorney fees with no prospect of getting our fees covered." He stated, "While that's an unusual case, the situation of facing litigation over an issue which may be of minor importance to the entity, but of significant concern in terms of the financial risk to the community involved, ...is a concern that I would like to see addressed." Mr. Brandt-Erichsen opined that SB 86 addresses this concern. He continued: The public interest attorney [fee] is not a court rule as it is now, and so it doesn't require an amendment to a court rule to achieve the things that this bill is seeking to achieve. The changes in this bill I don't believe would create a sufficient disincentive to public interest litigants to keep them from challenging governmental actions which they believe were taken improperly. I think we'll see a comparable number of challenges in the future if this bill is adopted, but the stakes for those challenges, for municipalities and for the state, will not be as lopsided. 10:23:03 AM MR. BRANDT-ERICHSEN, in response to a question from Chair Seaton, stated: There are occasionally issues where ... you realize there's a significant risk of litigation over the validity of the provision because there is a party that is either philosophically or economically motivated to challenge it. ... There's always a certain level of care, but the level of care that you take to try to ensure that you have covered all possibilities to avoid successful litigation by someone challenging the legislation or regulation is probably higher in those instances. These public interest litigant cases however - ... only about half of the ones that I've had have come up in the context of political issues, regulatory type, or law changes. Half of the ones that I have encountered have arisen out of administrative discharge of statutory duties, for example, the municipal clerk being charged with processing recall petitions. There are specific duties that the clerk is charged with carrying out, and someone challenging how those duties were carried out isn't really challenging legislation so much as that the action was not taken consistent with what the rules are. 10:24:59 AM CHAIR SEATON asked if there has been any heightened awareness or execution of those duties knowing that there could be public interest litigant challenges if the duties are not properly executed. 10:25:46 AM MR. BRANDT-ERICHSEN answered yes. He relayed that in most of the instances where public interest litigation develops, it tends to be in areas where there is certain controversy, for example, timber sales, recall issues, election contests, or certain legislation. He said the people who are not pleased with the way a particular policy issue was handled or with the decision that was made by an administrative official will look for anything they can find to try to get that decision reversed. He concluded, "And so, regardless of how careful you are, it will not prevent them from going to court to try and get it overturned anyway." 10:27:15 AM REPRESENTATIVE GRUENBERG recalled that Mr. Brandt-Erichsen had testified that SB 86 is designed to change certain court interpretations, thus, the court rule does not need to be amended. He said, "We find that quite often what we're dealing with is legislation designed to modify or reverse interpretations, say, of statutes. And the way the legislature works, if you're doing that, you amend the statute. And it's the same with a court rule; I don't see any difference." He asked Mr. Brandt-Erichsen what basis he had for the aforementioned statement. 10:28:16 AM MR. BRANDT-ERICHSEN clarified that he had meant that SB 86 would change a court interpretation; however, that interpretation "has not been reduced to a rule in one of the court rules." He explained, "The concept of public interest litigants and the way fees are awarded in public interest litigant cases is a construction of court decisions, rather than a rule, such as Rule 82. And so, while this legislation would have an interaction with prior court decisions, it does not change the court rules themselves." 10:29:07 AM REPRESENTATIVE GRUENBERG said he thinks that is an issue that should be examined, because normally the attorney fee provisions are an interpretation of the court rules. 10:30:43 AM REPRESENTATIVE GRUENBERG said he would like to know if Mr. Tillery and Mr. Brandt-Erichsen have opinions regarding whether a two-thirds vote or only a majority vote under the court's interpretive power would be necessary should the court rules be modified. 10:31:05 AM [SB 86 was heard and held.]
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