Legislature(2003 - 2004)
03/28/2003 03:40 PM Senate RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 97-ATTY FEES: PUBLIC INTEREST LITIGANTS
CHAIR OGAN asked a representative from the Administration to
present the bill.
MR. CRAIG TILLERY, Assistant Attorney General with the
Department of Law (DOL), gave the following explanation of SB
97. This legislation relates to public interest litigants and
more generally to attorney fees, and it provides a specific
amendment to Civil Rule 82. A public interest litigant is a
doctrine developed by the Alaska Supreme Court, which provides
that if someone is deemed a public interest litigant in a case
and wins the case, the person is awarded full attorney's fees.
If the person loses the case, no attorney's fees are assessed
against him or her. If the person wins only a small portion of
the case, except in exceptional circumstances, there is no
apportionment for that issue so full attorney's fees are
awarded. In addition, under the catalyst theory, even if a
person does not win a small part of the case but the agency
might later adopt a change reflective of the lawsuit, the award
of attorney's fees might be assessed.
MR. TILLERY said the public interest litigant provision is not a
court rule; it was developed by the Alaska Supreme Court in case
law. It applies both to civil actions and to appeals. He said SB
183 was introduced and passed the Senate but not the House
during the last legislative session. It would have amended Rule
82 to remove the public interest litigant rule for anyone. SB 97
follows a similar approach but is limited to certain decisions
made by the Departments of Environmental Conservation, Natural
Resources and Fish and Game. Those decisions are coastal
consistency determinations, the adoption of regulations or
decisions for which there is an opportunity for public comment
and for administrative review of the decision. In those
circumstances, public interest litigants would be treated the
same as other litigants under the bill. In each of the above
named situations, the state already paid for extensive public
participation.
MR. TILLERY said one suggestion likely to be proposed as an
amendment is due to a glitch on his part. SB 97 should also
amend Appellate Rule 508, which has the public interest litigant
exception attached to it. He said one more section of SB 97 is
not specific to public interest litigants. Civil Rule 82
contains a fee variance in which, under certain circumstances,
one can get enhanced or lowered fees. SB 97 contains a provision
that says in those situations, if a fee is varied by an
increased award, the enhanced fees may only be awarded for
issues on which the party prevailed except in exceptional
circumstances. He pointed out the exceptional circumstances are
not defined in the bill but the Supreme Court term often uses
that term in its opinions to denote very rare circumstances.
MR. TILLERY said the purpose of SB 97 is several-fold. It is an
effort to balance the incentives in litigation between those who
would attack a state resource agency decision and those who
would defend it. It would change the law to force all litigants,
whether they be public interest litigants or not, to engage in a
cost benefit analysis that regular litigants must do prior to
filing a suit. In looking at the kinds of costs that DOL has
been required to bear over the last 6 or 7 years, in almost
every instance the entities that litigated against the state
with public interest litigant status are entities that are well
financed with a number of lawyers. Those entities can engage
very effectively in this kind of cost benefit analysis without
any disadvantage. Most public interest lawsuits are against the
state and they are costly. DOL has expended over $475,000 over a
7-year period. That money could be better spent elsewhere and
there is a risk that it could become a factor in state decision
making.
MR. TILLERY noted that public interest litigant fees are also
available against private individuals. That may or may not raise
the specter of inhibiting the private party's ability to resort
to the courts to defend a lawsuit and to take a certain position
and follow it to the end of the lawsuit. Depending on the size
of the entity, it may not be a big problem but, for even a
moderate sized corporation, fees can easily amount to $100,000.
He said DOL expects this bill to reduce excessive, unjustified
claims. The lack of apportionment of awards has resulted in
lawsuits where DOL has "the kitchen sink thrown at us and a lot
of other appliances." In a recent case, 84 separate points on
appeal were taken to Superior Court. The number of successful
points on appeal was zero. From that decision, 98 points were
taken to the Supreme Court on appeal. The case became moot and
the only remaining issue was whether the litigant would get
attorney's fees. The current system provides no incentive to
make a reasoned decision as to which counts should be pursued
and which should not. Attorney time to defend against non-
meritorious claims is costly to DOL.
MR. TILLERY said the philosophy of this approach is very
narrowly drawn. From FY 95 to FY 01, there were 32 fee orders.
Of those, only 10 would have fallen under this rule. This
approach does not discourage anyone from bringing a lawsuit or
restrict anyone's ability to do so; it only removes a positive
incentive to bring a large complex lawsuit and makes the
litigant decide the important issues upfront. Generally, they
all involve situations where there was already extensive public
involvement by the parties and a number of opportunities both to
be heard and for public review.
MR. TILLERY said under SB 97, the courts remain free to vary
awards under the civil and appellate rules for a variety of
reasons, such as the complexity of the litigation. However,
awards will no longer be varied because the party is a public
interest litigant.
CHAIR OGAN asked whether committee members had questions.
SENATOR ELTON said his understanding of what SB 97 accomplishes
is that in discrete incidences described, no attorney fees for
public interest litigants will be awarded unless the litigant
has followed a prescribed course of action for participation at
the administrative level. He asked if a court can make that
decision right now based on the circumstances.
MR. TILLERY said SB 97 does not prevent the award of attorney's
fees like other cases allow. However, if public interest
litigants lose, they pay attorney's fees like anyone else.
SENATOR ELTON said that can happen now.
MR. TILLERY said the Supreme Court has made it very clear once
the court deems a person a public interest litigant, it is
required to award full fees except in cases of vexatious
conduct, bad faith, and a few others.
SENATOR ELTON asked if the case of the 84 non-meritorious points
that grew to 98 on appeal would be considered vexatious.
MR. TILLERY said DOL would consider it a vexatious case but
DOL's experience has been that courts generally do not find
counts to be vexatious because they are devoid of merit. To be
considered vexatious, a case tends to require active bad faith
or some indication that the case was filed simply for the
purpose of harassment. DOL rarely gets the court to rule with it
on that issue.
SENATOR ELTON asked if the court would consider a case that is
totally void of merit to be vexatious.
MR. TILLERY said DOL has not found that the courts refuse to
award attorney's fees simply because a count is totally devoid
of merit.
SENATOR WAGONER asked if the $475,000 cost was the total expense
to the state.
MR. TILLERY said that $475,000 was expended on public interest
litigants that would most likely fit under this bill. The actual
cost for all public interest litigants during that period was
actually much greater. He said at least one of those cases was
$1 million. The $475,000 does not include the time spent by DOL
attorneys on cases that DOL believes were without merit and
would have been brought much more compactly if SB 97 were in
effect.
CHAIR OGAN asked who the typical litigants are in these cases
and who represents them.
MR. TILLERY said a solitary attorney brought the case with so
many counts that he mentioned. Most of the cases were brought by
organizations such as the Trustees for Alaska.
CHAIR OGAN said it would probably be unconstitutional to single
out an organization that repeatedly files these cases.
MR. TILLERY said in DOL's view, targeting the bill in the way
Chair Ogan suggested would be constitutionally problematic. He
said that SB 97 does not go after an individual or party. It
focuses on a type of case where these fees are not available,
such as consumer protection cases. This prescription against
public interest litigants would apply equally to the Trustees
for Alaska and to the Pacific Legal Foundation, which might
bring a case on behalf of an industry that is attempting to
develop a project.
SENATOR BEN STEVENS asked Mr. Tillery if any public interest
litigant has ever brought each department to trial separately,
and how many times a public interest litigant has the
opportunity to take the state to trial.
MR. TILLERY replied cases can be complex and can be brought
serially and often.
SENATOR BEN STEVENS asked if the same public interest litigant
brings the suit each time.
MR. TILLERY said it could.
SENATOR BEN STEVENS asked if that has happened.
MR. TILLERY said he thought an ongoing case was the Forest Oil
case but that is not the only one. He explained that one suit
might be filed during the exploration phase and another during
the planning phase.
SENATOR BEN STEVENS asked if there is legal justification for
taking a case to each individual department or whether that is a
stall tactic.
MR. TILLERY said he believes the litigants are frequently forced
to file cases in a serial fashion because decisions tend to be
phased over a number of years. One can't sue over a production
decision that was not made two years ago while the exploration
aspects were being addressed. Litigants have a limited amount of
time to sue once a decision is made, even though the litigant
might prefer to wait and combine lawsuits.
SENATOR SEEKINS asked how one establishes public interest
litigant status.
MR. TILLERY said the court uses a number of factors to make the
determination. Those factors include whether the litigant is
advocating public policy or whether a large number of people
will be affected. The court looks to see whether there would be
enough of an economic interest that the litigant has an
incentive to bring the case on his or her own.
SENATOR SEEKINS asked if that status is difficult to establish.
MR. TILLERY said public interest litigant status is not
something that happens every day, but the courts are comfortable
making that decision.
SENATOR SEEKINS asked if he had a personal interest in a
situation and found a friend who did not, whether it is
conceivable he could get his friend to become a public interest
litigant while Senator Seekins helped fund the case.
MR. TILLERY said first of all the friend may not have standing
to bring the case. Second, the court tends to look at whether
the case is the type in which a person might have an economic
interest.
SENATOR SEEKINS asked if there are any disclosure requirements
about who is paying for the case.
MR. TILLERY said he did not know, but the party in litigation is
a matter of public record, as well as the attorneys.
SENATOR SEEKINS said he was wondering if he could have his
mother front the case while he funded it without any requirement
for disclosure.
MR. TILLERY said to his recollection, Senator Seekins' mother
could be the litigant, and DOL could inquire into her finances
if she asked that the fees be waived. He said it would be
difficult to find out who might be financing her. If Senator
Seekins' mother had an economic interest in the case, it would
not be likely to be a public interest litigant case.
5:37 p.m.
SENATOR SEEKINS said he asked because the only name that has
been brought up is the Trustees for Alaska. That organization
may be funded by an outside environmental extremist organization
just to slow down progress in the state. He asked if there is
any way to know who might be behind such a case.
MR. TILLEY said he believes the Trustees makes its activities
public record on its website.
CHAIR OGAN commented that perhaps a better disclosure method
should be considered. He noted with no further questions, he
would put this measure into a subcommittee. He appointed Senator
Seekins as chair of the subcommittee, and Senators Stevens and
Elton as members. He encouraged participants to contact Senator
Seekins' office for the schedule of subcommittee meetings. He
then took public testimony.
MR. TOM CRAFFORD, Alaska Miners' Association (AMA), said he
thought Mr. Tillery did an excellent job of summarizing the
benefits of SB 97. He said the AMA believes this bill will
create a level playing field and reduce the incentives to bring
lawsuits that are aimed at delaying development projects. Given
the seasonality of much of the work in Alaska, a lawsuit can
delay a project for a year and the expense that can cause to a
company can far exceed the attorneys' fees. He stated support
for SB 97.
MR. GARY CARLSON, Senior Vice President of Forest Oil
Corporation, stated support for SB 97. He told members that the
Alaska Supreme Court through judicial decisions created the
public interest litigant doctrine. It provides special treatment
for certain litigants chosen by the Supreme Court when it comes
to awarding attorneys' fees. This doctrine has been applied
against the state and private parties who have been sued by the
public interest litigants. It is time for the legislature to
step in and assert its authority over this area. The public
interest litigant doctrine represents policy making by the
Supreme Court on issues that are the province of the legislature
to decide. SB 97 levels the playing field and prohibits the
courts from discriminating against litigants appearing in state
courts. It does so without amending existing court rules, in
particular Civil Rules 82.
MR. CARLSON asked that the public interest litigant doctrine be
abrogated because it provides a perverse incentive for
environmentalists and other interests opposed to development
activities in Alaska to sue the state and private companies to
stop projects of great benefit to Alaskans. The public interest
doctrine is tailor made for environmentalists and other anti-
development litigants who qualify for public interest litigant
status virtually as a matter of law. These litigants face almost
no risk in bringing the most frivolous challenge to a state
approved project. If they win on any issues, no matter how
trivial, they hit the jackpot and receive full attorneys' fees.
Such decisions are not only costly to the state, but they
operate as a disincentive for responsible companies to do
business in Alaska. He said the Redoubt Shoal development
project is a good example. He described problems Forest Oil has
encountered with litigation of that project.
CHAIR OGAN asked Mr. Carlson what the costs of the delays to
Forest Oil's project cost the company.
MR. CARLSON said it is difficult to characterize the exact
amount because Forest Oil tried to make good use of its time
while the Supreme Court shut down its operation. However, the
cost was well in excess of $1 million.
CHAIR OGAN asked how long Forest Oil has been operating in
Alaska.
MR. CARLSON said Forest Oil started operations in Alaska in
1997.
CHAIR OGAN asked Mr. Carlson if he believes Alaska's public
interest litigant policy is a disincentive to attracting new
investment to the state.
MR. CARLSON said it is. It destroys value and provides
uncertainty. When a company comes to Alaska, complies with what
the state has asked it to do, and is then shut down for certain
periods of time because of these lawsuits, it is definitely a
disincentive.
CHAIR OGAN thanked Mr. Carlson and took further testimony.
MR. NEIL MACKINNON, Vice Chair of the Alaska Minerals
Commission, told members that it is no coincidence that this
legislation is the Alaska Mineral Commission's first
recommendation in its annual report this year. He said the
members of the commission felt strongly that this is a serious
problem companies are facing day in and day out. He pointed out
the second part of the commission's recommendation is to require
disclosure of funding sources. He told members that in 1999, the
Trustees for Alaska were awarded $84,639 in court awarded
attorney's fees. He said attorney's fees should also be paid by
organizations that file frivolous lawsuits. He pointed out that
the Trustees for Alaska spent $464,000 providing free legal
counsel and advocacy to protect and sustain Alaska's natural
environment. The Trustee's assets on 9/30/99 were $138,959,
which is substantially more than some of the companies it is
suing. He said companies want financial equality before the law,
yet public interest litigants often have more assets than any of
the mining companies. He asked that the subcommittee look into
expanding the legislation to include financial disclosure.
CHAIR OGAN commented that a few years ago members of the
Sakhalin Duma visited Alaska. He told those members about the
public interest litigant doctrine; they were completely baffled
by it. He then asked Mr. MacKinnon how he would respond to
accusations that without the public interest litigant doctrine,
companies will pollute the earth and poison everyone with toxic
chemicals.
MR. MACKINNON said this bill is fairly limited as it only deals
with state issued permits, for which massive hearings are held
and public comment is taken. He said these cases do not
represent the kind of case where the little guy is fighting the
huge evil company.
CHAIR OGAN said that groups like the Sierra Club have raised so
much money for the ANWR issue, they could easily afford to pay
for litigation.
MR. MACKINNON repeated that a person who is fighting an evil
company will not be hindered in any way by this legislation
because a person who brings a case with merit is not precluded
from collecting attorney's fees.
MS. PAM LABOLLE, President of the Alaska State Chamber of
Commerce, stated strong support for SB 97. She said that public
interest litigant status is a special one granted to a certain
group of Alaskans over the interests of other Alaskans. This
status was not created by the elected representatives through
the recognized public process, the legislature, but instead was
created by the courts. Under this special status, litigants are
provided exemption from their requirements of Rule 82. The
Alaska State Chamber worked very hard to get Rule 82 into law.
The Chamber feels the public interest litigant doctrine came
into being through the courts in 1990 as a result of the
Anchorage Daily News vs. the Anchorage School District case.
TAPE 03-19, SIDE A
MS. LABOLLE said these groups are often special interest groups
posing as trusts. Such challenges typically allege as many as 15
to 20 specific deficiencies in the state's administrative
finding and when the groups challenging the resource development
decisions prevail, they generally do on one or two issues.
However, they are awarded the full costs and attorney's fees.
MS. LABOLLE said SB 97 will return fairness to civil
proceedings. Under Rules 82, the court is allowed to raise or
lower the amount to be awarded based upon the established
factors. The rule should be applied equally to all litigants.
She urged the committee to support and pass SB 97.
MS. DEBORAH GREENBERG, Executive Director for Trustees for
Alaska, told members she submitted written testimony for
members' consideration. The Trustees asks to participate in
Senator Seekins' subcommittee and to be notified of those
hearings.
There being no further testimony, SENATOR SEEKINS asked if the
subcommittee will be working on Version A and whether the
proposed amendment has been adopted.
CHAIR OGAN said that is correct and that he feels it is best for
the subcommittee to look at the proposed amendment. With no
further business before the committee, he adjourned the meeting
at 5:55 p.m.
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