Legislature(2005 - 2006)CAPITOL 124

02/17/2005 08:00 AM House COMMUNITY & REGIONAL AFFAIRS

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08:05:17 AM Start
08:06:00 AM Overview: Aidea/aea
08:52:30 AM HB117
09:25:51 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Bills Previously Heard/Scheduled
HB 117-STATE/MUNI LIABILITY FOR ATTORNEY FEES                                                                                 
8:52:30 AM                                                                                                                    
CO-CHAIR THOMAS announced  that the final order  of business would                                                              
be HOUSE BILL  NO. 117, "An Act  relating to the liability  of the                                                              
state  and  municipalities  for  attorney fees  in  certain  civil                                                              
actions and appeals; and providing for an effective date."                                                                      
8:52:52 AM                                                                                                                    
CHRISTOPHER  KENNEDY,  Assistant Attorney  General,  Environmental                                                              
Section,   Civil   Division  (Anchorage),   Department   of   Law,                                                              
explained  that Alaska  is  unique in  that  winning litigants  in                                                              
civil  lawsuits  in  Alaska  receive a  partial  recovery  of  the                                                              
attorney  fees at  the end  of the  case.   Usually, the  attorney                                                              
fees are 20 percent  of a money judgment or less  or 20-30 percent                                                              
of the actual  attorney fees that were reasonably  incurred by the                                                              
other side.   This  legislation addresses  a special  circumstance                                                              
by which Alaska  courts have been awarding enhanced  fees, that is                                                              
full  fee  recovery,   to  public  interest  litigants.     Public                                                              
interest litigants  are those people who, as  the court determines                                                              
subjectively,  are in  pursuit of  strong public  policies.   Over                                                              
the last 10 years,  the amount paid under these  enhanced attorney                                                              
fees has averaged  approximately $600,000 annually.   He clarified                                                              
that  the  aforementioned  amount  of enhanced  attorney  fees  is                                                              
beyond  the  20-30 percent  that  would  normally  be paid.    The                                                              
Supreme  Court  created  this public  interest  litigant  doctrine                                                              
over time,  beginning in  the 1970s,  and it  was expanded  in the                                                              
late  1990s.    The  public  interest   litigant  doctrine  allows                                                              
parties  to  recover   full  attorney  fees  from   the  state  or                                                              
municipality, even  when they don't prevail in many  of the claims                                                              
brought.  He cited  the 1999 case of the American  Civil Liberties                                                            
Union  v. State,  relating  to the  1996  campaign finance  reform                                                            
law,  as  an  example.   The  Department  of  Law  feels  that  it                                                              
successfully  defended the  campaign  finance reform  law in  most                                                              
respects  and  was  able  to  preserve  most  of  its  provisions.                                                              
However,   the  American   Civil   Liberties   Union  (ACLU)   was                                                              
successful in  two provisions of  the campaign finance  reform law                                                              
and  was  able  to  recover  all   of  its  fees  for  the  entire                                                              
challenge.  The fees recovered amounted to $131,000.                                                                            
MR.  KENNEDY pointed  out  that  HB 117  creates  a new  provision                                                              
capping attorney  fees against governments in the  state, and thus                                                              
no enhanced  awards would  be available.   This provision  further                                                              
provides  that for  civil  actions  or appeals  in  which a  money                                                              
judgment  is  recovered,  the  state  municipalities  wouldn't  be                                                              
liable to  pay more  than 20 percent  of the  amount of  the money                                                              
judgment  as an attorney  fee [award  to the  adverse party].   He                                                              
opined  that the  aforementioned  cap would  rarely occur  because                                                              
it's unusual  to receive enhanced  attorney fees in a  money case.                                                              
The legislation also  places a cap in civil actions  with no money                                                              
judgment.   For  example,  the attorney  fees  awarded  in a  case                                                              
about a  regulatory decision  that goes to  trial would  be capped                                                              
at  30 percent  of  the  party's  reasonable and  actual  attorney                                                              
fees.   However, if  the aforementioned case  didn't go  to trial,                                                              
the  award  would   be  capped  at  20  percent   of  the  party's                                                              
reasonable attorney  fees.  The same  limit would be in  place for                                                              
appeals, he  related.   Mr. Kennedy  noted that these  limitations                                                              
wouldn't apply when  statutes specify otherwise or  when the court                                                              
determines there  should be enhanced attorney fees  as a sanction.                                                              
For  example,  if   there  had  been  misconduct   by  the  state,                                                              
municipality,  or the  attorneys.   The  limitation also  wouldn't                                                              
apply in cases relating to eminent domain.                                                                                      
MR. KENNEDY related  that the rationale behind the  immunity is to                                                              
protect the state  and municipal treasuries.  He  characterized it                                                              
as  a  money-saving  measure.   Furthermore,  it  returns  to  the                                                              
legislature  the authority  to make the  policy choices  regarding                                                              
what  types  of  litigation  to  subsidize.   He  noted  that  the                                                              
immunity can be waived by specific statute.                                                                                     
9:01:44 AM                                                                                                                    
CO-CHAIR THOMAS turned  attention to the fiscal  note, and related                                                              
his  understanding that  a fiscal  note  specifying savings  would                                                              
show the  savings in  brackets.   However, this  fiscal note  is a                                                              
zero fiscal note.                                                                                                               
MR. KENNEDY  suggested that the  $600,000 could possibly not  be a                                                              
savings to the  Department of Law because these  cases are against                                                              
various state agencies.                                                                                                         
CO-CHAIR  THOMAS, upon counsel  from staff,  related that  usually                                                              
these [awards] would be funded in supplemental appropriations.                                                                  
9:03:07 AM                                                                                                                    
REPRESENTATIVE  CISSNA  pointed  out that  the  legislature  talks                                                              
about  accountability a  lot.   She  opined  that the  legislature                                                              
needs to  be accountable.   She  said she  would be reviewing  the                                                              
balance of powers and recourse to the public.                                                                                   
9:04:16 AM                                                                                                                    
MICHAEL MACLEOD-BALL,  Executive Director, Alaska  Civil Liberties                                                              
Union (AkCLU),  paraphrased from  the following written  testimony                                                              
[original punctuation provided]:                                                                                                
          We oppose HB 117 (SB 86) on the grounds that it                                                                       
     will have  a chilling effect  on the ability  of parties                                                                   
     acting  in   the  public   interest  to  challenge   the                                                                   
     inappropriate   exercise  of   governmental   authority.                                                                   
     Further,  the   bill  will  tend  to  widen   the  legal                                                                   
     advantage  currently  held   by  governmental  litigants                                                                   
     over private individuals.                                                                                                  
          The typical plaintiff in a public interest                                                                            
     lawsuit   is  an  individual,   a  non-profit   advocacy                                                                   
     organization,  or   a  charitable  organization.     The                                                                   
     typical  defendant  in such  a  suit is  a  governmental                                                                   
     entity  - usually the  federal or  state government  due                                                                   
     to the nature  of the issues commonly litigated.   There                                                                   
     can be  no dispute  that the typical  suit pits  a party                                                                   
     with  limited  financial  resources  who needs  to  hire                                                                   
     outside  counsel  against  a  governmental  entity  with                                                                   
     access  to  substantially greater  financial  and  legal                                                                   
     resources.    As  often  as not,  the  dispute  is  over                                                                   
     principle and not over money.                                                                                              
          Compare this to any other type of litigation.                                                                         
     First,  private  suits  almost always  involve  a  fight                                                                   
     over money  or property  interests.  Typically,  general                                                                   
     civil  litigation  pits  business  against  business  or                                                                   
     individual  against  individual.   Certainly  there  are                                                                   
     disparities  in each  party's ability  to cope with  the                                                                   
     costs   of   litigation  -   but   it's  a   matter   of                                                                   
          The public interest litigant, therefore, is                                                                           
     financially  disadvantaged and  typically does not  have                                                                   
     the prospective  benefit of a  money damages award.   As                                                                   
     a result,  attorneys are not  readily available  to take                                                                   
     on  such cases  without sizable  retainers -  it is  not                                                                   
     profitable  for them to  do so.   Therefore, the  public                                                                   
     interest  litigant is  legally disadvantaged  as well  -                                                                   
     because  the  governmental  adversary will  always  have                                                                   
     counsel  on board  from the  start.   In  his letter  of                                                                   
     transmittal,  the  Governor  complains that  the  public                                                                   
     interest  litigant is  being subsidized  by the  current                                                                   
     system  of attorney  fee reimbursement.    But, bear  in                                                                   
     mind  that the  public interest  litigant only  receives                                                                   
     reimbursement  if a) he or  she is acting in  the public                                                                   
     interest  and b)  he  or she  is successful  in  showing                                                                   
     that the government  acted wrongly.  On the  other hand,                                                                   
     the  government  gets  its subsidy  from  the  taxpayers                                                                   
     whether it wins  or not.  It's not as if  the individual                                                                   
     within  the  government  who caused  the  government  to                                                                   
     violate  the victim's  rights is made  to reimburse  the                                                                   
     taxpayers  for   the  internal  costs  of   running  the                                                                   
     government   in  a  manner   violative  of  the   public                                                                   
     interest.   The key is to  set up a system  that doesn't                                                                   
     reward  improper  behavior   -  and  there  will  be  no                                                                   
     incentive  for  the  government  to  stop  inappropriate                                                                   
     action if there  is no one willing to speak  out against                                                                   
     such action through public interest legal action.                                                                          
          Who will this bill affect?  It will affect those                                                                      
     in our society  least able to afford it -  the poor, the                                                                   
     uneducated,  the minorities,  the disabled, the  elderly                                                                   
     -  all  of  whom have  benefited  from  public  interest                                                                   
     litigation  at one time  or another -  and many  of whom                                                                   
     would  not  have been  able  to  bring such  actions  in                                                                   
     their  own right.   It won't  make a  difference to  the                                                                   
     wealthy individual  who funds a public  interest lawsuit                                                                   
     - for  such individuals,  attorney fee reimbursement  is                                                                   
     not a consideration.   Rather, this law  will discourage                                                                   
     normal,   everyday  people   from  trying   to  make   a                                                                   
     difference  when they see the  government failing  to do                                                                   
     its  job.     If  this  bill  becomes  law,   the  state                                                                   
     government will  be able to rest easier that  it can act                                                                   
     against  the public  interest  because it  will be  less                                                                   
     likely to be held to account for its wrongful actions.                                                                     
          In short, this bill is presented as if the                                                                            
     government  is unfairly required  to pay for  a vengeful                                                                   
     individual's lawsuit  against the state.   Nothing could                                                                   
     be  further from  the truth.    This bill  will make  it                                                                   
     harder  for someone  acting  in the  public interest  to                                                                   
     force   the  government   to  comply   with  its   legal                                                                   
     obligations.    We  strongly  urge you  to  reject  this                                                                   
9:08:33 AM                                                                                                                    
CO-CHAIR  THOMAS  asked  if the  public  interest  litigant  fully                                                              
reimburses the state for its costs when the state wins the suit.                                                                
MR.  MACLEOD-BALL  deferred  to  the  attorneys  that  would  know                                                              
better,  but  related  his  understanding   that  public  interest                                                              
litigants don't  have to  compensate the  other side for  attorney                                                              
fees.    However,  he  reminded  the committee  that  there  is  a                                                              
provision available  for the courts to impose when  a frivolous or                                                              
egregious lawsuit is filed.                                                                                                     
9:09:30 AM                                                                                                                    
KAREN   BRETZ,   Attorney;   Secretary/Treasurer,   Alaskans   for                                                              
Efficient  Government,  stated her  opposition  to  HB  117.   Ms.                                                              
Bretz, speaking  from her experience  as an attorney,  opined that                                                              
many  organizations and  individuals  that  claim public  interest                                                              
litigant status lack  the resources to pay for  their own attorney                                                              
fees  in this  type  of litigation.    By definition,  the  public                                                              
interest litigant  has no  or little  financial interest  to bring                                                              
the  suit.   However,  the government  bodies  against which  they                                                              
bring suit  have unlimited  resources and  the ability  to prolong                                                              
the litigation.   "They  have, in  essence, the  power to  squeeze                                                              
the public interest  litigant to abandon the litigation  or to not                                                              
even bring  it from  the state,"  she stated.   Attorneys  take on                                                              
public interest  litigation cases  with the understanding  that if                                                              
the  client  wins,  then  his/her  fees  will  be  reimbursed  100                                                              
percent.   Therefore, without the  public interest  litigant rule,                                                              
it's  unlikely  the  attorney  would  recover  his/her  full  fees                                                              
because the  public interest litigant  doesn't have  the resources                                                              
to  pay.   Ms.  Bretz  opined  that the  current  public  interest                                                              
litigant law  places the public  interest litigant on a  more even                                                              
playing field  than the proposal  in HB  117.  She  further opined                                                              
that changing  the current law  will prevent many  worthy lawsuits                                                              
from being brought.                                                                                                             
CO-CHAIR THOMAS  restated his  earlier question regarding  whether                                                              
the  public interest  litigant would  pay the  attorney fees  when                                                              
the governmental entity wins the case.                                                                                          
MR.  BRETZ replied  no.   The  public  interest  litigant is  only                                                              
responsible  for the governmental  entity's  attorney fees  if the                                                              
court  finds  that  the  litigation  is  frivolous.    In  further                                                              
response to  Co-Chair Thomas,  Ms. Bretz  related her  belief that                                                              
it would be rare  that the court finds public  interest litigation                                                              
cases  to   be  frivolous  because   many  attorneys   won't  take                                                              
frivolous litigation.   In response  to Co-Chair Olson,  Ms. Bretz                                                              
said  that to  the  best of  her  knowledge,  the public  interest                                                              
litigant  hasn't  ever  paid the  governmental  entity's  attorney                                                              
fees in public interest litigation.                                                                                             
9:12:46 AM                                                                                                                    
UWE KALENKA,  President, Alaskans  for Efficient Government,  said                                                              
that the  previous witnesses have spoken  well on this  issue.  He                                                              
commented, "All  I have to  say is that  $600,000 a year  spent on                                                              
attorney  fees is  a  small price  to  pay for  justice.   If  you                                                              
really need to save  some money, let's start on the  jet that cost                                                              
$1.4 million  so we  can finance this  litigation for  three years                                                              
to help the underprivileged  in our society."   Mr. Kalenka stated                                                              
his opposition to HB 117.                                                                                                       
9:13:52 AM                                                                                                                    
KEN JACOBUS,  Attorney, noted his  agreement with  other testimony                                                              
[in opposition  to HB 117].   He highlighted that in  "our system"                                                              
there  are  checks and  balances  such  that the  legislature  and                                                              
municipal  assemblies enact  the laws  and the  courts review  the                                                              
laws.   He explained  that the courts  can't merely  say a  law is                                                              
bad and  review it, rather  a plaintiff has  to bring a case.   He                                                              
estimated that 99  percent of the [public interest  litigants] are                                                              
involved on  the basis of  principle.  He  noted that most  of the                                                              
people he  represents don't  have the money  to carry  forward the                                                              
suit.    The   idea  behind  public  interest   litigation  is  to                                                              
encourage  the  checks  and  balances.     Therefore,  the  public                                                              
interest litigant  isn't placed at risk  of losing a lot  of money                                                              
but  rather is  allowed the  financial  ability to  take the  case                                                              
forward.   He  noted that  most of  the people  he represents  are                                                              
initiative petitioners.   The most recent initiative  case was the                                                              
Matanuska Valley  tax cap.  Mr.  Jacobus opined that HB  117 harms                                                              
the public  interest litigants  more than  the previous  bill that                                                              
two  superior courts  held were  constitutionally  improper.   Mr.                                                              
Jacobus encouraged  the committee not  to enact HB 117  because it                                                              
creates further  problems in  an area that  is already  before the                                                              
Alaska Supreme Court.                                                                                                           
9:17:38 AM                                                                                                                    
DALE BONDURANT,  Alaska Constitutional Legal Defense  Fund, stated                                                              
that the Alaska  State Constitution is the best in  the Union.  He                                                              
highlighted the following  portion of Article 1, Section  1:  "all                                                              
persons have  corresponding obligations  to the people and  to the                                                              
State."   Mr.  Bondurant informed  the committee  that the  Alaska                                                              
Constitutional  Legal Defense  Fund has been  a successful  public                                                              
interest litigant  in all if its  cases before the  Alaska Supreme                                                              
Court.    He  reviewed some  of  the  [public  interest  litigant]                                                              
decisions  [with which  he has  been  involved] such  as:   Peyton                                                            
(ph);  McDowell(ph); Gulkana  River(ph); Totemoff(ph);  Oshik(ph).                                                      
Mr. Bondurant  said that  the 14th  Amendment of the  constitution                                                              
says, "That  those who are elected  or selected ...  support those                                                              
who are willing  to act responsible interest litigants."   He went                                                              
on to  say, "We, therefore, request  that those who  are selected,                                                              
including  the  governor  ... and  legislatures  and  the  general                                                              
public  be  supportive  of  Alaska's  constitution  and  the  14th                                                              
Amendment.  We find  that, in fact, proposing changes  to both the                                                              
Alaska  Constitution  and  the   US  Constitution  without  proper                                                              
citizenships'  right   to  vote  on  such  important   issues  are                                                              
denied."  Mr.  Bondurant concluded by noting his  opposition to HB
9:21:15 AM                                                                                                                    
KATHIE  WASSERMAN, Alaska  Municipal  League  (AML), reminded  the                                                              
committee  that  municipalities  are  involved  in  these  [public                                                              
interest] suits.   She recalled that two witnesses  specified that                                                              
municipalities have  unlimited means to fight lawsuits.   However,                                                              
she estimated that  two-thirds of the municipalities  in the state                                                              
don't  even  have  attorneys  or  have  the  money  to  secure  an                                                              
attorney.   Ms. Wasserman stated  that any lawsuit would  harm the                                                              
public interest in the community.                                                                                               
9:22:21 AM                                                                                                                    
REPRESENTATIVE CISSNA  inquired as  to how many local  governments                                                              
have  been sued  as  compared to  the  suits  brought against  the                                                              
state government.                                                                                                               
MS. WASSERMAN said that she didn't know.                                                                                        
9:23:17 AM                                                                                                                    
REPRESENTATIVE   CISSNA   requested  information   regarding   the                                                              
experience  local  governments   have  had  with  public  interest                                                              
litigant cases as compared to the state government.                                                                             
MS.  WASSERMAN clarified  that she  isn't  advocating taking  away                                                              
the ability  for the public to  bring action against  wrong doing,                                                              
but  merely  wanted to  be  sure  that everyone  understands  that                                                              
municipalities  could  be  devastated  if  they have  to  hire  an                                                              
attorney.   Ms. Wasserman, in  response to Co-Chair  Olson, agreed                                                              
to  contact  Mr.  Tom Boedeker,  the  head  of  AML's  legislative                                                              
subcommittee.     In  response   to  Representative   LeDoux,  Ms.                                                              
Wasserman agreed  to provide information  regarding the  amount in                                                              
enhanced attorney  fees paid by municipalities that  have lost [in                                                              
public interest litigant cases] over the last five years.                                                                       
[HB 117 was held over.]                                                                                                         

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