Legislature(1993 - 1994)
01/26/1994 01:15 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SCR 4 - REQUEST CHANGE IN RULE 82 FEES Number 053 KEVIN SULLIVAN, legislative aide to Senator Robin Taylor, Prime Sponsor of SCR 4, testified on behalf of the sponsor. He read from a prepared sponsor statement, which stated the purpose of this resolution is to petition the supreme court to review the special status afforded public interest groups in the award of attorney fees under Rule 82 of the Alaska Rules of Civil Procedure. Mr. Sullivan said that for all Alaskans, except special interest groups, Rule 82 provides partial repayment of attorney fees to the prevailing party by the losing party, and the rule is designed to discourage frivolous litigation and tends to reduce the judicial caseload as a result. He continued, saying the exception to this rule is public interest litigation; and based on the supreme court's exception for public interest litigants, Rule 82 provides an economic incentive to various groups to sue because full attorney fees are paid to the public interest group if they prevail, and no attorney fees are charged if it loses. MR. SULLIVAN explained this raises a number of public policy issues. He noted point number one: What is a public interest that the court is protecting with this rule 82 exception? He gave an example and asked if it was really in the public interest for environmental groups to sue to close down businesses in Alaska. He continued with point number two: How much of a legal subsidy is realized by these groups and who pays for it? His third point asked if it was good public policy to encourage litigation by groups the supreme court has decided to favor, and how much does the supreme court's policy cost the state of Alaska. MR. SULLIVAN said certain groups are being encouraged to litigate because the state is compelled by the court to partially fund those groups with money from other Alaskans, including appropriated funds from the state. MR. SULLIVAN summarized, saying as Rule 82 is currently interpreted by the court, certain parties are encouraged with significant economic incentives to bring litigation against the state. He asked whether the interest of the public is truly being served by these public interest parties, which is also at issue. He concluded, saying the state is being directed to subsidize these questionable public interest litigants at great expense to the public itself, and SCR 4 encourages the supreme court to review these issues. Number 137 REP. NORDLUND said that SCR 4, in the resolves, seems to be targeting those groups that somehow deal with or oppose mass resource development in the state. He asked if it was constitutional to target specific public interest groups. Number 160 MR. SULLIVAN replied that "targeting" was perhaps a different way of describing it, and the legislation lists a name of a group as an example; and from a constitution perspective it doesn't seem to particularly impact it. MR. SULLIVAN went on to say that the court, through case law, has come up with a determination on what is public interest litigation, and SCR 4 is simply a resolution asking the supreme court to review Rule 82 as it currently applies to public interest litigants. Number 192 REP. NORDLUND told the committee that it seems ridiculous to state "groups founded to oppose natural resource development" and ask if there are any environmental groups that would state that as their mission. Number 199 MR. SULLIVAN said he wasn't in a position to speak for what environmental groups may say in their mission statements, but that particular portion of the resolution is speaking to historically what has been presented in the courts by parties that were litigating specific situations in terms of trying to impede or inhibit further resource development. Number 208 REP. GREEN asked if an amendment might help Rep. Nordlund's concerns and suggested different wording. Number 218 REP. PORTER suggested it would be in the committee's best interest to hear all the testimony before proposing amendments. Number 217 REP. DAVIDSON asked Mr. Sullivan if he could expand on which litigant groups have gained significantly economic advantage as a result of bringing public interest litigation. Number 220 MR. SULLIVAN responded that the significant economic incentive is the fact that as Rule 82 currently stands, should the party lose they would not be obligated to pay for the reasonable attorney costs of the defendant because they are determined to be public interest litigants, so it is a net savings in retrospect instead as opposed to up-front. Number 254 REP. DAVIDSON asked Mr. Sullivan if from his perspective it is an economic gain for the group. Number 255 MR. SULLIVAN stated that should a case be brought, and it's determined that the case is without merit, under current law if the plaintiff was not determined to be a public interest litigant, then that entity would be responsible for a portion of the reasonable attorney fees of the defendant. He said by being classified by the court as a public interest litigant, they are not responsible for the payment of those fees to the other party. Number 279 REP. DAVIDSON said according to Mr. Sullivan's interpretation, people bring litigation because they know they can't win, but it will cost the people they are bringing the litigation against. Number 286 MR. SULLIVAN replied no, and said he is not asserting that any litigant is bringing a claim which they know they can't win; he's simply saying that public interest litigants, if they lose, are not responsible for the fees of the other party; therefore, that would enter into a decision on what claims to pursue. Number 303 RUSSELL HEATH, Executive Director, Alaska Environmental Lobby, testified against SCR 4. He said the Alaska Environmental Lobby is a coalition of twenty Alaskan environmental groups, and his organization represents their interests in the Alaska State Legislature. Mr. Heath described the differences between a public interest lawsuit and a private lawsuit, and said the vast majority of public interest lawsuits are against state and local governments, not against private individuals or corporations. He said this is because there is no citizen suit provision in Alaska statutes. Number 509 TROY REINHART, Executive Director, Alaska Forest Association (AFA), testified in favor of SCR 4. He said AFA believes the current exception to Rule 82, which allows public interest groups to file litigation without risk of paying legal bills of those being sued, if they lose, only promotes frivolous lawsuits. Mr. Reinhart said the current exception to Rule 82 is bad public policy and must change, and if Rule 82 was changed, it would level the litigation playing field, although it would still provide public access to the courts for those seeking to settle disagreements and would also ensure that so-called public interest groups cannot file lawsuits against companies or individuals without at least being confident of prevailing or being assessed court costs. REP. DAVIDSON asked Mr. Reinhart if AFA subscribes to the statement that was made in the sponsor's comments that the supreme court favors a certain group over another. Number 550 MR. REINHART answered that his concern is particularly with environmental litigation that has been filed against his industry, and AFA believes that the way the current situation is set up, it's an unlevel playing field where environmental groups have all of an upside and no downside, and it actually does promote litigation. Number 577 REP. NORDLUND reiterated that most of these lawsuits are filed against government, and certainly they have an effect on the timber industry. He asked Mr. Reinhart if by supporting this resolution he realized that he is asking the court to take away this exemption for all public interest groups, including the League of Women Voters, National Rifle Association, and so on. Number 591 MR. REINHART responded that his interest in this bill, and that of his organization, is on the environmental side and that's why he was there to testify. Number 595 EMILY BARNETT, Trustees for Alaska, testified against SCR 4, saying that the resolution has nothing to do with attorneys and everything to do with public rights and the integrity of our nation's democratic processes. Number 689 REP. PHILLIPS said it appears that Ms. Barnett questioned the validity of the statement that the supreme court has interpreted the Alaska Rule of Civil Procedure to allow litigation organizations to recover full attorney fees. Number 696 MS. BARNETT replied that she's not questioning that statement, she's questioning language that would have you believe it is solely environmental litigation firms that are getting this privilege under Rule 82. Number 713 MARY A. NORDALE, an attorney in private practice in Juneau and President of the Alaska Miner's Association, testified in support of SCR 4, saying SCR 4 requests the Alaska Supreme Court to grant equity among litigants regardless of which segment of the economy they represent when the litigation challenges activities for which the state is granted permits, that is permanent activities. Ms. Nordale continued by saying that at the present time the Alaska Supreme Court casts a protective cloak over those litigants representing recreation and fishing interests against litigants who represent other resource related interests. Ms. Nordale stressed that this apparent preference of some users over others is contrary to their concepts of equal protection. MS. NORDALE said the Alaska Miner's Association believes that under Article 8, Section 1, all litigants involved in the development of the state's resources, supporting or opposing, have equal and constitutionally protected interests and they should be treated equally. Number 755 REP. DAVIDSON asked Ms. Nordale how many companies or individuals in the mining community have had to suffer those kinds of losses as a result of being up against this unequal playing field. Number 765 MS. NORDALE replied that there have been several hundred miners injured substantially because of litigation. She said one thing that is important to remember in a lot of litigation relating to natural resources is that the law firms that represent the so-called public interest groups are law firms that are in the business of litigation and solicit their own clients, and when they can find an appropriate target client to act as a plaintiff in the case, then they move forward with the case. Ms. Nordale said they also use any victories they achieve as fundraising mechanisms. Number 785 REP. DAVIDSON asked if it was the court that determined if litigation was public interest litigation. Number 792 MS. NORDALE responded yes, and she thinks the court has so narrowly construed the language public interest that SCR 4 can send a very powerful message to the court that it's time it looked more broadly at the definition. Number 797 REP. DAVIDSON asked Ms. Nordale to expand on "narrowly construed." Number 798 MS. NORDALE replied that primarily the groups that the courts designate as public interest are those primarily involved in recreation and occasionally fishing. Number 801 REP. PHILLIPS observed that special interest groups run massive, nationwide campaigns for membership based on the sole fact that they are litigating this case against an entity, and this is a significant financial impact, and this is a significant judicial point the committee should be considering. REP. NORDLUND asked Ms. Nordale to clarify the point she was making about comparing mining or timber companies, and the interest of that company versus the interest of recreation and fishing interests. Number 814 MS. NORDALE said she's hoping she's making the case for allowing mining, recreation, fishing, timber, and so on, all to be treated equally as being in the public interest under our constitution. MS. NORDALE continued, saying often a litigation firm will find a target plaintiff they can represent, a private entity that would be put to the expense of defending themselves, not so much to target that particular entity, but to test a matter of public policy. Number 830 REP. NORDLUND said that a vast majority of the cases are environmental firms against the state or federal government. Number 833 MS. NORDALE responded that it always involves a private business as well, so it doesn't level the playing field. Number 842 REP. PORTER asked what was the wish of the committee. Number 850 REP. PHILLIPS moved to move SCR 4 out of committee with individual recommendations. Number 850 REP. NORDLUND cited his opposition to the bill, primarily because of the way it was drafted in the "Whereas's." Number 866 REP. DAVIDSON cited his opposition to SCR 4, and asked to hear from the supreme court on this issue. TAPE 94-9, SIDE B Number 003 REP. PORTER indicated his support for SCR 4, and said he believes the resolution is intended to be a reflection of the result of the supreme court's actions and decisions they've made. Rep. Porter said he intends to support the measure because most of the testimony seems to presume that the only access the public has is through costly litigation, and that's just not the case. He cited several avenues available to interested parties prior to having to litigate. REP. PORTER also said he believes the advantage flows to someone of a particular philosophy over someone else of a particular philosophy, and equity-wise he doesn't believe that's fair. He cited one of the unfairnesses as being that public litigants do receive full compensation for attorney's fees if they prevail, as opposed to any other litigant under Rule 82 that would get something between twenty and thirty percent. REP. PORTER concluded by saying that responsible development is in the public interest and this speaks against it, which is why he is going to vote for SCR 4. REP. PHILLIPS pointed out that not only is responsible development of our natural resources in the best public interest, it is also mandated in the constitution. Number 084 REP. PORTER called for a roll call vote on the motion. Rep. Green yes Rep. Kott yes Rep. Nordlund no Rep. Phillips yes Rep. Davidson no Rep. Porter yes SCR 4 WAS MOVED FROM COMMITTEE WITH INDIVIDUAL RECOMMENDATIONS.