Legislature(1999 - 2000)
04/15/1999 01:24 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 176 - PUBLIC INTEREST LITIGANTS CHAIRMAN KOTT announced that the next item of business would be House Bill No. 176, "An Act relating to attorney fees and costs and the granting of public interest litigant status in proceedings related to administrative actions and inactions; and amending Rules 79 and 82, Alaska Rules of Civil Procedure, and Rule 508, Alaska Rules of Appellate Procedure." Present to explain the bill and answer questions were Jeff Logan and Kevin Jardell, staff to Representative Green. Number 1786 JEFFREY LOGAN, Legislative Assistant to Representative Joe Green, Alaska State Legislature, spoke on behalf of the sponsor, saying HB 176 is designed to "take the 'kick me' sign off of our backs." Noting Alaska's resource development economy, he said the state leases, sells, rents or somehow disposes of its resources, and then collects a royalty, rent, tax, fee or other form of payment to fund government services. To protect the public interest, the legislature has spelled out a process that is carried out by the Administration. There are three stages of notice; integrated throughout are opportunities for extensive public involvement. The people who carry out this process are almost always people with impressive academic credentials, experience in their fields, and dedication to public service, he said. There is a clear process, carried out by competent people. But if a member of the public opposes an agency action or inaction, there is yet another opportunity to express that opposition: the administrative appeals process. Failing that, a person can appeal to the courts. Mr. Logan stated: Mr. Chairman, some people who oppose the development of our resources, and whose arguments don't win the day in this extensive public process, choose this final category, litigation in the courts, in an attempt to circumvent your policy and the executive branch's application of it. And that's okay, Mr. Chairman. House Bill 176 doesn't address the process, or those people's right to access the court system. What House Bill 176 does address is that under a doctrine established by the court, these people are getting paid by the state to sue the state; and that doctrine is called the Public Interest Litigant Doctrine. The court has said that some litigation is so important, [to] not just the parties bringing the action but to the public at large, that the public at large should ... foot the bill for the legal expenses, because the public at large will benefit from the resolution of the question at hand. And there is probably some merit to that, if it worked that way. Unfortunately, the court has seen fit to allow the people of Alaska to foot the bill for other, smaller, more specific questions before the court. House Bill 176 is a proposal to change state policy, to go from getting sued and paying the plaintiffs to sue us, to getting sued and letting them pay for their own legal expenses, in essence, taking the "kick me" sign off of our backs. MR. LOGAN indicated he had a lot more material, then deferred to testifiers on teleconference. Number 2172 WILLIAM GREENE, Deputy Municipal Attorney, Municipality of Anchorage, testified via teleconference from Anchorage that HB 176 is a step in the right direction. However, political subdivisions have similar problems, and the municipality would appreciate having the burden of public interest litigant fees included under the coverage of HB 176. He referred briefly to SB 123, then indicated the municipality has found, in its experience in the courts, the very liberal awarding of public interest litigant fees and the determination of who is a public interest litigant. MR. GREENE said in cases involving state statute, the constitution, or municipal law, the administrative or executive official making the decision is limited by what the law states to a greater extent than the courts are limited, he said. Accordingly, they run into cases frequently in which, under the existing statutory or ordinance law, the decision was correct but the courts overrode that judgment and made the plaintiff or the appellant a public interest litigant. The municipality ends up paying 100 percent of the actual reasonable attorneys fees of the other side; in this context, there is a great deal of leeway in determining what is reasonable. Under Civil Rule 82, the court has wide discretion to deviate from the schedules; at least in theory it could grant full actual attorneys fees. TAPE 99-33, SIDE A Number 0001 MR. GREENE, in response to a question of Representative Rokeberg, said in one instance the municipality prevailed in supporting the ruling of its administrative official, and one minor matter ended up being an advisory matter. The municipality is in the process of litigating whether or not the plaintiff will obtain full public interest litigant status on a relatively minor issue, because the courts generally will not apportion fees between issues. MR. GREENE told members that in a second case, the administrative official followed the ordinance, the state statutes and the constitution, but is limited in the degree to which the official may amend an initiative ballot proposition, whereas the court has some additional powers that allowed it to make some changes in language in the petition statement itself. Those are two instances in which the municipality faces a real prospect, they believe, of paying full actual attorneys fees, in cases where the municipality was, at least in part, correct. And in another instance where the controlling issue in the case was answered by the court in the municipality's favor, they are still looking at the potential of substantial fees. Mr. Greene offered to provide further examples in writing. Number 0234 STEVE WILLIAMS, Attorney at Law, testified at length via teleconference from Anchorage, noting that he has been an attorney in Fairbanks and Anchorage for 21 years, mostly representing civil commercial clients, although he does some public interest litigation. He stated, "I'm here because I believe that this bill is a bad policy and, frankly, bad politics." He told members: One thing I think that needs to be made clear is that the state is not paying people to sue them. What they are doing is ... if - at the end of the litigation, often several years out after a lawsuit is filed - the judiciary determines that the state acted unconstitutionally or unlawfully, then the party is entitled to reasonable attorneys fees under the public interest ... litigant standard. Secondly, with respect to Mr. Greene's testimony, I can fully understand that the municipality would want in on this being let off the hook for fees where they've acted unlawfully. No executive likes to be sued and called to task for acting unlawfully or unconstitutionally. But I think that the key point that I want to make here is that our society - our democratic society - is founded on the rule of law; and that's a principal distinction between our democracy and other places such as Stalinist Russia, "banana republics," or modern-day Kosovos. Now, I'm not saying Alaska is like that. But the principle is that the executive branch of government must act lawfully and constitutionally, not arbitrarily, and is subject to review and restraint by an independent judiciary. This principle is recognized as essential for emerging (indisc.) democracies around the world, to protect the freedom and the rights of all citizens. The public interest attorneys fees doctrine, which has been recognized in Alaska for about 25 years, has as its purpose to encourage private citizens to raise issues of public interest where officials may be acting in an unlawful or unconstitutional way, acting as a private attorney general to vindicate the public interest and the rule of law. By definition, ... under current law, a person is a public interest litigant only if the case is designed to effectuate strong public policies; if the plaintiff succeeds, numerous people receive benefits from that success - numerous members of the public; that only a private party could reasonably have been expected to bring the suit; and that the purported public interest litigant did not have a substantial, sufficient economic incentive to file the suit, but was instead primarily motivated to bring it by desire to raise and have decided issues of significant public policy and legal importance. ... Currently, the successful public interest litigant is one who's prevailed, who's obtained a judicial determination that a public official's conduct was unlawful, is entitled to a full reasonable fee ... for work devoted to pursuing that determination. However, the court is required to reduce the fee if the hourly rate is excessive, the total hours are unreasonable, or if the party has unreasonably asserted issues which are frivolous or were asserted in bad faith. Furthermore, under current law ... a public interest litigant is not liable to a public defendant for an award of attorneys fees if the court does not rule in the public interest litigant's favor. The reason for that rule is to eliminate the substantial disincentive [that] would be presented to citizens bringing cases of significant public interest. Few people can afford to sue the government and face the risk of having to pay substantial attorneys fees awards, in cases where they have no significant economic interests but merely are wanting to vindicate the public interest and the rule of law. HB 176 would eliminate these long-established public interest principles in all cases where a public interest litigant challenges action by the executive branch of state government. It would treat public interest litigants as the same as those who are motivated purely by financial incentive to sue, and, therefore, add an economic interest in incurring the costs and risks of litigation. It would thus dramatically reduce the incentive to bring public interest cases, where state officials are, in fact, acting in a way which is unlawful or unconstitutional. Instead of allowing a successful litigant to recover full reasonable fees for vindicating the public interest in having the executive branch - which, as we all know, at this point is the Knowles Administration - acting ... lawfully and constitutionally, it would allow the recovery of only 20 to 30 percent of those fees. And since most public interest fees are matters of law and ... decided by summary judgment, it would, in most cases, limit recovery to 20 percent of the actual reasonable fees incurred in the case. And I would submit that, with respect to private attorneys in Alaska, many of whom work by themselves or in relatively small firms, very few Alaskan lawyers could take on a public interest case if, in the end - ... after perhaps three or four years of litigation - they would be permitted to recover only 20 percent of their actual fees for work on the case. Those of you on the committee who are attorneys, or who have worked ... in the law business, know that that percentage of a fee would not even cover the overhead for most law firms, which generally ranges somewhere around 30 to 40 percent ... of revenues. Moreover, by exposing public interest litigants to the risk of facing award of fees, should the court not agree with their legal challenge to the state executive's conduct, HB 176 will clearly and dramatically ... deter such challenges from being brought. The average citizen would face bankruptcy, were he or she not to prevail on a public interest case, and be subjected to a substantial fee award. Number 0670 Now, I understand from talking to several folks, and it was reaffirmed by [Representative] Green's staffer, that this bill is apparently a reaction to certain public interest lawsuits, with which ... some legislators disagree, or which they view to be a nuisance, particularly in the natural resources area. However, it is just a reaction, in the sense that this law would affect all public interest litigants. Alaska's public interest fee doctrine is not partisan. It protects the rights of all Alaskans, of all political and philosophical persuasions, to litigate issues of substantial public interest. In fact, to the extent this ... bill purports to be a, quote, "conservative political reaction" is insulting to conservative principles. ... MR. WILLIAMS offered as proof the following discussion of reported cases on public interest litigation: Those cases involving the administration of state laws ... in which a litigant has been found to be a public interest litigant included [a] considerable number of cases involving political candidates or officeholders challenging election conduct; cases contesting the conduct and result of state elections; cases challenging state reapportionment schemes; cases challenging fish and game regulatory statutes, or fish and game enforcement or interpretation of them, where the litigant relies on fish or game resources for personal, ... rather than commercial, use, or where the litigation is principally designed to implement the public interest; cases challenging the state's public school ... funding formula laws, in the way that they discriminate between REAA [Rural Education Attendance Area] and non-REAA schools; cases challenging regulations concerning the use of boats on the Kenai River; challenges to the Local Boundary Commission decisions concerning incorporation of municipalities; challenges to the implied powers of government concerning state rights-of-way. And I think that these cases - and there are many more which don't involve ... the state administration, but which involve local government - these cases, if you review them fairly, make it clear that the public interest litigation doctrine is not, one, a doctrine which is merely about, quote, "liberal groups" or "environmental groups" or even "civil liberties groups." It's a doctrine which protects the rights of us all, and protects the rights of people of all philosophical and political persuasions to seek to vindicate the rule of law. The only other comment I would make is that, in fact, what this law will do is deter any private attorneys from taking public interest cases brought by individual citizens. In fact, the concern of some members of the legislature, and of this committee, as expressed by Representative Green's aide, is to somehow deter environmental organizations and law firms from bringing lawsuits challenging natural resource decisions by the state executive. I would suggest that this bill will not do that, mainly because that is what those groups exist to do. At most, this bill will somewhat reduce their income from this particular source, which they might get, again, if they were right, and if they won the case - in other words, if their view of the law was correct, ... at the end of a lawsuit. But, in fact, those kinds of interest groups are out there and established specifically to litigate these issues. So, I don't think that this is going to be a deterrent to those sorts of interests being asserted in litigation against the state executive. Instead, it's going to be a deterrent against people who aren't a part of organized environmental groups or other organized groups, who may not have an organization ... with a few staff attorneys who ... are capable of bringing cases. It will, in fact, deter people who go to lawyers like me and say, "I think that I was not treated fairly," or "I think that the state government is acting unlawfully; will you help me?" And I'd have to look at that people and say, "I really want to. I care about this. But you have to understand that I can't afford to take a case on where, even if we're right, and even if we get paid some fee three years from now, or four years from now, it will only be 20 percent of what I actually put into the case, which won't even be enough to cover my overhead." So, in conclusion, I just think that ... there's no doubt that this bill will seriously reduce the power of Alaskans of all political persuasions to ensure that the executive branch of their government - the Knowles Administration, for at least the next three and a half years - conducts itself in a way which is lawful, consistent with the laws passed by this legislature, and constitutional. Simply put, the bill will erode the rule of law in Alaska, and I would urge the committee not to pass it out. Number 1002 KEVIN JARDELL, Legislative Assistant to Representative Joe Green, Alaska State Legislature, responded that he takes some exception to the loose analogy to Kosovo and "banana republic" countries, although he realizes it was to make a point. He then reminded members that neither the federal system nor any other state system, to his knowledge, has such a broad doctrine. He stated: I don't think, if the doctrine is eliminated or is defined in some other way, that we would see an all-out destruction of the rule of law by any means, or even an erosion of the rule of law. Throughout this state's history, we've had people stand up and take it upon themselves to challenge actions by municipalities, the state; and we're not saying that they can't do that now. In fact, in the state of Alaska we have a system, under Rule 82, that pays a portion of their fees if they do, in fact, win and are considered the prevailing party. This just eliminates the doctrine, or will redefine the doctrine, in a way, that some policymakers believe brings it more in line with what they feel [it] should be. Some of the problems that we see have been brought out by the Administration, in its arguments in cases, when it argues that the courts have reimbursed public interest litigants for legislative lobbying costs. The courts have allowed public interest litigant status to be awarded to groups and individuals that are seeking policy agendas, and not necessarily in the public interest. ... The question the Administration posed to the court was: What amount should the Alaska Center for the Environment be awarded as an accidental beneficiary of an unfortunately drafted settlement agreement, the fatal deficiencies (indisc.) which were established by others? This is a case where ACE won approximately three out of eleven claims. The court decided that even those three weren't significant. The superior court said, "We won't give you any fees." The supreme court remanded the case and said, "Not only will you pay them fees, but you'll pay them $456,000." That's the type of abuse of the policy that we [have] recognized, and that we are trying to remedy. Now, whether there are other solutions, other considerations that can be brought up -- I know the sponsor is always open to suggestions. The municipality has raised some points that they would like to bring up, apparently, and ... the sponsor would be more than happy to listen to those suggestions. But there is a problem, and it needs to be addressed. And this is an attempt to address that problem. CHAIRMAN KOTT asked whether Mr. Williams wished to reply briefly. Number 1211 MR. WILLIAMS responded that, first, he was obviously not comparing Governor Knowles to [Yugoslav President] Milosevic. He himself believes that the conduct of the government is subject to review by the judiciary, and there is no doubt that the ability of people to obtain judicial review of executive conduct will be diminished here. Second, he agrees with Mr. Jardell that most other states don't provide for attorneys fees, except in certain statutorily provided situations. In fact, very few other states provide for an award of attorneys fees against the losing party, period. It is, therefore, a two-edged sword. He believes that HB 176 will provide a substantial disincentive to people bringing public interest cases, although probably not to some organizations that exist for this very purpose. Number 1318 LAUREE HUGONIN, Director, Alaska Network on Domestic Violence and Sexual Assault, came forward. She told members that unfortunately the network had entered into litigation as a public interest litigant after passage of the domestic violence prevention and victim protection Act of 1996. It was a case against the court system, which had refused to recognize the three separate types of protective orders that the legislature had made provision for in the Act; through court forms, only two kinds of protective orders were available. MS. HUGONIN explained, "We tried to work with their forms committee. We tried to work with Mr. Snowden, who was the administrator at the time. We tried to intervene through talks with the Administration, talking to the court system. Then Representative Parnell also tried to work with the court system to remedy this short of litigation. And we were not successful in any of our attempts to do so. And so, we believe strongly enough that victims were being put at risk, by not being able to ... avail themselves of this remedy that the legislature had provided, that we did enter into litigation against the court system." MS. HUGONIN noted that they had been successful in that litigation, winning on all issues. They tried to reduce costs, she said, and they sold T-shirts and sweatshirts. They are a small organization that is lucky if it has $10,000 in the bank. Although only about two-thirds of their attorneys fees were awarded to them, the ability to collect those attorneys fees helped them to stay a viable entity. She understands that the concern is of maybe a bigger proportion in terms of money that the state has to return to programs. However, it affects little programs, as well - and on matters of life and death. MS. HUGONIN said as she reads them, HB 176 differs from the Senate bill in that it applies to executive branch actions. Although their particular case against the judicial branch may not fall within the scope of this bill, there could be occasions where they need to litigate against the Administration, if the Administration chooses to not follow a policy meant for the protection of victims, for example, and is, in fact, endangering them. Ms. Hugonin expressed hope that some consideration would be given to narrowing the scope or, for a prevailing party, allowing the court to continue to have discretion in the amount of the attorneys fees awarded. Noting that their case was the first time her organization had to be a public interest litigant, she said she hopes it is the last. "But we would like to be able to avail ourselves of that, if it became necessary again," she concluded. Number 1515 REPRESENTATIVE GREEN asked whether that two-thirds was awarded because of being a public interest litigant or because of being the victorious party. MS. HUGONIN replied that she believes it was for both reasons. REPRESENTATIVE GREEN asked whether she believes they would have been awarded no fees if they hadn't applied as a public interest litigant. MS. HUGONIN said she wasn't sure, as she is not an attorney. Number 1617 MR. JARDELL, who is an attorney, clarified that under Rule 82 the court can award more than the 30 percent or 20 percent that is given in section (b), and factors are set out for the courts to look at. Even under Rule 82, therefore, the court could always come back, for whatever reason deemed necessary, and award whatever it believes to be adequate. Number 1714 REPRESENTATIVE ROKEBERG asked whether it is a fair analysis that the legislature, rather than the court system, makes the laws, and that in this case the courts clearly have usurped the lawmaking ability of the legislature. MR. JARDELL answered that if one goes far enough back, to common law, the courts set all law. It has evolved from that to more of a civil law, to where we now codify almost everything. Reserved in the common law is the concept that if the legislature hasn't spoken to it, the courts can create it. Therefore, until the legislature speaks to it, the courts can create a doctrine. REPRESENTATIVE ROKEBERG asked whether the legislature couldn't repeal any public interest doctrine or principles, and restrict the court from applying them. MR. JARDELL replied, "Absolutely." REPRESENTATIVE ROKEBERG thanked Representative Green for introducing HB 176, saying it is one of the best bills he has seen this session, including his own. He disagreed with Mr. Williams that this would erode the rule of law, then stated, "I'd say the existence of this is making scofflaws of people who intentionally litigate for the very purpose of filling their own coffers and pursuing agendas, and of taking advantage of this, to the degree that it's stifled development and cost literally thousands of jobs in this state. And it's the most frustrating thing I've witnesses here for the last 50 years of my life, the development of this type of thing." Number 1786 CHAIRMAN KOTT referred to Mr. Greene's suggestion that HB 176 be extended to apply to municipalities. He asked whether that had been given any thought. MR. JARDELL affirmed that, then added, "We didn't have any good communications with the municipality, and weren't aware of exactly what type of problem existed there. We were working under a rough assumption that they may see more of ... causes of action that ... may be in the realm where the policy makers here believe it should be a sole individual standing up for zoning problems against the municipality, and not really running into the same problems that the state does. We work with the state, so we're more aware of the state's problems." Mr. Jardell said they would contact Mr. Greene and work with him; if there is a need to extend this to municipalities, and a way to do that, then the sponsor's office will see whether it can be done. Number 1848 REPRESENTATIVE KERTTULA pointed out that courts create the rule of law along with the legislature. REPRESENTATIVE ROKEBERG responded, "I don't disagree with Representative Kerttula; I just think we're in the constitutionally superior position." He then asked whether there is a potential here to distinguish between natural resource or development activities and other grievances, without running afoul of constitutional fairness mandates, for example. Number 1903 MR. JARDELL replied that the federal method and most states' methods are to determine specific causes of action, such as election laws, and make a determination that election laws are an area that they want to encourage people to challenge, for instance, as a foundation of democracy; therefore, they will allow full reasonable attorneys fees as an exception to that cause of action. However, it is very difficult to develop each and every cause of action that could come up. It is also difficult to try to come up with a balance for the carrot and the stick, without having a doctrine like we do now. REPRESENTATIVE KERTTULA responded that therein lies the problem. They would foreclose a whole range of public interest litigation, including civil rights cases, public information matters or those raised by Ms. Hugonin, for example, not just that involving natural resources. REPRESENTATIVE ROKEBERG said he takes exception, asking whether the issue is now paying Mr. Williams' overhead. He commented that members of the bar have an obligation to look out for people whose rights are being stepped on, and who don't have the resources to come forward. He said he believes the current situation is being abused. MR. JARDELL addressed Representative Kerttula's comment, saying that the exception mentioned earlier in Rule 82 would still provide the courts a remedy for those situations that aren't being abusive, and which truly merit a greater award of attorneys fees than the 30 percent or 20 percent. Number 2054 MR. LOGAN referred to the 1990 Alaska Supreme Court opinion provided in committee packets regarding Anchorage Daily News v. Anchorage School District. He clarified that although that is the case where the court enumerated the four standards that must be met in order to be considered a public interest litigant, that was a case where the plaintiff was a subsidiary of a large newspaper corporation. It isn't always an indigent organizations that is granted public interest litigation status, he pointed out. Number 2089 MS. HUGONIN expressed her understanding that one reason why her organization became a public interest litigant was because it needed standing in order to appear in court. Part of what HB 176 does is remove the notion of public interest litigant or doctrine. She asked the committee to consider still allowing these litigants to have standing in court, to continue to bring these matters forward, aside from the issue of attorney fees. Number 2158 MR. JARDELL pointed out that standing is a completely different issue from attorneys fees, and this would have no affect, whatsoever, on the ability of one person or another to obtain standing. REPRESENTATIVE ROKEBERG said he is aware of a part-time fisherman in Haines with standing enough to bring down and stop any development anywhere in the state of Alaska, in terms of the practical application of the Alaska courts. MR. JARDELL stated, "Even with public interest litigants, when there's a group the courts still look to the members of the group to see if the members having standing, so that the group will have standing. And so, whether you're claiming to be a public interest litigant or not, you're still going to have to have an individual standing classification, some injury, in fact. So, this really would not have any effect on a person's ability to get so-called standing." Number 2231 CHAIRMAN KOTT asked whether there were further questions or testifiers, then closed public testimony. Number 2247 REPRESENTATIVE KERTTULA told members she would like to be sure on the issue of standing, as she doesn't want to change the statute on that. Second, she would like to show the committee the kinds of cases that get these awards. These are people who have won their cases, which is why they are getting the awards, she noted. REPRESENTATIVE ROKEBERG agreed that would be great information, stating his understanding that with resource cases, it is "merely technical, minor provisions that allow 100 percent awards, and it stops development for five years." REPRESENTATIVE KERTTULA responded that those aren't the cases she has seen. CHAIRMAN KOTT agreed that these are valid concerns. He indicated he looked forward to hearing from Representative Kerttula regarding standing and the types of cases, at the next hearing on the bill. He concluded by announcing that HB 176 would be held over.