Legislature(2005 - 2006)CAPITOL 106

04/13/2006 08:00 AM House STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: Division of Elections, TELECONFERENCED
Electronic Voting (in Rm 106)
<Agenda Item Postponed to 04/20/06>
Heard & Held
Moved CSHB 461(STA) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
SB  86-STATE/MUNI LIABILITY FOR ATTORNEY FEES                                                                                 
8:51:06 AM                                                                                                                    
CHAIR SEATON  announced that  the next order  of business  was CS                                                               
FOR SENATE  BILL NO.  86(CRA)(efd fld), "An  Act relating  to the                                                               
liability of  the state and  municipalities for attorney  fees in                                                               
certain civil actions and appeals."                                                                                             
8:51:16 AM                                                                                                                    
RANDY RUARO,  Assistant Attorney  General &  Legislative Liaison,                                                               
Legislation  &  Regulations  Section,  Civil  Division  (Juneau),                                                               
Department of Law,  said he was standing in for  Mr. Tillery, who                                                               
had testified  during the 3/23/06 hearing  on SB 86.   He said he                                                               
would  address  a  question  asked  at  the  last  bill  hearing,                                                               
regarding a concern that the bill  would mandate a payment by the                                                               
state in  an appeal  of 20-30 percent  of the  prevailing party's                                                               
reasonable fees.  Mr. Ruaro explained  that that amount is a cap,                                                               
not a  mandated amount, which  he noted  is shown in  language on                                                               
page 2, [Section 2, subsection (a)].                                                                                            
The committee took an at-ease from 8:53:25 AM to 8:54:37 AM.                                                                
8:55:13 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG said  if  the intent  is  to limit  the                                                               
courts  in what  they  can procedurally  award,  then he  doesn't                                                               
think "this Act  is effective to do that because  it doesn't have                                                               
a title  that says it  amends the  appellate rules or  it doesn't                                                               
amend  the civil  rule, and  it  doesn't have  the required  two-                                                               
thirds vote,  obviously."  He asked  Mr. Ruaro if he  is aware of                                                               
that deficiency in the bill.                                                                                                    
8:55:58 AM                                                                                                                    
MR. RUARO  said Representative  Gruenberg's concern  mirrors that                                                               
which  the committee  had  asked  Mr. Tillery  and  Mr. Ruaro  to                                                               
research during the last hearing of  the bill.  He clarified that                                                               
Representative  Gruenberg's  point is  that  the  bill effects  a                                                               
court rule change,  thus mandating the title  requirement and the                                                               
two-thirds vote.                                                                                                                
REPRESENTATIVE  GRUENBERG inserted,  "It  effects  at least  two:                                                               
Rule 82 and the appellate rule as well."                                                                                        
8:56:43 AM                                                                                                                    
MR.  RUARO, on  that  point,  stated that  he  disagrees that  it                                                               
effects a  court rule.   He  offered his  belief that  the public                                                               
interest litigant  doctrine isn't spelled  out in either  Rule 82                                                               
or Rule  508; those rules  speak generally to awards  of attorney                                                               
fees.   He  stated,  "The public  interest  litigant doctrine,  I                                                               
believe,  is case  law, starting  with the  McCabe case  and then                                                             
proceeding through a  number of other cases.  And  I believe that                                                               
the  two-thirds vote  requirement applies  to rules  of procedure                                                               
that are expressly promulgated by  the court, and that the public                                                               
interest litigant  doctrine is not  contained in either  of those                                                               
8:57:23 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG responded  that  Mr. Ruaro's  statement                                                               
seems to be novel legal theory, and  he asked Mr. Ruaro if he has                                                               
any precedent to support his position.                                                                                          
8:57:41 AM                                                                                                                    
MR.  RUARO replied  that  the cases  themselves  speak about  the                                                               
doctrine and  the right  to receive attorney  fees, but  the term                                                               
public interest  litigant, or  the amount to  be awarded,  or the                                                               
rule that fees  will not be apportioned among issues  if one is a                                                               
public interest  litigant doesn't appear  in the language  of the                                                               
rules.  He said, "It's all case law as far as I could tell."                                                                    
8:58:14 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG  offered  his  understanding  that  Mr.                                                               
Ruaro  is making  the argument  that because  the rule  itself is                                                               
established in  the case, therefore the  constitutional provision                                                               
does not apply.  He asked, "I'm  not aware of any case holding to                                                               
that effect, are you?"                                                                                                          
8:58:42 AM                                                                                                                    
MR. RUARO  said there is  a case  which references the  test that                                                               
courts apply:   Nolan  B.C. Air  Motive 627 P.2d  1035.   In that                                                             
case, he  said, the court notes  that there has to  be an initial                                                               
finding  that the  statute that  the legislature  passed actually                                                               
conflicts with a  rule promulgated by the court.   Mr. Ruaro said                                                               
he  interprets that  language  to  mean that  "it  has  to be  an                                                               
express rule that the court has adopted."  He continued:                                                                        
     I  think the  distinction  is a  bright-line test,  and                                                                    
     that's whether  or not the court  has expressly adopted                                                                    
     it as  a rule.  If  it were not, the  legislature would                                                                    
     be  left  to  guess  every  time  the  court  issued  a                                                                    
     decision,  whether  or  not   [this  is]  a  two-thirds                                                                    
     requirement ....   So, I guess I read  Nolan to require                                                                    
     a bright-line test of whether  it actually appears in a                                                                    
8:59:59 AM                                                                                                                    
REPRESENTATIVE GRUENBERG  recollected that in the  past there was                                                               
a  similar bill  limiting attorney  fees which  passed without  a                                                               
two-thirds vote and  "at least the superior court  struck it down                                                               
on that basis."                                                                                                                 
9:00:36 AM                                                                                                                    
MR. RUARO  said he thinks  Representative Gruenberg  is referring                                                               
to House Bill  145, and he said an [Alaska]  Superior Court judge                                                               
did hold that  there was a two-thirds vote requirement.   He said                                                               
the state's position on appeal was that the judge was incorrect.                                                                
9:00:44 AM                                                                                                                    
REPRESENTATIVE GRUENBERG responded that  that may be that state's                                                               
position, but  the case,  as it stands,  is directly  opposite to                                                               
the  position of  SB 86.    He concluded,  "So why  don't you  be                                                               
certain and put that in?"                                                                                                       
9:01:05 AM                                                                                                                    
MR. RUARO said  there are additional reasons that SB  86 does not                                                               
require  a  two-thirds vote  "beyond  that  distinction that  the                                                               
judge made  in that case."   He noted that Article  2, Section 21                                                               
of  the  [Alaska  State]  Constitution  specifically  grants  the                                                               
legislature  the authority  to  provide the  rules for  sovereign                                                               
immunity of the state and municipalities.  He continued:                                                                        
     That  was not  present in  [House Bill]  145.   So, ...                                                                    
     there's a distinction to make  between [House Bill] 145                                                                    
     and the  basis or  the authority for  SB 86,  which is:                                                                    
     SB  86 is  a function  or a  result of  the legislature                                                                    
     using  its ...  very specific  constitutional grant  of                                                                    
     authority  to exercise  a core  function,  which is  to                                                                    
     protect the  state in the  means it  deems fit.   And I                                                                    
     would  argue that  that specific  grant of  authority -                                                                    
     even if public interest  litigant doctrine was embodied                                                                    
     in  a  court rule  -  ...  must  give  way to  ...  the                                                                    
     legislature's  authority under  Article 2,  Section 21.                                                                    
     And  the language  there  ...  specifically grants  the                                                                    
     legislature the  authority to determine  the procedures                                                                    
     for suits against the state.                                                                                               
9:02:47 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG  asked  Mr.   Ruaro  if  there  is  any                                                               
precedent for that opinion.                                                                                                     
9:02:54 AM                                                                                                                    
MR. RUARO  answered yes:  Alaska  v. O/S Lynn Kendall.   He said,                                                             
"It's not exactly  on point, but it does say  the Constitution of                                                               
the  State of  Alaska  grants  to the  legislature  the sole  and                                                               
exclusive  power  to  enact  laws   establishing  the  terms  and                                                               
conditions upon which the state may be sued."  He continued:                                                                    
     And I would just note  that the position I'm arguing is                                                                    
     also consistent  with the  U.S. Supreme  Court decision                                                                    
     in  Alyeska  Pipeline  Service  Company  v.  Wilderness                                                                  
     Society  and other  federal decision  where the  courts                                                                  
     have  noted  that it  would  be  inappropriate for  the                                                                    
     judiciary  to  create  a general  rule  independent  of                                                                    
     statute  to allow  attorney fee  awards in  the courts,                                                                    
     and  that  those  matters   are  subject  to  Congress'                                                                    
     determinations.  So, I guess  I would argue my position                                                                    
     as also consistent with U.S. Supreme Court law.                                                                            
9:03:57 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG  said he  would  like  copies of  those                                                               
cases as soon as possible.                                                                                                      
9:04:08 AM                                                                                                                    
MR. RUARO said he would provide those copies.                                                                                   
9:04:15 AM                                                                                                                    
CHAIR  SEATON said  he  does not  think that's  the  core of  the                                                               
issue.   He  opined that  the core  of the  issue is  whether the                                                               
committee is proceeding on the  basis of ensuring that the public                                                               
has  reasonable access  to  redress bad  laws  that are  possibly                                                               
unconstitutional or ordinances  that violate state law.   He said                                                               
people  who challenge  their  government  for the  aforementioned                                                               
reasons -  not for personal  gain - will have huge out-of- pocket                                                               
expenses  even if  they win,  if the  legislature only  allows 20                                                               
percent  reimbursement of  actual expenses.   He  said the  House                                                               
State Affairs  Standing Committee has  a policy decision  to make                                                               
as to  whether to  raise the  bar for  those people,  which would                                                               
result  in their  being  less able  to sue.    He indicated  that                                                               
looking  at  the court  rule  issue  is  more  in line  with  the                                                               
perspective of the House Judiciary Standing Committee.                                                                          
9:05:58 AM                                                                                                                    
MR. RUARO said  he understands Chair Seaton's concern.   He said,                                                               
"I think the  answer is that all of the  things you mentioned can                                                               
still be in  place; it's simply that the legislature  will be the                                                               
entity  that's exercising  the authority  to  determine that,  as                                                               
opposed to the court system.                                                                                                    
9:07:10 AM                                                                                                                    
CHAIR  SEATON  asked  how the  legislature  would  exercise  that                                                               
authority, should the bill pass.                                                                                                
9:07:30 AM                                                                                                                    
MR. RUARO explained  that if SB 86 passed and  a particular group                                                               
or entity wanted  to receive the right to  recover enhanced fees,                                                               
it would lobby the legislature,  and the legislature could pass a                                                               
statute -  similar to  what the legislature  has done  related to                                                               
consumer protection,  imminent domain,  or other  exceptions that                                                               
the legislature  currently has  on the books  - and  receive that                                                               
exception.  He said, "In the  first instance, I guess, the entity                                                               
making that policy decision would  be the legislature, as opposed                                                               
to the court system."                                                                                                           
MR.  RUARO,  in  response  to   a  question  from  Chair  Seaton,                                                               
clarified that  he is  talking about a  situation where  - rather                                                               
than going  back and  making an appropriation  after the  case is                                                               
over -  a group or interested  party would have a  ... legislator                                                               
introduce  a  bill  that  said,  "This class  or  this  group  of                                                               
litigants  is entitled  to receive  enhanced  attorney fees,  and                                                               
here's why."  The legislature  would act on that legislation, and                                                               
then in  subsequent cases that  fell within that  category, those                                                               
entities would be entitled to receive the enhanced fees.                                                                        
9:08:24 AM                                                                                                                    
CHAIR SEATON responded:                                                                                                         
     I think ...  that might be good for  something like ...                                                                    
     the last ... challenged  reapportionment ....  In fact,                                                                    
     it's  the  second  largest year  in  suit  cases  under                                                                    
     public interest  litigants.  I  think that  there might                                                                    
     be the clout there.   But what we're talking about here                                                                    
     is looking at  the small guy on the  municipal level or                                                                    
     the  individuals who  are challenging  state laws,  and                                                                    
     the ability  of individuals that  ... we are  trying to                                                                    
     protect under  ... public  policy.   I don't  think the                                                                    
     chance  of getting  ... any  kind  of legislation  like                                                                    
     that through for them is very large.                                                                                       
9:09:22 AM                                                                                                                    
ROBERT  SPARKS,  testifying  on   behalf  of  himself,  told  the                                                               
committee that  he is  an attorney practicing  in Fairbanks.   He                                                               
shared his  background with  the committee.   He relayed  that he                                                               
had a client  a few years ago who had  a driver's licensing issue                                                               
with the  City of Fairbanks.   The client was trying  to obtain a                                                               
taxicab  license  and the  city  was  demanding that  the  person                                                               
comply  with   requirements  way  beyond  the   requirements  for                                                               
obtaining a driver's license.  He  said his client did not have a                                                               
lot of  money.  Eventually the  city agreed to issue  the man his                                                               
taxicab license.   Mr. Sparks indicated that if [SB  86] had been                                                               
in place at the time and his  client had filed a lawsuit in order                                                               
to get  the city  to comply with  state law, there  is no  way he                                                               
would have  been able  to pay  for it.   Furthermore,  Mr. Sparks                                                               
said, "If I  was only going to  look at getting 20  or 30 percent                                                               
of  my  actual  attorney  fees  and costs  back  for  doing  that                                                               
lawsuit, there's no way that that  person would have been able to                                                               
get his ...  taxi permit so that he could  ... continue earning a                                                               
MR.  SPARKS opined  that  SB  86 is  shortsighted  and has  vast,                                                               
unforeseen  ramifications that  would  substantially change  "the                                                               
public  justice  outcomes  in  Alaska."   He  said  the  proposed                                                               
legislation  would limit  the  ability of  citizens  to make  the                                                               
state comply with its own law  by making those citizens pay 70-80                                                               
percent of the  actual attorney fees.  Mr.  Sparks exclaimed that                                                               
he thinks  that is outrageous.   In  response to a  question from                                                               
Chair  Seaton  regarding  pro  bono work,  said  there  are  many                                                               
instances where  lawyers do  pro bono work  for people  who don't                                                               
have any  money.  He cited  family law cases as  one example, and                                                               
said he is  on the list for Alaska Legal  Services to help people                                                               
with eviction cases.   He indicated that there are  already a lot                                                               
of pro bono cases taken on.  He said:                                                                                           
     In this  circumstance ...  you're talking  about trying                                                                    
     to  get the  state  or a  municipality  to comply  with                                                                    
     either  ...  state  [law]  or  the  municipality's  own                                                                    
     charter ..., and it doesn't seem  to me when you win in                                                                    
     a case  like that that it's  necessarily punishment for                                                                    
     the  municipality  or the  state  to  have to  pay  the                                                                    
     attorney fees that they caused  the person to run up to                                                                    
     make the  municipality or the  state comply  with their                                                                    
     own law.                                                                                                                   
9:13:02 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG asked  Mr. Sparks  how the  legislature                                                               
can ensure  that the legal  system isn't being abused  by private                                                               
litigants that  are just litigating unmeritorious  claims against                                                               
the government.                                                                                                                 
9:13:36 AM                                                                                                                    
MR.  SPARKS  replied  that  the   legislature  is  in  charge  of                                                               
appointing the  superior court  judges and  must have  faith that                                                               
the system is going  to work the way it is supposed  to work.  He                                                               
said the  system was developed  over time  and has been  in place                                                               
for "hundreds of years."                                                                                                        
REPRESENTATIVE GRUENBERG,  regarding the  award of  attorney fees                                                               
under  case  law,  asked  if  the  courts  consider  whether  the                                                               
lawsuits are  frivolous or  over litigated and  if the  court and                                                               
appellate rules currently provide that kind of protection.                                                                      
MR. SPARKS  answered yes.   He said  the court rules  provide the                                                               
judge  with  great  discretion  to be  able  determine  what  the                                                               
attorney fees  are, and he  said there are some  really competent                                                               
judges with integrity who follow the  law.  He noted that Rule 82                                                               
has many exceptions regarding the  percentage awarded in attorney                                                               
fees.   Mr. Sparks stated,  "If you take  away ... having  to pay                                                               
attorney fees,  it reduces  the overall  incentive for  the state                                                               
and municipality to exercise reasonable  care and take reasonable                                                               
action."    He offered  examples.    He  said making  people  pay                                                               
consequences for  unreasonable actions  is a  disincentive toward                                                               
them taking  those actions.  He  stated, "If you commit  a crime,                                                               
you're  going  to  have  to  pay attorney  fees  for  the  public                                                               
defender, you  have to pay  court costs,  you have to  pay fines,                                                               
you have to go  to jail.  I mean, it's the  same thing; it should                                                               
be the same thing for the state."                                                                                               
9:16:43 AM                                                                                                                    
CHAIR SEATON talked about recent committee discussion regarding                                                                 
paperwork in the committee packet showing that litigants are                                                                    
considered the prevailing party if they succeed on the main                                                                     
issue.  He said the handout cites [Hillman v. Nationwide Mutual                                                               
Fire Insurance Company, 855 P.2d 1321, 1324 (Alaska 1993)].  He                                                               
asked Mr. Sparks if he is aware if there is a different                                                                         
standard, so that a public interest litigant could win on a                                                                     
minor technicality and receive full attorney fees, or if "they                                                                  
have to do the same thing and prevail on the main issue."                                                                       
9:17:25 AM                                                                                                                    
MR.  SPARKS offered  his understanding  that the  public interest                                                               
litigant would  be compensated  only for  the issues  that he/she                                                               
wins.   He  said  the  public interest  litigant  has to  justify                                                               
his/her fee position  by filing a motion for attorney  fees and a                                                               
detailed statement about time spent,  work done, and costs, after                                                               
which the judge decides if the  motion is reasonable.  He said he                                                               
thinks the judges can be relied upon to do their job.                                                                           
9:18:30 AM                                                                                                                    
REPRESENTATIVE GRUENBERG  asked if  the government can  appeal if                                                               
the trial court  awards attorney fees against  the government and                                                               
the government feels those fees are too high.                                                                                   
9:18:56 AM                                                                                                                    
MR.  SPARKS  answered  that in  his  experience,  the  government                                                               
usually appeals  those issues if  it believes that the  judge has                                                               
been  unreasonable,   and  the  supreme  court   is  amenable  to                                                               
reviewing such cases and is critical  in its review of the awards                                                               
of  attorney   fees  if  it   believes  they  are   excessive  or                                                               
unreasonable in any manner.                                                                                                     
9:19:16 AM                                                                                                                    
BARRY DONNELLAN,  testifying on behalf  of himself, said he  is a                                                               
lawyer in  Fairbanks.  He said  he has dealt over  the years with                                                               
private  parties dealing  with the  state,  and he  said the  big                                                               
problem  lies with  the state's  law firm,  not with  the private                                                               
litigant.   He  related having  experienced a  case in  which the                                                               
state's law firm  spent tens of thousands of  dollars defending a                                                               
point, only  to ultimately contradict  the point it had  spent so                                                               
much money defending.   He said his client didn't  have any money                                                               
and thus couldn't carry the case  any further.  He stated, "If we                                                               
want to save  money, what we need  to do is instill  a little bit                                                               
of fiscal responsibility  with the state's law firm  and not with                                                               
the private law  firm."  He opined that the  state's law firm has                                                               
no  concept whatsoever  with fiscal  responsibility.   He  shared                                                               
that  his experience  is that  the state's  law firm  defends the                                                               
state even when the state is obviously wrong.                                                                                   
MR. DONNELLAN recommended that the  attorney fees to a prevailing                                                               
party be  increased to 100 percent,  not cut back to  20 percent.                                                               
He  concluded,  "I  think  it  is very  serious  when  the  state                                                               
considers raising  the bar  against a  private citizen  raising a                                                               
grievance with the state."                                                                                                      
9:21:40 AM                                                                                                                    
MICHAEL  W.  MacLEOD-BALL,  Executive  Director,  American  Civil                                                               
Liberties Union (ACLU)  of Alaska, testified in  opposition to SB
86.  In response to  Representative Gruenberg's previous question                                                               
about  frivolous  lawsuits, he  said  the  short answer  is  that                                                               
nothing needs to  be done.  He explained that  under the existing                                                               
rules,  if the  attorney is  not successful  in the  case, he/she                                                               
does not  get an award  of attorney fee, and  certainly frivolous                                                               
lawsuits are not going to be successful.                                                                                        
MR. MacLEOD-BALL stated:                                                                                                        
     ACLU of  Alaska opposes  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.  The                                                                    
     bill will  tend to widen the  legal advantage currently                                                                    
     held   by    governmental   litigants    over   private                                                                    
     individuals.     The  ACLU  of   Alaska,  I   will  say                                                                    
     parenthetically, will  be affected, but not  as much as                                                                    
     other  individuals  and  nonprofit  organizations  that                                                                    
     will benefit  from the existing  rule.  The  reason for                                                                    
     that  is  that  most  of   our  cases  are  brought  on                                                                    
     constitutional grounds, and  most constitutional claims                                                                    
     have separate award of fee provisions in the statute.                                                                      
     But the  bottom line here  is that if  this legislation                                                                    
     is  enacted, citizen  oversight of  government will  be                                                                    
     thwarted, and  I think that  is a bad thing  for Alaska                                                                    
     as  a  whole.    The  typical  plaintiff  in  a  public                                                                    
     interest  lawsuit  is  an  individual  or  a  nonprofit                                                                    
     advocacy organization.   An atypical defendant  in such                                                                    
     a suit is a governmental  entity - often the federal or                                                                    
     state  government,  due to  the  nature  of the  issues                                                                    
     commonly  litigated.    However, your  reports  clearly                                                                    
     show that  the public  interest cases are  brought just                                                                    
     as  regularly  against  quasi-public  or  even  private                                                                    
     entities.   There can  be no  dispute that  the typical                                                                    
     suit  hits a  party  with  limited financial  resources                                                                    
     that   needs  to   hire  outside   council  against   a                                                                    
     governmental  or other  private entity  with access  to                                                                    
     substantially  greater financial  and legal  resources.                                                                    
     As often  as not,  the dispute  is over  principle, and                                                                    
     very rarely over any substantial amount of money.                                                                          
     Compare this to  any other type of  litigation.  First,                                                                    
     private  suits almost  involve a  fight  over money  or                                                                    
     property   interest.       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                                                                    
     cost   of   litigation,   but  that's   a   matter   of                                                                    
     happenstance.     The   public  interest   litigant  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 sizeable retainers;  it's simply                                                                    
     not   profitable  for   those  attorneys   to  do   so.                                                                    
     Therefore  the  public  interest  litigant  is  legally                                                                    
     disadvantaged,  as   well,  because   the  governmental                                                                    
     adversary will  always have council  on board  from the                                                                    
     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,   unlawfully.     On  the   other  hand,   the                                                                    
     government gets  its subsidy from the  taxpayer whether                                                                    
     it wins or  not.  It's not as if  the individual within                                                                    
     the  government who  caused the  government to  violate                                                                    
     that  victim's  rights is  made  to  reimburse the  tax                                                                    
     payers for the internal  cost of running the government                                                                    
     in a manner violative of the public interest.                                                                              
9:25:24 AM                                                                                                                    
MR. MacLEOD-BALL continued his testimony as follows:                                                                            
     The key  is to  set up  a system  that does  not reward                                                                    
     improper behavior,  and there will be  no incentive for                                                                    
     the government to  stop unlawful 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, 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                                                                    
     the  public interest  lawsuit.   For such  individuals,                                                                    
     attorney  fee   reimbursement  is  not   a  significant                                                                    
     consideration.     Rather  this  law   will  discourage                                                                    
     normal,   everyday    people   and    small   nonprofit                                                                    
     organizations  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.                                                                                          
MR.  MacLEOD-BALL  said  he  believes   that  the  committee  has                                                               
examined the two-thirds vote for  the court rule change; however,                                                               
he  suggested  that it  might  be  appropriate  to wait  for  the                                                               
supreme court to  rule on the pending case  before taking further                                                               
legislative action  "that would  further muddy  the waters."   He                                                               
noted that there appears to be  an exception in SB 86 for eminent                                                               
domain cases; fees  can be awarded in such cases.   He questioned                                                               
why  eminent domain  cases  are made  an  exception, while  other                                                               
unlawful  acts  by the  government  are  not.   He  listed  other                                                               
unlawful acts,  and asked, "Who's  to say that a  property taking                                                               
is somehow  worthy of fee  reimbursement and is  somehow superior                                                               
to all these other very legitimate claims?"                                                                                     
MR. MacLEOD-BALL  noted that  a gentleman  named Ken  Jacobus had                                                               
wished  to testify,  but  had to  leave.   He  reported that  Mr.                                                               
Jacobus had  asked him to  relay his  opposition to the  bill for                                                               
the reason that  "this will affect not just  ... organizations on                                                               
the  left,  but  also  organizations  on the  right  and  in  the                                                               
middle."   Mr. MacLeod-Ball  told the  committee Mr.  Jacobus has                                                               
represented conservative organizations on  a fairly regular basis                                                               
in public interest litigation actions.                                                                                          
9:28:05 AM                                                                                                                    
MR. MacLEOD-BALL  summarized that  SB 86 is  presented as  if the                                                               
government   is  unfairly   required  to   pay  for   a  vengeful                                                               
individual's  lawsuit  against  the  state, and  he  opined  that                                                               
nothing could be  further from the truth.  This  bill will simply                                                               
make it  harder for someone  who's acting in the  public interest                                                               
to force the government to comply with its legal obligations.                                                                   
9:28:57 AM                                                                                                                    
REPRESENTATIVE  GATTO mentioned  the article  entitled, "Governor                                                               
aims at legal  fees," copied from an unknown source  on a handout                                                               
in the  committee packet.   In the article,  Representative Gatto                                                               
said,  ["Chris Kennedy,  state  assistant  attorney general"]  is                                                               
quoted  as having  noted  that  "Alaska is  the  only state  that                                                               
awards repayment  of all  legal fees to  winning litigants."   He                                                               
asked if  that is  accurate and,  if so,  how it  transpired that                                                               
Alaska stands alone among 50 states.                                                                                            
9:29:31 AM                                                                                                                    
MR.  MacLEOD-BALL   [began  to  answer,  but   due  to  technical                                                               
difficulty  the teleconference  connection was  cut off  abruptly                                                               
and he could no longer be heard].                                                                                               
The committee took an at-ease from 9:30:29 AM to 9:32:27 AM.                                                                
9:32:28 AM                                                                                                                    
CHAIR SEATON asked Mr. MacLeod-Ball  to repeat his answer for the                                                               
9:32:57 AM                                                                                                                    
MR.  MacLEOD-BALL said  the answer  is  complicated because  each                                                               
state has  slightly different  rules.   For example,  some states                                                               
have a greater  number of statutes that award attorney  fees.  He                                                               
said in  almost all  states the courts  have discretion  to award                                                               
attorney fees,  but some courts  will interpret  their discretion                                                               
somewhat more broadly  than others.  Mr.  MacLeod-Ball stated his                                                               
belief that Alaska  is the only state that follows  the rule that                                                               
says as  a matter of  course the losing  party pays a  portion of                                                               
the winning  party's fee.   He stated the  reason for that  is to                                                               
discourage frivolous lawsuits.  He  added, "Beyond that there can                                                               
be sanctions ... awarded, as well."                                                                                             
9:34:01 AM                                                                                                                    
REPRESENTATIVE  GARDNER  said  she  would  like  a  copy  of  Mr.                                                               
MacLeod-Ball's testimony in writing, if available.                                                                              
9:34:16 AM                                                                                                                    
CHAIR SEATON made the same request of all the testifiers.                                                                       
9:34:25 AM                                                                                                                    
REPRESENTATIVE   GRUENBERG   offered   his   understanding   that                                                               
Rule 82(b)(3)  "puts  some  sidebars   on,  among  other  things,                                                               
frivolous  suits."   He  said  he  is  not certain  whether  that                                                               
subsection applies  in the public  interest arena, but  asked Mr.                                                               
MacLeod-Ball, "Would you have any  problems with making sure that                                                               
that does  apply so that the  rule would explicitly say  that ...                                                               
the  court  can  take  into   consideration  if  the  lawsuit  is                                                               
9:35:20 AM                                                                                                                    
MR.  MacLEOD-BALL answered  that he  would have  no problem  with                                                               
that.  He  stated, "Our practice is not to  file a lawsuit unless                                                               
we are very confident we're going to win."                                                                                      
9:35:56 AM                                                                                                                    
KARI  ROBINSON,  Legal  Advocacy Project  (LAP)  Director/Project                                                               
Attorney, Alaska  Network on Violence  & Sexual  Assault (ANVSA),                                                               
testified in opposition to SB 86.  She relayed:                                                                                 
     We were  a successful public interest  litigant back in                                                                    
     1997,  and  we were  forced  to  sue the  Alaska  court                                                                    
     system  to ...  properly  implement  the 1996  Domestic                                                                    
     Violence  Act.    So,  here   we  were  challenging  to                                                                    
     actually  have  the   legislative  mandate  in  statute                                                                    
     properly enforced.   So,  I want to  echo that  a small                                                                    
     nonprofit  does  not  take   on  litigation  like  that                                                                    
     without serious  consideration.  We would  never file a                                                                    
     frivolous  lawsuit; it's  a  huge  investment of  staff                                                                    
     time,  and  we  really  consider ...  what  the  public                                                                    
     impact of the litigation is.                                                                                               
     I also want to echo  that this bill would affect people                                                                    
     in our  society who are  least likely to  protect their                                                                    
     rights.    We're  talking  about  victims  of  domestic                                                                    
     violence  and sexual  assault, ...  the poor,  minority                                                                    
     groups, the  disabled, and the  elderly.  If  this bill                                                                    
     passed,  it  would  severely limit  our  ability  as  a                                                                    
     nonprofit  to  take  action   for  victims'  rights  in                                                                    
     similar  types of  litigation  ... as  we  did back  in                                                                    
9:38:15 AM                                                                                                                    
REPRESENTATIVE  LYNN asked  Ms. Robinson  for an  example of  the                                                               
type  of case  in which  ANVSA might  get involved  in suing  the                                                               
state as a public interest litigant.                                                                                            
9:38:41 AM                                                                                                                    
MS. ROBINSON  offered more  details regarding  the aforementioned                                                               
case from 1997.   She explained that the court  system refused to                                                               
put  all three  types of  protective  orders on  the state  court                                                               
form, which  meant that a victim  could not request all  forms of                                                               
relief  that the  legislature  had mandated  by  statute.   After                                                               
trying  for over  a  year  to negotiate  with  the court  system,                                                               
ANDVSA finally had  to file suit.  Ms. Robinson  said ANDVSA kept                                                               
costs down by  doing much of the  work in house and  was lucky to                                                               
have an attorney work for  the nonprofit organization for reduced                                                               
fees.  She said the case was  won, and she stated her belief that                                                               
had ANDVSA not filed that suit,  victims today would not have all                                                               
three types of  protective orders available to them  on the court                                                               
9:39:55 AM                                                                                                                    
CHAIR  SEATON asked  Ms.  Robinson  if ANDVSA  "put  in" for  the                                                               
attorney fees as they had been  incurred at the reduced levels or                                                               
if they were requested at a higher level.                                                                                       
9:40:18 AM                                                                                                                    
MS. ROBINSON  said ANDVSA  requested those fees  at the  level at                                                               
which they were incurred, which was  at a reduced rate.  She said                                                               
the fees for that litigation, which  lasted at least a year, were                                                               
$19,000.   In  response  to  a question  from  Chair Seaton,  she                                                               
confirmed that  the court  decided to  award the  actual attorney                                                               
fees.  She said it was a hardship  for ANDVSA to come up with the                                                               
reduced fees, because the nonprofit  organization has limited and                                                               
restricted funding.  She concluded,  "So, litigation such as this                                                               
would really limit our ability."                                                                                                
9:41:02 AM                                                                                                                    
REPRESENTATIVE  LYNN  asked  Ms.   Robinson  if  ANDVSA's  public                                                               
interest litigant prevailed on all  elements of the litigation or                                                               
just some.                                                                                                                      
9:41:08 AM                                                                                                                    
MS. ROBINSON replied that there  were three elements in the case,                                                               
all three of which were won.   Two of them became mute, she said,                                                               
when the court  system agreed to make changes, but  the third and                                                               
primary issue,  which was to  list all three types  of protective                                                               
orders on the court form, was won through litigation.                                                                           
9:42:18 AM                                                                                                                    
MS.  ROBINSON,  in response  to  a  question from  Representative                                                               
Gruenberg, explained that there are  a number of factors that the                                                               
court looks  at in  determining "whether or  not you're  a public                                                               
interest litigant."  She said, "It's  not ... simply by the issue                                                               
that you're bringing to the court."   She listed the four factors                                                               
that the  court considers,  which are to  decide whether  or not:                                                               
the case is  designed to affect strong  public policies; numerous                                                               
people  will receive  benefits  from the  suit  if the  plaintiff                                                               
succeeds; only  a private party  can have been expected  to bring                                                               
the  suit;  and  the  purported   public  interest  litigant  has                                                               
sufficient economic incentive  to file suit - even  if the action                                                               
involved only narrow issues lacking general importance.                                                                         
9:43:18 AM                                                                                                                    
CHAIR SEATON mentioned  the Dansereau v. Ulmer case  and said the                                                             
committee had  heard testimony  that a  court may  also determine                                                               
that  apportionment  is  appropriate because  a  litigant  raised                                                               
certain issues  that were  frivolous.  He  asked Ms.  Robinson if                                                               
she  is familiar  with  that case  or was  made  aware that  some                                                               
frivolous suits can reduce the award.                                                                                           
9:43:37 AM                                                                                                                    
MS. ROBINSON responded that she is not familiar with that case.                                                                 
9:44:28 AM                                                                                                                    
CHAIR SEATON closed public testimony.                                                                                           
9:44:36 AM                                                                                                                    
MR.  RUARO  recollected  that Representative  Gatto  had  made  a                                                               
comment  that  the  public  interest   litigant  doctrine  is  an                                                               
aberration  among  the  50  states.     He  concurred  with  that                                                               
estimation.  He said, "Any  other states that do provide recovery                                                               
of  enhanced attorney  fees do  handle that  by statute,  and ...                                                               
we're  suggesting that  this legislature  can do  that very  same                                                               
thing."  Regarding the apportionment  issue, he noted that public                                                               
interest litigants  under Dansereau  can prevail  on one  issue -                                                             
one  item -  and  recover  full attorney  fees.    He offered  an                                                               
example of  when that  has happened.   In  response to  a request                                                               
from  Chair Seaton,  he said  he would  provide to  the committee                                                               
information pertaining to the court cases.                                                                                      
9:46:32 AM                                                                                                                    
MR.  RUARO   referred  to   Mr.  MacLeod-Ball's   testimony  that                                                               
something needs to be in place  that imposes a penalty on parties                                                               
for bringing  a frivolous or losing  suit, and he said  under the                                                               
public  interest   litigant  doctrine   the  loser   doesn't  pay                                                               
anything.  He recalled testimony  that characterized the types of                                                               
plaintiffs  that bring  these cases  as being  ordinary, everyday                                                               
people and individuals  with a lack of funds.   He stated, "While                                                               
that may be  the case in some  instances, I think if  you look at                                                               
Ms.  Taylor's February  17 Legislative  Report, I  think to  your                                                               
office, most of  the entities listed in  there are organizations,                                                               
environmental groups, ACLU,  and I would suggest to  you that ...                                                               
some of those  organizations at least have more  than ample funds                                                               
and  don't ...  fit the  image that  was painted  for the  public                                                               
interest litigants.   In response  to Mr.  MacLeod-Ball's mention                                                               
of eminent domain as an  exception, he stated, "That's in current                                                               
statute,  and  that's why  it  would  still  stand."   Mr.  Ruaro                                                               
disagreed  with  a  former testifier's  characterization  of  the                                                               
Department of Law  as not being competent, revealing  that he had                                                               
worked eight years in private  practice and sees the attorneys in                                                               
the department as highly specialized.                                                                                           
9:48:37 AM                                                                                                                    
CHAIR SEATON  reminded Mr. Ruaro  that the opinions  expressed by                                                               
those  testifying   are  not  necessarily  the   opinion  of  the                                                               
committee, even if they are not  challenged by the committee.  He                                                               
said there had  been testimony imparting that  full attorney fees                                                               
would  be  paid in  relation  to  "challenging on  constitutional                                                               
grounds."  He said he does not see that in SB 86.                                                                               
9:49:01 AM                                                                                                                    
MR. RUARO said that exception is  in House Bill 145, which is "up                                                               
on appeal right now."                                                                                                           
CHAIR SEATON asked  if that exception is for the  recovery or the                                                               
payment of the fee.                                                                                                             
MR. RUARO said he believes it is for the recovery.                                                                              
9:49:23 AM                                                                                                                    
CHAIR  SEATON said,  "But  we're passing  a  piece of  subsequent                                                               
legislation  now, without  the  exception  for enhanced  recovery                                                               
fees  for  constitutional  grounds.    So,  as  I  see  it,  this                                                               
subsequent   legislation   will   be  precedent   over   previous                                                               
legislation."  He asked if that is correct.                                                                                     
9:49:52 AM                                                                                                                    
MR.  RUARO said  he  believes  that is  incorrect.   He  directed                                                               
attention to page 2, lines 4-6, which read:                                                                                     
          (c) This Act does not preclude the enactment of,                                                                      
     nor  create an  implied  repeal  of, specific  statutes                                                                    
     authorizing  awards  of  attorney  fees  in  particular                                                                    
     situations, such as in AS 45.50.537.                                                                                       
MR. RUARO indicated that the  language includes enhanced attorney                                                               
fee awards, "so that it dovetails in that regard."                                                                              
9:50:08 AM                                                                                                                    
REPRESENTATIVE GARDNER said  Mr. Ruaro had given an  example of a                                                               
case in  which the plaintiff lost  on several points, won  on one                                                               
point, but  received full attorney  fees.   She asked if  that is                                                               
standard,  and if  there could  be other  cases in  which someone                                                               
could lose on  several points, win on one point,  and get partial                                                               
9:50:24 AM                                                                                                                    
MR.  RUARO responded  that the  standard  for nonpublic  interest                                                               
litigants is  that they have  to be  the prevailing party  on the                                                               
main issue in the case,  whereas public interest litigants merely                                                               
need to prevail on a single  issue in the case to receive payment                                                               
of full attorney fees for all issues.                                                                                           
9:52:25 AM                                                                                                                    
REPRESENTATIVE GRUENBERG,  regarding Mr.  Ruaro's defense  of the                                                               
department's  attorneys, suggested  that  [the attorneys  working                                                               
for]  the  State of  Alaska  have  far  more resources  than  any                                                               
litigant that they are up against.                                                                                              
MR. RUARO,  although agreeing that the  state as an entity  has a                                                               
significant  amount of  resources, said  he wouldn't  label those                                                               
resources as unlimited.                                                                                                         
CHAIR  SEATON  reopened  public testimony  to  allow  someone  to                                                               
testify whose  name previously had  not been noticed on  the sign                                                               
up sheet.                                                                                                                       
9:52:57 AM                                                                                                                    
KAY  ROLLISON,   testifying  on  behalf  of   herself,  told  the                                                               
committee about a  case that she had to "take  on" a couple years                                                               
ago that was  against organized labor.  Luckily,  she said, there                                                               
were  a  couple  of  attorneys  that  were  willing  to  work  on                                                               
contingency  fees.   If  it had  not been  for  the "loser  pays"                                                               
requirement, she  said, she would  never have had the  ability to                                                               
take  that case  on.   She related  that just  knowing she  has a                                                               
right  to  bring  a  case   against  any  person  or  entity  not                                                               
fulfilling the  obligations specified  by law  keeps her  "in the                                                               
process."     Ms.  Rollison  suggested   that  if   the  proposed                                                               
legislation  passes, there  would  be nothing  "to  keep it  from                                                               
sliding over  into the  private sector also,  so that  those same                                                               
contingency fees would  be limited to a certain  amount, and then                                                               
... I'd have no way to defend  myself in that arena either."  She                                                               
     When  it   comes  to  principle,   when  it   comes  to                                                                    
     integrity, and it comes to  my staying connected to how                                                                    
     we run this  state, if you pass this  bill, you've just                                                                    
     cut my legs right out from  under me.  I personally ...                                                                    
     have  concerns with  things that  are going  on in  our                                                                    
     legislature,   things  that   are  going   on  in   our                                                                    
     government,  and I  may  well be  one  of those  public                                                                    
     And with respect  to your nonprofits and  how they play                                                                    
     into it:   Okay, I'm single, I'm by myself,  ... I have                                                                    
     some small  savings, but  if I  had a case  - if  I had                                                                    
     something that  I just was  willing to  risk everything                                                                    
     for  - I  would  probably  have to  ...  look for  some                                                                    
     nonprofit  that might  be interested  in taking  ... my                                                                    
     case  [and be]  willing to  help me,  because at  least                                                                    
     they  have ...  some  way of  helping  me present  that                                                                    
     ... My  plea to you is  to please keep this  process as                                                                    
     it is.  It's scary even as  it is, but ... I think it's                                                                    
     incredibly  untimely  that  this  particular  piece  of                                                                    
     legislation is brought up.   You might be thinking that                                                                    
     you're defending  yourself or looking out  for some big                                                                    
     money-bag, nonprofit  group from outside ...  or inside                                                                    
     the  state, but  I'm not  one of  those, and  I've used                                                                    
     this process, at  least ... on the private  side, and I                                                                    
     may well use it on the public side.                                                                                        
9:57:44 AM                                                                                                                    
CHAIR SEATON closed public testimony.                                                                                           
CHAIR SEATON announced that SB 86 was heard and held.                                                                           

Document Name Date/Time Subjects