Legislature(2003 - 2004)

05/04/2004 08:28 AM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
          SB  97-ATTY FEES: PUBLIC INTEREST LITIGANTS                                                                       
                                                                                                                              
CHAIR  SEEKINS called  the meeting  back  to order  at 5:38  p.m.                                                               
Present  were Senators  Ogan, Therriault  and Chair  Seekins. The                                                               
committee  took up  SB 97.  He  asked a  representative from  the                                                               
administration to address the committee.                                                                                        
                                                                                                                                
MR.  CRAIG TILLERY,  Assistant  Attorney  General, Department  of                                                               
Law, offered the following explanation  of the proposed committee                                                               
substitute, labeled 23G-2.                                                                                                      
                                                                                                                                
The proposed  CS is similar  to HB 145,  which was passed  by the                                                               
legislature last  year. HB  145 provided  that the  criteria that                                                               
forms the  basis of the  public interest litigant policy  may not                                                               
be used  to discriminate  in the  award of fees  to or  against a                                                               
party. That  bill was challenged  in Superior Court and  found to                                                               
be  unconstitutional  on the  following  basis.  First, it  would                                                               
require a  rule change, which  requires a two-thirds vote  of the                                                               
legislature.  Second,  the  enhanced   fees  against  the  public                                                               
interest litigant  would violate equal protection.  The limits on                                                               
the awarded  enhanced fees to  the public interest  litigant were                                                               
not challenged, according  to the court. The  most critical issue                                                               
was the  two-thirds vote.  The due  process and  equal protection                                                               
decisions were  grounded on  what the court  saw as  a disconnect                                                               
between the  purpose of  the statute,  which is  characterized as                                                               
intended  to deal  with natural  resource cases  due to  the fact                                                               
that  the  bill   was  aimed  at  natural   resource  cases  when                                                               
originally introduced.  The disconnect  was between  that purpose                                                               
and the  effect of that  statute, which  was to affect  all cases                                                               
with very  specific exceptions related to  constitutional rights.                                                               
For those reasons, the court found HB 145 to be overly broad.                                                                   
                                                                                                                                
MR. TILLERY  said the proposed  committee substitute  responds to                                                               
the court  decision in  several ways. First,  it enacts  the same                                                               
rule changes with  a two-thirds vote of  the legislature. Second,                                                               
it  makes  clear  that the  legislature  recognizes  the  broader                                                               
application of change  made by the bill and intended  to do so to                                                               
carry  out   the  fundamental  purpose  of   providing  fair  and                                                               
consistent  treatment  using  objective  criteria.  The  proposed                                                               
committee  substitute  still   contains  provisions  for  special                                                               
treatment  of cases  based on  certain constitutional  rights. It                                                               
still  allows  special treatment  in  other  instances where  the                                                               
legislature  has  specified,  namely consumer  protection  cases.                                                               
This bill differs  from HB 145 by adding a  new special situation                                                               
for  award   of  attorneys'  fees  for   actions  that  challenge                                                               
decisions by  the Board of  Fisheries and  the Board of  Game. In                                                               
this bill,  the provision that deals  with fees to and  against a                                                               
party are split  into two separate provisions  and a severability                                                               
clause has  been added, to  clarify that these two  conducts have                                                               
separate importance  and can  be severed  if one  is found  to be                                                               
unconstitutional.  The proposed  committee substitute  repeals HB
145  retroactively to  its effective  date, which  will moot  the                                                               
current litigation.                                                                                                             
                                                                                                                                
MR. TILLERY said  a new provision in the CS  addresses a separate                                                               
but related  issue. Enhanced fee  awards against the state  - the                                                               
amount over  the normal compensation  awarded by the  court, will                                                               
represent a serious  impact on the state treasury.  Over the last                                                               
10  years,  that impact  has  averaged  $600,000 per  year  above                                                               
normal compensation. Section 4 of  the CS creates a new provision                                                               
in Title  9 devoted to immunity.  It provides that, as  a matter,                                                               
under the  government's sovereign  immunity for civil  actions or                                                               
appeals  in  which  money  judgments  are  recovered,  state  and                                                               
municipalities are not liable to pay  more than 20 percent of the                                                               
money judgment recovered  for attorneys' fees. In  a civil action                                                               
in which  no money is  recovered, the  liability is capped  at 30                                                               
percent  for cases  that go  to trial  and 20  percent for  cases                                                               
resolved  without  trial. For  appeals  in  which the  prevailing                                                               
party recovers no  money judgment, the liability is  capped at 20                                                               
percent.  These  limits on  liability  are  very similar  to  the                                                               
limits the  courts have found  to represent fair  compensation to                                                               
prevailing  parties.   These  limitations  do  not   apply  where                                                               
statutes differ,  where the court finds  awarding attorneys' fees                                                               
appropriate as  a sanction to  misconduct, or in  cases involving                                                               
the condemnation of  property under the power  of eminent domain.                                                               
Immunity  can be  waived  by specific  statute;  one such  waiver                                                               
would be  the constitutional rights  provision; another  would be                                                               
the new  provision that relates  to challenges to actions  by the                                                               
Boards  of Fish  and Game.  Immunity asserts  legislative control                                                               
over state expenditures and provides protection of the state.                                                                   
                                                                                                                                
SENATOR   THERRIAULT  asked   if,  by   repealing  HB   145,  any                                                               
possibility  of   appealing  Judge  Collins'  decision   will  be                                                               
extinguished.                                                                                                                   
                                                                                                                                
MR. TILLERY said that is correct.                                                                                               
                                                                                                                                
SENATOR THERRIAULT  asked why  it is  a foregone  conclusion that                                                               
the legislature would want to forego that possibility.                                                                          
                                                                                                                                
MR. TILLERY explained  if this bill passes by  a two-thirds vote,                                                               
the only  reason to go to  the expense and trouble  of litigating                                                               
HB  145 would  be for  public interest  litigant cases  that have                                                               
arisen in  the meantime. He  is only aware  of one that  has come                                                               
up; that  case is very small  and DOL does not  believe the party                                                               
asserting  it will  prevail.  Therefore, there  is  no reason  to                                                               
continue the  HB 145  litigation unless  someone simply  wants an                                                               
answer  to  the  question  of   whether  a  two-thirds  vote  was                                                               
necessary.                                                                                                                      
                                                                                                                                
SENATOR THERRIAULT said  the legislature has to  be guarded about                                                               
the  erosion  of its  power  and  its  assertion last  year  when                                                               
passing HB  145 was  that it  was a  doctrine, not  necessarily a                                                               
court rule,  so it did  not require  a two-thirds vote.  He noted                                                               
that Mr. Tillery is asking, with  the language in SB 97, that the                                                               
legislature forego  a decision on  that matter by a  higher court                                                               
and to leave the lower court ruling to stand.                                                                                   
                                                                                                                                
MR. TILLERY agreed but said  that is DOL's practical position. He                                                               
noted  that  although  the  legislature   may  have  a  different                                                               
position,  the preamble  of the  bill says  that the  legislature                                                               
does not endorse that court  decision. If the legislature deleted                                                               
the repeal provision, HB 145 would  be left intact and the appeal                                                               
could continue.                                                                                                                 
                                                                                                                                
SENATOR THERRIAULT  said Legislative Legal and  Research Services                                                               
raised  the  issue  of  the sovereign  immunity  clause  and  the                                                               
concern that  approach will  backfire because  it is  unsure that                                                               
the  Supreme  Court   will  look  kindly  at  the   threat  of  a                                                               
constitutional crisis or consider it  to be abrasive. He asked if                                                               
there is an alternate route that the legislature can use.                                                                       
                                                                                                                                
MR.  TILLERY said  he is  not aware  of an  alternate route  that                                                               
would  address this  issue. He  doesn't believe  the court  would                                                               
find this to be abrasive any  more than the legislature finds the                                                               
court's  creation  of a  policy  that  reaches into  the  state's                                                               
treasury  to  be  abrasive.  This  is an  area  between  the  two                                                               
branches of  government that needs  to be explored and  the court                                                               
would have the chance to review  and resolve it. He said that DOL                                                               
does not believe  it in anyway impedes  the legislature's policy;                                                               
DOL believes it helps the legislature's position.                                                                               
                                                                                                                                
MR.  JOE  BALASH,  staff  to  Senator  Therriault,  explained  to                                                               
members that  the sovereign immunity  question is  something that                                                               
has been  a stumbling block  in discussions with  Jerry Luckhaupt                                                               
of Legislative Legal and Research Services. He furthered:                                                                       
                                                                                                                                
     One question is...the question  about the potential for                                                                    
     a constitutional crisis, if you  will, as sort of being                                                                    
     an underlying threat  to the court that,  okay, you may                                                                    
     find  this particular  construction  in Title  9 to  be                                                                    
     infirm for  one reason or  another so we're  just going                                                                    
     to go ahead  and say that the state  and a municipality                                                                    
     are not going to be liable  in the future for any award                                                                    
     in  excess of  the Rule  82 schedule  and there's  some                                                                    
     question as  to whether  or not the  court is  going to                                                                    
     take that seriously.  Currently the legislature already                                                                    
     has  the power  of  appropriation.  If the  legislature                                                                    
     chose not to  award or to appropriate  the fees awarded                                                                    
     to a plaintiff  that was successful in  suing the state                                                                    
     that could be done. In  fact, there've been a couple of                                                                    
     showdowns in  the past, particularly related  to former                                                                    
     Senator Donley  and a particular case  that he followed                                                                    
     very closely.                                                                                                              
                                                                                                                                
     Now  I haven't  had the  time to  go back  and research                                                                    
     whether,  in fact,  those fees  were  never awarded  or                                                                    
     there  was  just  a delay  in  the  appropriation,  but                                                                    
     that's something  that folks who've been  around here a                                                                    
     little while  might remember and recall  as having been                                                                    
     an issue. I wasn't able  to determine the final outcome                                                                    
     of that.                                                                                                                   
                                                                                                                                
SENATOR  THERRIAULT  said  the possibility  of  a  constitutional                                                               
showdown would  occur if the  court determines that the  fees are                                                               
owed but the legislature refuses  to pay them under its sovereign                                                               
status.                                                                                                                         
                                                                                                                                
MR. BALASH agreed.                                                                                                              
                                                                                                                                
SENATOR THERRIAULT said that rather  than force that showdown, an                                                               
alternative way to  get there would be preferable,  which is what                                                               
Mr. Luckhaupt is advising.                                                                                                      
                                                                                                                                
MR. BALASH  added that  the first  issue about  extinguishing the                                                               
legislature's  ability  to  appeal  Judge  Collins'  decision  is                                                               
interesting  because an  argument can  be made  that the  changes                                                               
made in HB  145 last year were changes to  substantive law, which                                                               
is the legislature's place to  decide under the Constitution. The                                                               
case  law  in  this  area  is  a bit  gray  so  this  may  be  an                                                               
opportunity to get some clarity  from the Supreme Court. He noted                                                               
that whether to  approach this particular Supreme  Court would be                                                               
a policy call for the legislature to make.                                                                                      
                                                                                                                                
SENATOR THERRIAULT  reminded members  that the  legislature could                                                               
preserve the right to appeal  by deleting the retroactive section                                                               
of the bill.                                                                                                                    
                                                                                                                                
MR. BALASH noted that Sections 6  and 10 would have to be deleted                                                               
to do  so. He said  if that happened and  DOL were to  appeal the                                                               
case, Legislative  Council may wish  to move it to  be recognized                                                               
in the appeal to the Supreme Court.                                                                                             
                                                                                                                                
SENATOR  THERRIAULT said  since, at  the very  least, this  is an                                                               
issue of  the preservation of legislative  power, the legislature                                                               
could participate in an amicus capacity.                                                                                        
                                                                                                                                
MR. BALASH asked Mr. Tillery if his description was correct.                                                                    
                                                                                                                                
MR. TILLERY replied:                                                                                                            
                                                                                                                                
     ...we   really  do   not  think   that  there   is  any                                                                    
     constitutional show  down that  would be  brought about                                                                    
     by  use  of  sovereign  immunity. That  is  a  standard                                                                    
     clause in  the statutes.  The language that's  in there                                                                    
     was essentially  taken from the  statute. The  way that                                                                    
     would work is if this  is passed and someone challenged                                                                    
     it, by likely doing  a declaratory judgment, the courts                                                                    
     would either  rule that the  legislature could  do this                                                                    
     or could  not do this  and you  would - and  then there                                                                    
     would  be no  fees.  There is  no  challenge. The  real                                                                    
     challenge  would  actually  come  -  it's  one  of  the                                                                    
     alternatives that  you've mentioned, which is  if there                                                                    
     is a  court order  and the  legislature refuses  to pay                                                                    
     it, then you  have two branches of government  - one of                                                                    
     [indisc.] legislature  or something  or the  state does                                                                    
     nothing and the legislature  refused to fund it. That's                                                                    
     the confrontation  but the immunity provision  itself -                                                                    
     there really is no  confrontation. The confrontation is                                                                    
     going to  be on  the court's terms  in the  court. It's                                                                    
     going to decide whether it's valid or invalid....                                                                          
                                                                                                                                
CHAIR SEEKINS  asked Mr. Balash  if he is  suggesting eliminating                                                               
Sections 6 and 10.                                                                                                              
                                                                                                                                
MR. BALASH  said that is correct  if the committee would  like to                                                               
see Judge  Collins' decision  appealed to  the Supreme  Court for                                                               
further  clarification   on  the  question  of   substantive  law                                                               
changes.                                                                                                                        
                                                                                                                                
CHAIR SEEKINS asked  if it basically comes down  to two different                                                               
issues.  What this  bill attempts  to accomplish  may be  totally                                                               
separate  in some  respects from  what the  legislature would  be                                                               
looking at  if appealing that  ruling because it would  be trying                                                               
to determine  the extent of  the authority of the  legislature in                                                               
the appeal.                                                                                                                     
                                                                                                                                
MR. BALASH  said that is  correct. He  then asked Mr.  Tillery to                                                               
comment  on whether  the court  might view  that appeal  as being                                                               
moot if the law has since changed.                                                                                              
                                                                                                                                
MR. TILLERY said it is possible  the court could view it as moot.                                                               
He said he is aware of one case  that was since filed by a public                                                               
interest  litigant that  is alive  under that  law so  they could                                                               
plead  a constitutional  claim. He  said he  cannot answer  as to                                                               
what the  court will decide but  there is an argument  that it is                                                               
not moot because an active  case exists. He added that particular                                                               
case  was brought  before Judge  Collins one  day before  the law                                                               
became effective so it was filed under the old law.                                                                             
                                                                                                                                
CHAIR SEEKINS  asked if that  case in itself would  not challenge                                                               
the law passed last year.                                                                                                       
                                                                                                                                
MR. TILLERY said  it challenges the law but it  was filed the day                                                               
before that law  became effective so it would come  under the old                                                               
policy. Therefore,  if attorney  fees were  sought in  that case,                                                               
they would come under the old law.                                                                                              
                                                                                                                                
CHAIR SEEKINS announced he would hold SB 97 until the next day                                                                  
and adjourned the meeting at 6:05 p.m.                                                                                          

Document Name Date/Time Subjects