Legislature(2003 - 2004)

03/28/2003 03:40 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
           SB 97-ATTY FEES: PUBLIC INTEREST LITIGANTS                                                                       
                                                                                                                                
CHAIR  OGAN asked  a representative  from  the Administration  to                                                               
present the bill.                                                                                                               
                                                                                                                                
MR.   CRAIG  TILLERY,   Assistant  Attorney   General  with   the                                                               
Department of  Law (DOL),  gave the  following explanation  of SB
97.  This legislation  relates to  public interest  litigants and                                                               
more  generally to  attorney  fees, and  it  provides a  specific                                                               
amendment  to Civil  Rule 82.  A  public interest  litigant is  a                                                               
doctrine developed  by the Alaska  Supreme Court,  which provides                                                               
that if  someone is deemed a  public interest litigant in  a case                                                               
and wins  the case, the  person is awarded full  attorney's fees.                                                               
If the  person loses  the case, no  attorney's fees  are assessed                                                               
against him  or her. If the  person wins only a  small portion of                                                               
the  case,  except  in exceptional  circumstances,  there  is  no                                                               
apportionment  for  that  issue   so  full  attorney's  fees  are                                                               
awarded.  In  addition, under  the  catalyst  theory, even  if  a                                                               
person  does not  win a  small part  of the  case but  the agency                                                               
might later adopt  a change reflective of the  lawsuit, the award                                                               
of attorney's fees might be assessed.                                                                                           
                                                                                                                                
MR. TILLERY said the public  interest litigant provision is not a                                                               
court rule; it was developed by  the Alaska Supreme Court in case                                                               
law. It applies both to civil  actions and to appeals. He said SB
183  was introduced  and  passed  the Senate  but  not the  House                                                               
during the last  legislative session. It would  have amended Rule                                                               
82 to remove the public interest  litigant rule for anyone. SB 97                                                               
follows a  similar approach but  is limited to  certain decisions                                                               
made by  the Departments  of Environmental  Conservation, Natural                                                               
Resources  and  Fish  and  Game.   Those  decisions  are  coastal                                                               
consistency  determinations,  the   adoption  of  regulations  or                                                               
decisions for  which there is  an opportunity for  public comment                                                               
and  for   administrative  review  of  the   decision.  In  those                                                               
circumstances,  public interest  litigants would  be treated  the                                                               
same as  other litigants  under the  bill. In  each of  the above                                                               
named  situations, the  state already  paid for  extensive public                                                               
participation.                                                                                                                  
                                                                                                                                
MR.  TILLERY said  one suggestion  likely  to be  proposed as  an                                                               
amendment  is due  to a  glitch on  his part.  SB 97  should also                                                               
amend Appellate Rule 508, which  has the public interest litigant                                                               
exception attached  to it. He said  one more section of  SB 97 is                                                               
not  specific  to  public  interest   litigants.  Civil  Rule  82                                                               
contains a  fee variance in  which, under  certain circumstances,                                                               
one can get enhanced or lowered  fees. SB 97 contains a provision                                                               
that  says  in  those  situations,  if a  fee  is  varied  by  an                                                               
increased  award,  the enhanced  fees  may  only be  awarded  for                                                               
issues  on  which  the  party  prevailed  except  in  exceptional                                                               
circumstances. He  pointed out the exceptional  circumstances are                                                               
not defined  in the bill  but the  Supreme Court term  often uses                                                               
that term in its opinions to denote very rare circumstances.                                                                    
                                                                                                                                
MR. TILLERY said  the purpose of SB 97 is  several-fold. It is an                                                               
effort to balance the incentives  in litigation between those who                                                               
would  attack a  state  resource agency  decision  and those  who                                                               
would defend it. It would change  the law to force all litigants,                                                               
whether they be public interest litigants  or not, to engage in a                                                               
cost benefit  analysis that  regular litigants  must do  prior to                                                               
filing a  suit. In  looking at  the kinds of  costs that  DOL has                                                               
been  required to  bear over  the last  6 or  7 years,  in almost                                                               
every  instance the  entities that  litigated  against the  state                                                               
with public interest  litigant status are entities  that are well                                                               
financed  with a  number of  lawyers. Those  entities can  engage                                                               
very effectively  in this kind  of cost benefit  analysis without                                                               
any disadvantage.  Most public interest lawsuits  are against the                                                               
state and they are costly. DOL  has expended over $475,000 over a                                                               
7-year period.  That money  could be  better spent  elsewhere and                                                               
there is a  risk that it could become a  factor in state decision                                                               
making.                                                                                                                         
                                                                                                                                
MR. TILLERY  noted that  public interest  litigant fees  are also                                                               
available against private individuals. That  may or may not raise                                                               
the specter of  inhibiting the private party's  ability to resort                                                               
to the courts to defend a  lawsuit and to take a certain position                                                               
and follow it to  the end of the lawsuit.   Depending on the size                                                               
of  the entity,  it may  not be  a big  problem but,  for even  a                                                               
moderate sized  corporation, fees can easily  amount to $100,000.                                                               
He said  DOL expects this  bill to reduce  excessive, unjustified                                                               
claims.  The lack  of  apportionment of  awards  has resulted  in                                                               
lawsuits where DOL  has "the kitchen sink thrown at  us and a lot                                                               
of other  appliances." In  a recent case,  84 separate  points on                                                               
appeal were  taken to  Superior Court.  The number  of successful                                                               
points on  appeal was  zero. From that  decision, 98  points were                                                               
taken to  the Supreme Court on  appeal. The case became  moot and                                                               
the  only remaining  issue  was whether  the  litigant would  get                                                               
attorney's  fees. The  current system  provides  no incentive  to                                                               
make a  reasoned decision  as to which  counts should  be pursued                                                               
and  which  should not.  Attorney  time  to defend  against  non-                                                               
meritorious claims is costly to DOL.                                                                                            
                                                                                                                                
MR.  TILLERY  said  the  philosophy  of  this  approach  is  very                                                               
narrowly drawn.  From FY 95 to  FY 01, there were  32 fee orders.                                                               
Of  those,  only 10  would  have  fallen  under this  rule.  This                                                               
approach does  not discourage anyone  from bringing a  lawsuit or                                                               
restrict anyone's  ability to do  so; it only removes  a positive                                                               
incentive  to  bring  a  large  complex  lawsuit  and  makes  the                                                               
litigant  decide the  important issues  upfront. Generally,  they                                                               
all involve  situations where there was  already extensive public                                                               
involvement by the parties and  a number of opportunities both to                                                               
be heard and for public review.                                                                                                 
                                                                                                                                
MR. TILLERY  said under  SB 97,  the courts  remain free  to vary                                                               
awards  under the  civil and  appellate  rules for  a variety  of                                                               
reasons,  such  as the  complexity  of  the litigation.  However,                                                               
awards will  no longer be  varied because  the party is  a public                                                               
interest litigant.                                                                                                              
                                                                                                                                
CHAIR OGAN asked whether committee members had questions.                                                                       
                                                                                                                                
SENATOR ELTON said  his understanding of what  SB 97 accomplishes                                                               
is that  in discrete incidences  described, no attorney  fees for                                                               
public  interest litigants  will be  awarded unless  the litigant                                                               
has followed a  prescribed course of action  for participation at                                                               
the  administrative level.  He asked  if  a court  can make  that                                                               
decision right now based on the circumstances.                                                                                  
                                                                                                                                
MR. TILLERY said  SB 97 does not prevent the  award of attorney's                                                               
fees  like  other  cases  allow.   However,  if  public  interest                                                               
litigants lose, they pay attorney's fees like anyone else.                                                                      
                                                                                                                                
SENATOR ELTON said that can happen now.                                                                                         
                                                                                                                                
MR. TILLERY  said the Supreme Court  has made it very  clear once                                                               
the  court deems  a  person  a public  interest  litigant, it  is                                                               
required  to  award  full  fees  except  in  cases  of  vexatious                                                               
conduct, bad faith, and a few others.                                                                                           
                                                                                                                                
SENATOR ELTON asked if the  case of the 84 non-meritorious points                                                               
that grew to 98 on appeal would be considered vexatious.                                                                        
                                                                                                                                
MR.  TILLERY said  DOL would  consider  it a  vexatious case  but                                                               
DOL's  experience has  been  that courts  generally  do not  find                                                               
counts to  be vexatious because they  are devoid of merit.  To be                                                               
considered vexatious,  a case tends  to require active  bad faith                                                               
or  some  indication that  the  case  was  filed simply  for  the                                                               
purpose of harassment. DOL rarely gets  the court to rule with it                                                               
on that issue.                                                                                                                  
                                                                                                                                
SENATOR ELTON  asked if the court  would consider a case  that is                                                               
totally void of merit to be vexatious.                                                                                          
                                                                                                                                
MR. TILLERY  said DOL  has not  found that  the courts  refuse to                                                               
award attorney's  fees simply because  a count is  totally devoid                                                               
of merit.                                                                                                                       
                                                                                                                                
SENATOR WAGONER asked if the  $475,000 cost was the total expense                                                               
to the state.                                                                                                                   
                                                                                                                                
MR. TILLERY  said that $475,000  was expended on  public interest                                                               
litigants that would most likely  fit under this bill. The actual                                                               
cost for  all public  interest litigants  during that  period was                                                               
actually much  greater. He said at  least one of those  cases was                                                               
$1 million. The  $475,000 does not include the time  spent by DOL                                                               
attorneys  on cases  that  DOL believes  were  without merit  and                                                               
would have  been brought  much more  compactly if  SB 97  were in                                                               
effect.                                                                                                                         
                                                                                                                                
CHAIR OGAN  asked who  the typical litigants  are in  these cases                                                               
and who represents them.                                                                                                        
                                                                                                                                
MR. TILLERY  said a  solitary attorney brought  the case  with so                                                               
many counts that he mentioned. Most  of the cases were brought by                                                               
organizations such as the Trustees for Alaska.                                                                                  
                                                                                                                                
CHAIR OGAN said  it would probably be  unconstitutional to single                                                               
out an organization that repeatedly files these cases.                                                                          
                                                                                                                                
MR. TILLERY  said in DOL's  view, targeting  the bill in  the way                                                               
Chair Ogan  suggested would  be constitutionally  problematic. He                                                               
said that  SB 97  does not  go after an  individual or  party. It                                                               
focuses on  a type of  case where  these fees are  not available,                                                               
such  as consumer  protection  cases.  This prescription  against                                                               
public  interest litigants  would apply  equally to  the Trustees                                                               
for  Alaska and  to  the Pacific  Legal  Foundation, which  might                                                               
bring  a case  on behalf  of an  industry that  is attempting  to                                                               
develop a project.                                                                                                              
                                                                                                                                
SENATOR  BEN STEVENS  asked Mr.  Tillery if  any public  interest                                                               
litigant has  ever brought each  department to  trial separately,                                                               
and  how   many  times  a   public  interest  litigant   has  the                                                               
opportunity to take the state to trial.                                                                                         
                                                                                                                                
MR.  TILLERY replied  cases can  be  complex and  can be  brought                                                               
serially and often.                                                                                                             
                                                                                                                                
SENATOR BEN  STEVENS asked if  the same public  interest litigant                                                               
brings the suit each time.                                                                                                      
                                                                                                                                
MR. TILLERY said it could.                                                                                                      
                                                                                                                                
SENATOR BEN STEVENS asked if that has happened.                                                                                 
                                                                                                                                
MR. TILLERY  said he thought an  ongoing case was the  Forest Oil                                                               
case but  that is not  the only one.  He explained that  one suit                                                               
might be  filed during the  exploration phase and  another during                                                               
the planning phase.                                                                                                             
                                                                                                                                
SENATOR BEN  STEVENS asked  if there  is legal  justification for                                                               
taking a case to each individual  department or whether that is a                                                               
stall tactic.                                                                                                                   
                                                                                                                                
MR. TILLERY said he believes  the litigants are frequently forced                                                               
to file  cases in a serial  fashion because decisions tend  to be                                                               
phased over  a number of years.  One can't sue over  a production                                                               
decision that  was not made  two years ago while  the exploration                                                               
aspects were being addressed. Litigants  have a limited amount of                                                               
time to  sue once a  decision is  made, even though  the litigant                                                               
might prefer to wait and combine lawsuits.                                                                                      
                                                                                                                                
SENATOR  SEEKINS  asked  how   one  establishes  public  interest                                                               
litigant status.                                                                                                                
                                                                                                                                
MR. TILLERY said  the court uses a number of  factors to make the                                                               
determination.  Those factors  include  whether  the litigant  is                                                               
advocating  public policy  or whether  a large  number of  people                                                               
will be affected.  The court looks to see whether  there would be                                                               
enough  of  an  economic  interest   that  the  litigant  has  an                                                               
incentive to bring the case on his or her own.                                                                                  
                                                                                                                                
SENATOR SEEKINS asked if that status is difficult to establish.                                                                 
                                                                                                                                
MR.  TILLERY   said  public  interest  litigant   status  is  not                                                               
something that happens every day,  but the courts are comfortable                                                               
making that decision.                                                                                                           
                                                                                                                                
SENATOR  SEEKINS  asked  if  he  had a  personal  interest  in  a                                                               
situation  and  found  a  friend  who  did  not,  whether  it  is                                                               
conceivable he could  get his friend to become  a public interest                                                               
litigant while Senator Seekins helped fund the case.                                                                            
                                                                                                                                
MR. TILLERY  said first of all  the friend may not  have standing                                                               
to bring  the case. Second,  the court  tends to look  at whether                                                               
the case  is the type  in which a  person might have  an economic                                                               
interest.                                                                                                                       
                                                                                                                                
SENATOR SEEKINS  asked if there  are any  disclosure requirements                                                               
about who is paying for the case.                                                                                               
                                                                                                                                
MR. TILLERY said he did not  know, but the party in litigation is                                                               
a matter of public record, as well as the attorneys.                                                                            
                                                                                                                                
SENATOR  SEEKINS said  he  was  wondering if  he  could have  his                                                               
mother front the case while  he funded it without any requirement                                                               
for disclosure.                                                                                                                 
                                                                                                                                
MR.  TILLERY said  to his  recollection, Senator  Seekins' mother                                                               
could be  the litigant, and  DOL could inquire into  her finances                                                               
if  she asked  that  the fees  be  waived. He  said  it would  be                                                               
difficult  to find  out who  might be  financing her.  If Senator                                                               
Seekins' mother  had an economic  interest in the case,  it would                                                               
not be likely to be a public interest litigant case.                                                                            
                                                                                                                                
5:37 p.m.                                                                                                                     
                                                                                                                                
SENATOR  SEEKINS said  he asked  because the  only name  that has                                                               
been brought  up is  the Trustees  for Alaska.  That organization                                                               
may be funded by an  outside environmental extremist organization                                                               
just to  slow down progress  in the state.  He asked if  there is                                                               
any way to know who might be behind such a case.                                                                                
                                                                                                                                
MR. TILLEY  said he  believes the  Trustees makes  its activities                                                               
public record on its website.                                                                                                   
                                                                                                                                
CHAIR  OGAN commented  that perhaps  a  better disclosure  method                                                               
should  be considered.  He noted  with no  further questions,  he                                                               
would put this measure into  a subcommittee. He appointed Senator                                                               
Seekins as  chair of the  subcommittee, and Senators  Stevens and                                                               
Elton as  members. He encouraged participants  to contact Senator                                                               
Seekins'  office for  the schedule  of subcommittee  meetings. He                                                               
then took public testimony.                                                                                                     
                                                                                                                                
MR.  TOM  CRAFFORD, Alaska  Miners'  Association  (AMA), said  he                                                               
thought  Mr. Tillery  did  an excellent  job  of summarizing  the                                                               
benefits  of SB  97.  He said  the AMA  believes  this bill  will                                                               
create a level  playing field and reduce the  incentives to bring                                                               
lawsuits that  are aimed at delaying  development projects. Given                                                               
the seasonality  of much  of the  work in  Alaska, a  lawsuit can                                                               
delay a project  for a year and  the expense that can  cause to a                                                               
company can  far exceed the  attorneys' fees.  He  stated support                                                               
for SB 97.                                                                                                                      
                                                                                                                                
MR.   GARY  CARLSON,   Senior  Vice   President  of   Forest  Oil                                                               
Corporation, stated support  for SB 97. He told  members that the                                                               
Alaska  Supreme  Court  through judicial  decisions  created  the                                                               
public interest litigant doctrine.  It provides special treatment                                                               
for certain litigants  chosen by the Supreme Court  when it comes                                                               
to  awarding  attorneys' fees.  This  doctrine  has been  applied                                                               
against the state  and private parties who have been  sued by the                                                               
public  interest litigants.  It is  time for  the legislature  to                                                               
step  in and  assert its  authority  over this  area. The  public                                                               
interest  litigant  doctrine  represents  policy  making  by  the                                                               
Supreme Court on issues that  are the province of the legislature                                                               
to  decide. SB  97 levels  the  playing field  and prohibits  the                                                               
courts from  discriminating against litigants appearing  in state                                                               
courts.  It does  so without  amending existing  court rules,  in                                                               
particular Civil Rules 82.                                                                                                      
                                                                                                                                
MR. CARLSON asked  that the public interest  litigant doctrine be                                                               
abrogated   because  it   provides  a   perverse  incentive   for                                                               
environmentalists  and  other  interests opposed  to  development                                                               
activities in  Alaska to sue  the state and private  companies to                                                               
stop projects of  great benefit to Alaskans.  The public interest                                                               
doctrine  is tailor  made for  environmentalists and  other anti-                                                               
development litigants  who qualify  for public  interest litigant                                                               
status virtually as a matter  of law. These litigants face almost                                                               
no  risk in  bringing the  most  frivolous challenge  to a  state                                                               
approved  project. If  they  win  on any  issues,  no matter  how                                                               
trivial, they hit  the jackpot and receive  full attorneys' fees.                                                               
Such  decisions  are not  only  costly  to  the state,  but  they                                                               
operate  as  a  disincentive  for  responsible  companies  to  do                                                               
business  in  Alaska.  He  said  the  Redoubt  Shoal  development                                                               
project is a  good example. He described problems  Forest Oil has                                                               
encountered with litigation of that project.                                                                                    
                                                                                                                                
CHAIR OGAN  asked Mr.  Carlson what  the costs  of the  delays to                                                               
Forest Oil's project cost the company.                                                                                          
                                                                                                                                
MR.  CARLSON  said it  is  difficult  to characterize  the  exact                                                               
amount because  Forest Oil  tried to  make good  use of  its time                                                               
while the  Supreme Court  shut down  its operation.  However, the                                                               
cost was well in excess of $1 million.                                                                                          
                                                                                                                                
CHAIR  OGAN asked  how  long  Forest Oil  has  been operating  in                                                               
Alaska.                                                                                                                         
                                                                                                                                
MR.  CARLSON said  Forest  Oil started  operations  in Alaska  in                                                               
1997.                                                                                                                           
                                                                                                                                
CHAIR  OGAN asked  Mr.  Carlson if  he  believes Alaska's  public                                                               
interest  litigant policy  is a  disincentive  to attracting  new                                                               
investment to the state.                                                                                                        
                                                                                                                                
MR.  CARLSON  said   it  is.  It  destroys   value  and  provides                                                               
uncertainty. When a  company comes to Alaska,  complies with what                                                               
the state has asked  it to do, and is then  shut down for certain                                                               
periods of  time because  of these lawsuits,  it is  definitely a                                                               
disincentive.                                                                                                                   
                                                                                                                                
CHAIR OGAN thanked Mr. Carlson and took further testimony.                                                                      
                                                                                                                                
MR.   NEIL  MACKINNON,   Vice  Chair   of  the   Alaska  Minerals                                                               
Commission,  told members  that it  is no  coincidence that  this                                                               
legislation   is   the    Alaska   Mineral   Commission's   first                                                               
recommendation  in  its annual  report  this  year. He  said  the                                                               
members of  the commission felt  strongly that this is  a serious                                                               
problem companies are facing day in  and day out.  He pointed out                                                               
the second part of the  commission's recommendation is to require                                                               
disclosure of funding sources. He  told members that in 1999, the                                                               
Trustees  for  Alaska  were  awarded  $84,639  in  court  awarded                                                               
attorney's fees. He  said attorney's fees should also  be paid by                                                               
organizations that  file frivolous lawsuits. He  pointed out that                                                               
the  Trustees  for Alaska  spent  $464,000  providing free  legal                                                               
counsel  and advocacy  to protect  and  sustain Alaska's  natural                                                               
environment.  The  Trustee's  assets on  9/30/99  were  $138,959,                                                               
which  is substantially  more than  some of  the companies  it is                                                               
suing. He said companies want  financial equality before the law,                                                               
yet public interest litigants often  have more assets than any of                                                               
the mining  companies. He asked  that the subcommittee  look into                                                               
expanding the legislation to include financial disclosure.                                                                      
                                                                                                                                
CHAIR  OGAN  commented  that  a  few years  ago  members  of  the                                                               
Sakhalin Duma  visited Alaska.  He told  those members  about the                                                               
public interest  litigant doctrine; they were  completely baffled                                                               
by  it. He  then  asked Mr.  MacKinnon how  he  would respond  to                                                               
accusations that  without the public interest  litigant doctrine,                                                               
companies will pollute  the earth and poison  everyone with toxic                                                               
chemicals.                                                                                                                      
                                                                                                                                
MR. MACKINNON said  this bill is fairly limited as  it only deals                                                               
with state  issued permits, for  which massive hearings  are held                                                               
and  public  comment  is  taken.  He  said  these  cases  do  not                                                               
represent the kind  of case where the little guy  is fighting the                                                               
huge evil company.                                                                                                              
                                                                                                                                
CHAIR OGAN said  that groups like the Sierra Club  have raised so                                                               
much money  for the ANWR issue,  they could easily afford  to pay                                                               
for litigation.                                                                                                                 
                                                                                                                                
MR.  MACKINNON repeated  that a  person who  is fighting  an evil                                                               
company  will not  be hindered  in  any way  by this  legislation                                                               
because a  person who brings a  case with merit is  not precluded                                                               
from collecting attorney's fees.                                                                                                
                                                                                                                                
MS.  PAM  LABOLLE,  President  of the  Alaska  State  Chamber  of                                                               
Commerce, stated strong  support for SB 97. She  said that public                                                               
interest litigant  status is a  special one granted to  a certain                                                               
group  of Alaskans  over the  interests of  other Alaskans.  This                                                               
status  was not  created by  the elected  representatives through                                                               
the recognized  public process, the legislature,  but instead was                                                               
created by the  courts. Under this special  status, litigants are                                                               
provided  exemption  from  their  requirements of  Rule  82.  The                                                               
Alaska State  Chamber worked very hard  to get Rule 82  into law.                                                               
The  Chamber feels  the public  interest  litigant doctrine  came                                                               
into  being  through the  courts  in  1990  as  a result  of  the                                                               
Anchorage Daily News vs. the Anchorage School District case.                                                                    
                                                                                                                                
TAPE 03-19, SIDE A                                                                                                              
                                                                                                                                
MS. LABOLLE said  these groups are often  special interest groups                                                               
posing as trusts. Such challenges  typically allege as many as 15                                                               
to  20  specific  deficiencies   in  the  state's  administrative                                                               
finding and when the groups  challenging the resource development                                                               
decisions  prevail,  they generally  do  on  one or  two  issues.                                                               
However, they are awarded the full costs and attorney's fees.                                                                   
                                                                                                                                
MS.  LABOLLE   said  SB   97  will   return  fairness   to  civil                                                               
proceedings. Under  Rules 82,  the court is  allowed to  raise or                                                               
lower  the  amount  to  be awarded  based  upon  the  established                                                               
factors. The  rule should  be applied  equally to  all litigants.                                                               
She urged the committee to support and pass SB 97.                                                                              
                                                                                                                                
MS.  DEBORAH  GREENBERG,  Executive  Director  for  Trustees  for                                                               
Alaska,  told   members  she  submitted  written   testimony  for                                                               
members'  consideration.  The  Trustees asks  to  participate  in                                                               
Senator  Seekins'  subcommittee  and  to  be  notified  of  those                                                               
hearings.                                                                                                                       
                                                                                                                                
There being  no further testimony,  SENATOR SEEKINS asked  if the                                                               
subcommittee  will  be  working  on Version  A  and  whether  the                                                               
proposed amendment has been adopted.                                                                                            
                                                                                                                                
CHAIR OGAN said that is correct and  that he feels it is best for                                                               
the  subcommittee to  look  at the  proposed  amendment. With  no                                                               
further business  before the committee, he  adjourned the meeting                                                               
at 5:55 p.m.                                                                                                                    

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