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Alaska Conservation Foundation v. Pebble Limited Partnership

Supreme Court of Alaska

May 29, 2015

ALASKA CONSERVATION FOUNDATION, Petitioner,
v.
PEBBLE LIMITED PARTNERSHIP, Respondent. NUNAMTA AULUKESTAI, RICKY DELKITTIE, SR., VIOLET WILLSOBELLA HAMMOND, and VICTOR FISCHER, Petitioners,
v.
STATE OF ALASKA, DEPARTMENT OF NATURAL RESOURCES, and PEBBLE LIMITED PARTNERSHIP, Respondents. TRUSTEES FOR ALASKA, Petitioner,
v.
PEBBLE LIMITED PARTNERSHIP, Respondent

Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Eric A. Aarseth, Judge. Superior Court No. 3AN-09-09173 CI.

Susan Orlansky and William J. Wailand, Feldman Orlansky & Sanders, Anchorage, for Petitioner Alaska Conservation Foundation.

Nancy S. Wainwright, Victoria Clark, and Stephen E. Cotton, Trustees for Alaska, Anchorage, for Petitioners Nunamta Aulukestai, et al.

William S. Cummings, Friedman Rubin, Bremerton, Washington, for Petitioner Trustees for Alaska.

Matthew Singer, Howard S. Trickey, and Robert J. Misulich, Jermain Dunnagan & Owens, P.C., Anchorage, for Respondent Pebble Limited Partnership.

John A. Treptow, Senior Assistant Attorney General, Anchorage, and Michael C. Geraghty, Attorney General, Juneau, for Respondent State of Alaska.

Brettny Hardy, Thomas S. Waldo, and Shawn Eisele, Earthjustice, Juneau, for Amici Curiae Council on Foundations, Sierra Club, Northern Alaska Environmental Center, and Alaska Community Action on Toxics.

Joshua A. Decker and David C. Embree, American Civil Liberties Union of Alaska Foundation, Anchorage, for Amici Curiae Alaska Legal Services Corporation, American Civil Liberties Union of Alaska Foundation, Native American Rights Fund, Northern Justice Project, LLC, and Planned Parenthood of the Great Northwest.

Before: Winfree, Maassen, and Bolger, Justices, and Matthews and Eastaugh, Senior Justices.[*] [Fabe, Chief Justice, and Stowers, Justice, not participating.]

OPINION

Page 274

WINFREE, Justice.

I. INTRODUCTION

Alaska Statute 09.60.010 was enacted to abrogate our previous common law public interest litigation attorney's fees framework and replace it with a narrower constitutional litigation framework. The statute both encourages and protects those challenging governmental action as a violation of federal or state constitutional rights. First, the statute provides that a successful claimant generally is entitled to an award of full reasonable attorney's fees and costs incurred in connection with a constitutional claim, unless the claimant had " sufficient economic incentive" to bring the claim regardless of its constitutional nature. Second, the statute protects an unsuccessful claimant from an adverse attorney's fees award if the constitutional claim was not frivolous and the claimant did not have " sufficient economic incentive" to bring the claim regardless of its constitutional nature. The primary question raised in this case by the original applications for relief and petition for review, which seek to quash an order for wide-ranging discovery about the petitioners' financial information and the third-party funding of this litigation, is what " sufficient economic incentive" means in this context.

As presented to us here, the question arose from unsuccessful constitutional claimants' invocation of the statutory protection against adverse awards of attorney's fees and the responsive assertion that they had sufficient economic incentive to bring their claim regardless of its constitutional nature. But in a related decision issued today,[1] we reversed the superior court's decision on the merits of the constitutional claim and remanded for entry of declaratory judgment in the claimants' favor. The constitutional claimants have therefore become the prevailing parties, and we assume that on remand they will seek an award of attorney's fees and costs under AS 09.60.010. Because such

Page 275

an award is conditioned on the absence of sufficient economic incentive to bring the claim regardless of its constitutional nature, we also assume that on remand the superior court would enter the same discovery orders regarding the petitioners' financial information and third-party funding of the litigation. We see no purpose in dismissing the original applications for relief and petition for review as moot in light of the change in prevailing party status, only to have them re-filed as a result of further attorney's fees proceedings in the superior court; we therefore address the meaning of " sufficient economic incentive."

We first conclude that our earlier public interest litigation case law, outlined below, provides the guiding parameters for the meaning of " sufficient economic incentive." We also conclude that in this case the claimants did not have " sufficient economic incentive" to bring the claim regardless of its constitutional nature. We therefore vacate the superior court's discovery order and remand for further proceedings consistent with today's decisions.

II. FACTS AND PROCEEDINGS

A. Underlying Litigation

Four individual Alaskans and Nunamta Aulukestai, a non-profit organization whose members are village corporations in the Bristol Bay region, sued the State of Alaska, Department of Natural Resources, for alleged constitutional violations related to land and water use permits issued to Pebble Limited Partnership (Pebble) for what we will refer to as the Pebble Project.[2] They sought declaratory and injunctive relief -- primarily a court order requiring the State to provide public notice and make best-interest findings before authorizing land and water use permits for the Pebble Project.[3] Pebble intervened to defend its existing permits and the State's permitting process.[4] After a non-jury trial the superior court issued findings of fact and conclusions of law resolving the case in favor of the State and Pebble.[5]

B. Motions For Attorney's Fees And Related Discovery

The State sought awards of costs and attorney's fees under Alaska Civil Rules 79 and 82, requesting about $82,000 in costs and 30% of its attorney's fees, about $484,000. Pebble requested about $105,000 in costs and 30% of its attorney's fees, about $284,000. Altogether the State and Pebble sought costs and attorney's fees awards in excess of $950,000 against Nunamta Aulukestai and the individuals.

Nunamta Aulukestai and the individuals responded by invoking AS 09.60.010(c)(2)'s constitutional claimant protection, which provides:

[A court] may not order a claimant to pay the attorney fees of the opposing party devoted to claims concerning constitutional rights if the claimant . . . did not prevail in asserting the right, the action . . . was not frivolous, and the claimant did not have sufficient economic incentive to bring the action . . . regardless of the constitutional claims involved.

Nunamta Aulukestai and the individuals argued that the court could not award attorney's fees against them because the case concerned a non-frivolous constitutional claim. Nunamta Aulukestai's executive director and the individuals disclaimed any economic interest in the litigation's outcome.[6]

Page 276

The State and Pebble disputed Nunamta Aulukestai's protected constitutional claimant status, arguing that Nunamta Aulukestai had sufficient economic incentive to bring the claim. According to Pebble, Nunamta Aulukestai made economic arguments throughout the litigation, particularly during closing statements when Nunamta Aulukestai's attorney described people who " have lost their livelihoods" because of Pebble's mineral exploration. Pebble also alleged that Nunamta Aulukestai acted as a " mere stalking horse," bringing the litigation on behalf of the commercial fishing industry and other entities with economic interests in stopping the Pebble Project. The State conceded that it did not know who funded the litigation, but echoed Pebble's accusation that third parties with economic incentives used Nunamta Aulukestai and the individuals as alter egos to bring the litigation.

The superior court issued a preliminary order regarding the requests for costs and attorney's fees. The court determined that Nunamta Aulukestai and the individuals brought a non-frivolous constitutional claim that " trigger[ed] the possible protection within AS 09.60.010(c)(2)." But the court also determined that the State and Pebble " made a prima facie showing that some plaintiffs had an economic incentive to make the claims litigated at trial." Because the court believed that " some source" had funded the litigation, it concluded that the State and Pebble were entitled to discovery and an evidentiary hearing on the economic incentive issue.

The State and Pebble made discovery requests seeking an array of financial information from Nunamta Aulukestai and the individuals. The State requested that Nunamta Aulukestai disclose its members, contributors, and financial information and identify shareholders of member village corporations who were commercial fishers, sports fishing guides, tourism promoters, or otherwise worked in the fishing or tourism industries. Pebble requested that Nunamta Aulukestai provide financial information, including federal tax filings and identities of all members, and disclose its members' funding sources. Pebble also requested that the individuals disclose their property and assets, individual financial information, and details of any promises or assurances from third parties about paying litigation expenses.

Nunamta Aulukestai and the individuals objected to the discovery requests, asserting they were overly broad, unduly burdensome, and not reasonably calculated to lead to admissible evidence. Nunamta Aulukestai also asserted that some requested information was protected by attorney-client privilege, work product immunity, and constitutional rights to free speech and association. The individuals disclosed some financial information, such as annual income, and declared that their attorney-client agreement made them personally responsible for any litigation fees or costs owed to an opposing party.

The State and Pebble filed motions to compel discovery of the information withheld under objection. The State argued that members of the villages connected to Nunamta Aulukestai included commercial fishers, guides, and tourism promoters -- giving Nunamta Aulukestai an economic incentive to bring litigation that would stop mineral exploration near Bristol Bay. Pebble claimed its production requests sought information directly relevant to discovering ...


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