JAMES M. STUDLEY, Appellant,
v.
ALASKA PUBLIC OFFICES COMMISSION, Appellee.
Appeal
from the Superior Court No. 1JU-13-00669 CI of the State of
Alaska, First Judicial District, Juneau, Philip M.
Pallenberg, Judge.
Fred
W. Triem, Petersburg, for Appellant.
Joanne
M. Grace, Assistant Attorney General, Anchorage, and Craig W.
Richards, Attorney General, Juneau, for Appellee.
Before: Stowers, Chief Justice, Fabe, Winfree, Maassen, and
Bolger, Justices.
OPINION
WINFREE, Justice.
I.
INTRODUCTION
A
self-employed real estate broker ran as a candidate for local
elective office. The broker sought a blanket exemption from
Alaska's financial disclosure requirements to avoid
reporting his clients' identities and the income earned
from them. The Alaska Public Offices Commission denied the
broker's request and assessed a $175 civil penalty for
his failure to comply with the candidate reporting
requirements. On appeal the superior court upheld the
Commission's ruling. The broker now appeals the superior
court's decision, contending the disclosure requirements
violate his duty to maintain client confidentiality, infringe
his clients' privacy rights under the Alaska
Constitution, and impair several personal constitutional
rights. We affirm the superior court's decision upholding
the Commission's ruling.
II.
FACTS AND PROCEEDINGS
In 2012
James Studley, a real estate broker operating through a
self-owned corporation, ran for a borough assembly seat. As a
candidate for public office Studley was subject to
Alaska's financial disclosure laws, administered and
enforced by the Alaska Public Offices Commission. He was
required to file a Public Official Financial Disclosure
Statement reporting the source of any income exceeding $1,
000 earned during the prior calendar year and the nature of
the services rendered.[1] Because Studley owned the corporation
through which he operated, he was self-employed for purposes
of the disclosure laws and so was required to report his
actual client names as the income
"source."[2]
Studley
submitted his calendar year 2011 disclosure statement in July
2012 and amended it three times. On the line for identifying
clients Studley provided no details, but he made notes
essentially stating that he was prohibited by law from
disclosing the information. Under a general entry he titled
"Real Estate Sales" Studley reported "$20, 000
- $50, 000" in income. During this process Studley
contacted the Commission and directed it to four real estate
statutes that he said should provide "an exemption from
disclosing confidential financial
information."[3] Studley stated: "These statutes
specifically prohibit release of any financial information
regarding my clients or customers without prior written
approval or at the direction of the judicial system by court
order."
Campaign
disclosure regulations permit a candidate to request a
reporting exemption or a waiver.[4] The Commission asked Studley
to provide the required information for making an exemption
request, including the name, mailing address, and email
address of the person making the request; the provision under
which the exemption was sought; the reasons for requesting
the exemption; and a certification that all facts given were
true.[5] Studley responded by providing some of the
requested information, including his name, mailing address,
email address, and a certification that the information was
true and accurate. Citing "AS 08-4145, " he gave as
the reason for his request that the statute does "not
allow any financial disclosure or information that would be
considered financially harmful to a
client."[6]
In a
subsequent exchange Studley provided the Commission a copy of
the Alaska Real Estate Commission pamphlet he had referred to
as "AS 08-4145" and stated that no information
about a client may be disclosed without court order. Studley
provided two hypothetical examples to illustrate how
disclosing the existence or details of a broker-client
relationship might harm a client. Studley's first example
discussed how a buyer might be able to infer that a couple is
divorcing from client disclosures and use that as negotiating
leverage in a purchase; his second outlined privacy concerns
for a person selling real property while filing for
bankruptcy. He did not assert that these were actual client
situations he faced.
Later
that day Studley sent the Commission another response
asserting that he was "not required" to file the
disclosures because "I receive my money from my various
owned companies and I have listed both of my companies that
pay me my income." He explained that: "all of my
clients are with contracts to my companies and not to me
personally"; "Alaska real estate law requires a
court order or subpoena before I (a Broker) can release
confidential information"; and "the legal system
seems to weigh towards protecting the personal rights of all
Alaskans['] financial data."
The
following week Commission staff denied Studley's
exemption request. The Commission explained that the four
statutes Studley cited "do not provide any statutory
reason that would exempt you as a candidate[] from disclosing
real estate transactions that provided you income."
Noting that "the value of real estate transactions is a
public process and your involvement and [c]ommissions from
this public process [are] ascertainable already from other
sources, " the Commission concluded that the
transactions did not "fall under a constitutionally
protected zone of privacy." The Commission observed that
"the public's right to know the sources of your
income outweigh[s] any reason you may have to keep these
matters private." The denial also informed Studley that
he could appeal the staff's decision directly to the
Commission's appointed members within 30 days.
Studley
took no action to appeal. The Commission then sent him a
"Notice of Penalty" informing him that civil
penalties are assessed for filing incomplete disclosure
statements, and that he was subject to fines accrued daily
from the decision date until the election date. The penalty
was $10 per day, for a total of $350. Studley was given 30
days to pay the penalty or appeal to the Commission.
Studley
appealed the penalty, requesting a hearing and stating that
he was "not allowed" to comply with the disclosure
laws "on reporting contractual agreements." At the
hearing the commissioners located a real estate statute
defining "confidential information"[7] and tooknoteof
Studley's arguments thattherequired disclosures violated
his clients' constitutional privacy rights.
The
Commission later issued a "Final Order" ruling that
none of the real estate statutes Studley cited prohibited the
required disclosures. The Commission found that Studley
"violated the reporting statute by not filing a complete
[disclosure] report, " but reduced his civil penalty to
$175 because he was an "inexperienced filer." The
order informed Studley that he could request reconsideration
within 15 days and that he could appeal to the superior court
within 30 days.
Studley
requested reconsideration.[8] The Commission addressed Studley's
request at a subsequent meeting, ultimately denying it for
failure to provide a basis for reconsideration.
Studley
had not been represented by an attorney during his Commission
interactions; he retained counsel and filed an appeal with
the superior court after the Commission denied his request
for reconsideration. Studley cited the real estate statute
establishing a licensee's duty to maintain a client's
confidential information learned during representation,
[9] and
the statutory "confidential information" definition
examined at his Commission hearing.[10] Studley also asserted
that the required disclosures would violate his clients'
constitutional privacy rights and would infringe on several
of his own constitutional rights.
The
superior court concluded that Studley "has not shown
that he was called upon to disclose any confidential
information" and that he "never made any specific
assertion that any particular client's information should
be kept confidential." The court rejected Studley's
constitutional claims, explaining that "Studley did not
demonstrate . . . that release of information about his
clients would violate any of his clients' privacy rights
[or that] his rights under any of the[ ] [asserted]
constitutional provisions were violated." Observing that
Studley "provided no basis upon which [the Commission]
could have granted him an exemption, " the court
affirmed the Commission's decision.
Studley
now appeals the superior court's decision with two
"principal questions" for our review. First, do
"real estate regulations that require a broker
not to release confidential client information
conflict with the [Commission's] regulations that demand
this disclosure by a broker who runs for public office?"
(Emphasis in original.) Second, was Studley's
"constitutional right of candidacy improperly
conditioned upon relinquishment of his constitutional right
of privacy and the rights of privacy of his clients[, or
u]pon possible loss of his license and of his
profession?"
III.
STANDARD OF REVIEW
"When
the superior court has acted as an intermediate court of
appeal, we review the merits of the administrative
agency's decision without deference to the superior
court's decision."[11] "[W]e give deference to
[an] agency's interpretation of a statute] so long as it
is reasonable, when the interpretation at issue implicates
agency expertise or the determination of fundamental policies
within the scope of the agency's statutory
functions."[12] But we will substitute our own judgment
for questions of law "when the statutory interpretation
does not involve agency expertise, or the agency's
specialized knowledge and experience would not be
particularly probative."[13] "In such cases we
'adopt the rule of law that is most persuasive in light
of precedent, reason, and policy.' "[14] Questions of
constitutional interpretation are also reviewed de novo under
the substitution of judgment standard.[15]
IV.
DISCUSSION
A.
Candidates Must Report Sources And Amounts Of Income But May
Seek An Exemption When Privacy Concerns Arise.
1.
Disclosure requirements
Under
Alaska law a candidate for elective office, including
municipal office, must file a statement disclosing
"income sources and business
interests."[16] A municipal candidate must disclose this
information when declaring candidacy or submitting other
required filings.[17] The statement must provide "sources
of income over $1, 000" for the preceding calendar year,
including "each source of the income" and the
corresponding "amount of income" earned from the
source, which "may be stated in a range rather than as
an exact amount."[18] A candidate is considered
self-employed when the candidate owns a controlling interest
in an income-deriving entity, such as a partnership or a
corporation.[19] A self-employed candidate's source
of income is the entity's individual "client or
customer."[20] Disclosure statements are available to
the public.[21]
2.
Disclosure exemptions
A
candidate required to file a disclosure statement may request
exemptions from reporting.[22] Among other items, a candidate
may request to keep "the name of an individual
whowasasourceofincome"or "theamountof income"
earned confidential.[23]"The person requesting any exemption
has the burden of proving each fact necessary to show that an
exemption . . . is applicable."[24] A candidate may seek an
exemption under 2 AAC 50.775(c)(1) when "prohibited by
law . . . from reporting" the information, or under 2
AAC 50.775(c)(2) when disclosure "would violate rights
of the source under state or federal statutes or
constitutions."[25] Although the superior court
baseditsdecision on a different provision, [26] both parties
relied on these two provisions and we accept them as the
relevant authorities for this appeal.
B.
Studley Did Not Demonstrate He Was Entitled To An
Exemption.
1.
We regard Studley's assertions as arguments for
an exemption.
Studley
argues that candidate disclosure requirements
"compete" with his statutory duty as a real estate
agent to keep client information confidential, and that
reporting the information would violate his clients'
privacy rights under the Alaska Constitution. Studley claims
that his right to stand for elective office was conditioned
upon the surrender of his right to practice as a real estate
broker and that his equal protection rights were violated. He
also contends he does not need to show that his clients'
information is confidential on a "case-by-case"
basis. We consider these contentions together as an argument
that Studley was entitled to a financial disclosure reporting
exemption.
2.
Exemption requests must be supported by facts;
hypothetical scenarios are insufficient.
As a
candidate requesting an exemption it was Studley's burden
to "prov[e] each fact necessary" to show that a
reporting exemption applied.[27] Contending that he
"cannot know the circumstances of each client, [but] can
envision or anticipate circumstances in which disclosure
would be detrimental, " Studley offers four
"possible examples" where disclosure could be
detrimental to a client.[28] Studley argues that such hypothetical
examples should suffice for an exemption, quoting Falcon
v. Alaska PublicOffices
Commission[29] for the proposition that "a
case-by-case determination would be ...