Alaska Miners Association v. Holman

         Appeal from the Superior Court of the State of Alaska Supreme Court No. 4FA-13-01296 CI, Fourth Judicial District, Fairbanks, Paul R. Lyle, Judge.

          Appearances: Matthew Singer and Robert J. Misulich, Holland & Knight LLP, Anchorage, for Appellants.

          Timothy A. McKeever and Stacey C. Stone, Holmes Weddle & Barcott, P.C., Anchorage, for Appellees Holman, Niver, and Salmon. Notice of nonparticipation filed by Elizabeth M. Bakalar, Assistant Attorney General, and Craig W. Richards, Attorney General, Juneau, for Appellees Treadwell and State of Alaska, Division of Elections.

          Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and Carney, Justices.

          OPINION

          STOWERS, Chief Justice.

         I. INTRODUCTION

         Richard Hughes, Alaska Miners Association, and Council of Alaska Producers (Hughes plaintiffs) challenged the certification of a ballot initiative that would subject large-scale mining operations in the Bristol Bay region to additional legislative approval. It is undisputed that this initiative, if passed, would impact the Pebble Project, a potential large-scale mining project in the Bristol Bay region. The initiative's sponsors, John H. Holman, Mark Niver, and Christina Salmon (Holman intervenors), intervened on the side of the State, and the State and intervenors moved for summary judgment to establish the legality of the initiative. The superior court granted the State's and the Holman intervenors' motions for summary judgment and we affirmed on the merits.^[1]

         The Holman intervenors then moved for full reasonable attorney's fees as constitutional claimants under AS 09.60.010.^[2] The Hughes plaintiffs opposed, arguing that they themselves were constitutional claimants and that the Holman intervenors were not constitutional claimants because they were intervenor-defendants. The superior court determined that the Holman intervenors were constitutional claimants. It also found that because Pebble Limited Partnership (Pebble) financed at least part of the litigation for the Hughes plaintiffs, Pebble was the real party in interest; the court further found that Pebble did not qualify as a constitutional claimant because it had sufficient economic incentive to bring the action. The court therefore awarded the Holman intervenors full reasonable attorney's fees. The Hughes plaintiffs appeal. We hold that because this case is fundamentally about constitutional limits on the ballot-initiative process and not whether the Pebble Project should go forward, the Hughes plaintiffs did not have sufficient economic incentive to remove them from constitutional-claimant status, and we therefore reverse the award of attorney's fees.

         II. FACTS AND PROCEEDINGS

         This appeal involves an attorney's fees dispute following a superior court decision upholding Lt. Governor Mead Treadwell's certification of the "Bristol Bay Forever" ballot initiative. The initiative was approved to be placed on the November 2014 ballot. It required additional legislative approval for "a large-scale metallic sulfide mining operation located within the watershed of the Bristol Bay Fisheries Reserve."

         In January 2013 Richard Hughes filed suit against Lt. Governor Treadwell and the State of Alaska, Division of Elections seeking declaratory and injunctive relief and asserting that the initiative was contrary to the subject matter restrictions in article XI, section 7 of the Alaska Constitution.^[3] Hughes also alleged that the initiative violated separation of powers. Hughes's Amended Complaint added as a plaintiff the Alaska Miners Association, and his Second Amended Complaint added the Council of Alaska Producers. The initiative's sponsors, JohnH. Holman, MarkNiver, and Christina Salmon, moved to intervene as defendants, and the superior court granted that motion.^[4]

         In February 2014 the superior court granted summary judgment in favor of the State and the Holman intervenors, ^[5] and on appeal we affirmed the superior court's decision.^[6]

         After the superior court entered final judgment the Holman intervenors moved for an award of full attorney's fees and costs, claiming that they were constitutional claimants or in the alternative that they were entitled to attorney's fees and costs under Alaska Rules of Civil Procedure 79^[7] and 82.^[8] The Holman intervenors supported their motion with affidavits from Holman, Niver, and Salmon. All claimed that they did not have an economic incentive for pursuing litigation; rather, they asserted that they were primarily concerned with protecting their rights to get the initiative on the ballot.^[9]

         The Hughes plaintiffs opposed the motion and raised two primary arguments: (1) they were constitutional claimants and thus immune from attorney's fees under AS 09.60.010(c); and (2) the statute was intended to protect persons who raised constitutional claims against the State but not to protect intervenor-defendants against private parties.^[10] In support of their argument that they were constitutional claimants, they filed affidavits from Hughes; Deantha Crockett, Executive Director of the Alaska Miners Association; and Karen Matthias, Managing Consultant of the Council of Alaska Producers. Each disclaimed any economic interest in the litigation. Notably, their opposition did not allege that the Holman intervenors had an economic incentive to litigate and were therefore not constitutional claimants. They also contended that the Holman intervenors' fees were excessive.

         In their reply brief in superior court, the Holman intervenors asserted that the Hughes plaintiffs had economic incentive to bring the action and suggested that Pebble was actually the entity paying for the litigation. The Holman intervenors attached an affidavit from Scott Kendall, an attorney working for them. Kendall attached a number of publications to his affidavit connecting the Hughes plaintiffs to Pebble.

         At oral argument counsel for the Hughes plaintiffs conceded that plaintiffs' litigation fees had been paid for by the Alaska Miners Association, the Council of Alaska Producers, and Pebble. He also conceded that Pebble had agreed to indemnify all of the named plaintiffs in the event of an adverse attorney's fees ruling. But he argued that if the Hughes plaintiffs' interests in mining could exclude them from constitutional-claimant status, then the Holman intervenors' interests in commercial fishing should likewise disqualify them from constitutional-claimant status.

         The superior court awarded full fees to the Holman intervenors in the amount of $63, 944. The court first concluded that the intervenors were claimants under AS 09.06.010(c) because "[their] summary judgment motions sought declarations that [the initiative] was constitutional and [they] sought dismissal of [the Hughes plaintiffs'] complaint. [Their] claims were, therefore, in substance, counterclaims to [the plaintiffs'] claims: [they] sought the exact opposite result [the plaintiffs] sought." The court found that this was true even though the Holman intervenors failed to raise counterclaims in their answer.

         The court next sought to determine whether the Hughes plaintiffs were constitutional claimants and therefore exempt from paying fees. The court decided that "[t]hey filed non-frivolous constitutional claims on which they did not prevail and [were] subject to paying full, reasonable attorney's fees and costs only if they had an economic incentive to bring the action." The court then found that they had an economic incentive to bring the claim because "[t]he only entity actually paying the intervenors' fees[, Pebble, ] will be the entity with an undeniably 'sufficient economic incentive to file suit even if the action involved only narrow issues lacking general importance.' "^[11] The court did not make findings whether the Holman intervenors had a sufficient economic incentive to preclude constitutional-claimant status.

         The court provided an alternate ruling in the event that on appeal this court determined the court was not permitted to consider Pebble's funding of the litigation. The court found that "[the Alaska Miners Association's] and [the Council of Alaska Producers'] affidavits fail to make a prima facie showing of the interests of their typical members so that the court can assess the organizational economic incentives." The Council noted only that it was a trade group "representing Alaska's large metal mining industry"; the court found that the Council therefore failed to provide it with sufficient evidence to determine the Council's constitutional-claimant status under AS 09.60.010(c)(1). Similarly, the court found that the Alaska Miners Association identified classes of members, but it failed to provide information concerning its members' typical economic interests. The court concluded that the two organizations therefore waived their claims to constitutional-claimant status.

         The court next analyzed whether Hughes was a constitutional claimant. The court noted that his affidavit disclaimed any economic interest in the litigation and that he therefore had made a prima facie showing that he had no financial interest in the litigation. But the court concluded that the Holman intervenors "submitted evidence tending to rebut [this] prima facie showing." Because the ongoing relationship between Hughes and Pebble was unclear, the court stated that the Holman intervenors would be permitted discovery on that issue if this court ...