Alaska Law Blog

In a recent decision, Mat-Su Regional Medical Center, LLC v. Burkhead, the Alaska Supreme Court held that a patient could not assign their personal injury claim for recovery of her medical expenses to her health-care provider.

In Burkhead, a patient received medical services at a hospital after an automobile accident. During her treatment, she signed two “Consent: Authorization, Assignment, and Acknowledgment” forms in which she ostensibly assigned to the hospital “all rights to or claims for payment against third parties” for the reasonable value of medical services rendered. The hospital subsequently attempted to intervene in the patient’s personal injury lawsuit and filed its own suit against the tortfeasor. In both cases, the hospital sought to recover the expenses it incurred in treating the patient from the tortfeasor directly and pursuant to the patient’s purported assignment.

The Alaska Supreme Court held that the patient’s purported assignment of her personal injury claim to the hospital was not valid. The court explained that

the assignment of personal injury claims is socially problematic given the potential for overreaching when injured assignees bargain away some or all of their rights under the equivalent of at least economic, if not physical or mental, duress. Any benefits potentially derived by expanding the remedies available to mandatory providers of emergency services would seem to be outweighed by the risk that the routine collection of such assignments from emergency room patients would increase the potential for duress and decrease the likelihood of a fully informed assignment.

Id. at 5. As such, and because health-care providers had the ability under Alaska law to file a lien against any recovery by the patient from the tortfeasor, the court refused to recognize the assignment of the patient’s personal injury claim to the hospital:

Given that our legislature has provided an effective, albeit limited, lien remedy, the social ramifications of allowing such assignments, and health care providers' continued ability to collect from their own patients as creditors, we think it should be for the legislature to decide whether to recognize assignments of patients' personal injury claims.

The Alaska Supreme Court’s decision may have unintended consequences for the subrogation rights of insurers and health-care providers in Alaska. Litigants may attempt to rely on Burkhead to argue that unless a statute expressly assigns all or part of a personal injury claim to the insurer, employer or other entity, any contractual assignment of that right will not be valid.

The Burkhead ruling may also have an impact in legal malpractice cases. The Alaska Supreme Court has not squarely held that a legal malpractice claim may be assigned. It, however, did not disapprove of the practice in Continental Ins. Co. v. Bayless & Roberts, Inc., 608 P.2d 281, 286 (Alaska 1980) and Bohna v. Hughes, Thorsness, Gantz, Powell & Brundin, 828 P.2d 745, 758 (Alaska 1992) superseded by statute on a different issue as stated in Petrolane Inc. v. Robles, 154 P.3d 1014 (Alaska 2007).

In holding that a patient could not assign her personal injury claim to a health-care provider, the Burkhead court, however, noted that it has “long recognized a ‘general rule of non-assignability of claims for personal injury’ under Alaska law” and that [t]he majority of jurisdictions around the country have similarly declined to recognize the validity of assignments of tort claims for personal injury….” The court’s general disapproval of assignment of personal injury claims could support the argument that the assignment of a legal malpractice claims is not valid, given that a legal malpractice claim is a type of personal injury claim.

Under Alaska Civil Rule 68, a litigant who beats their offer of judgment at trial can recover additional attorney’s fees and costs. On Friday, September 25, 2009, the Alaska Supreme Court ruled that an offer of judgment must be reasonable and good faith in both timing and amount before the penal provisions of Civil Rule 68 can be imposed. In Beal v. McGuire
, an offer of judgment for $1 was held to not be a bona fide attempt to settle the case because of its small amount and timing. The offer of judgment was served thirty days after the litigation was started.

The Alaska Supreme Court’s ruling will limit the utility of offers of judgment, and will cause greater uncertainty, and litigation, over the effectiveness of offers of judgment. For example, is an offer of judgment for defense costs a bona fide effort of settlement? When is an offer of judgment made in good faith, and how is that good faith to be determined? Those issues will now have to be decided by the courts, apparently on a case by case basis.

Most troubling about the Supreme Court’s decision is that it apparently requires that some meaningful amount of money must be offered in order for an offer of judgment to be valid. No longer can offers of judgment for $1 or likely even $100 be made. Thus, even in cases where a claim has no validity, and which will be summarily dismissed, an offer of judgment will be valid only if a meaningful amount of money for a worthless claim is offered. This may have the perverse effect of promoting additional litigation, rather than reducing it, as litigants will no longer be faced with the risk of an award of enhanced fees and costs under Civil Rule 68.

The Alaska Supreme Court recently issued an opinion in Asher v. Alkan Shelter, LLC, which is a case involving an employee’s embezzlement of funds from his employer. The Alaska Supreme Court reversed the trial court’s ruling that the employee and his girlfriend were jointly and severally liable to the employer for the stolen funds, holding that AS 09.17.080, Alaska’s allocation of fault statute, required the court to allocate fault and liability between the employee and his girlfriend.

Significantly, the court ruled that the trial court should not simply determine the total damages suffered by the employer and allocate fault for those damages between the employee and his girlfriend. Instead, the court ruled that the trial court should only allocate fault on those damages it found had been caused by both the employee and the girlfriend. The effect of the court’s ruling is that if a defendant is responsible for a part of, but not all of, a plaintiff’s damages, trial courts and juries must separate the plaintiff’s damages into their divisible parts and make separate allocations of fault for each category of damages.

Asher, however, is perhaps more significant in that it effectively ruled that comparative fault will not apply to fraud claims where the plaintiff proves he justifiably relied on a defendant’s misrepresentations. In Asher, the court held that the justifiable reliance element of the plaintiff’s fraudulent misrepresentation claim precluded an allocation of fault to the plaintiff. The court reasoned that if the plaintiff was at fault for relying on the defendant’s misrepresentation, he would not have been justified in relying on those misrepresentations. A priori, if the plaintiff was justified in relying on those misrepresentations, he was not at fault and no fault could be allocated to him.

The practical effect of Asher is to eliminate comparative fault from fraudulent misrepresentation claims. If a plaintiff prevails on a fraudulent misrepresentation claim, 100% of the fault must be allocated to the defendant(s) and no fault, as a matter of law, can be allocated to the plaintiff. It is unclear how Asher will apply in the context of the Alaska Supreme Court’s prior holdings that, in real estate transactions, a buyer is justified in relying on the seller’s misrepresentations unless it was utterly unreasonable for the buyer to do so.

In a recent decision, Lockhart v. Draper, the Alaska Supreme Court held that punitive damages could be awarded based on an equitable claim if (1) the plaintiff sought equitable relief independent from its claim for punitive damages, (2) the equitable relief was intended to make the plaintiff whole, (3) the plaintiff suffered “substantial damage” and (4) the requirements Alaska’s punitive damages statute, AS 09.17.020, were met. The Alaska Supreme Court affirmed the imposition of punitive damages in Lockhart because the plaintiff sought equitable relief independent of his punitive damages claim, voiding of a fraudulent conveyance, and the fraudulent transfer caused the plaintiff “substantial damage.”

Lockhart is significant in that it permits an award of punitive damages even where no compensatory damages are awarded or sought. While the Alaska Supreme Court recognized that a plaintiff would still have to establish that they suffered “substantial damage” before obtaining punitive damages, those damages do not have to be established to the degree of certainty that would permit an award of compensatory damages. Lockhart thus expands the availability of punitive damages into the realm of equitable claims, and continues the destruction of barrier between equitable claims and legal claims.

In the interest of truth in advertising, I will no longer describe these posts as "weekly" summaries of Alaska Supreme Court opinions. Nonetheless, here is a selection of some relevant and interesting opinions issued by the Alaska Supreme Court over the past month.

May 8, 2009

In Cragle v. Gray, a granddaughter claimed that her grandmother orally promised to leave her house to her if she would care for her until she died. The grandmother’s will left the house to her daughter, and not the granddaughter. The court reversed the trial court’s denial of a motion for partial summary judgment, holding that the oral promise was a succession contract and unenforceable under AS 13.12.514.

Municipality of Anchorage v. Regulatory Commission of Alaska held that the Regulatory Commission had no reasonable basis for denying approval of rate increases requested by the Anchorage Water and Wastewater Utility. The rate increases were necessary because of new regulations adopted by the Municipality regarding payment in lieu of property taxes.

April 24, 2009

E.P. v. Alaska Psychiatric Institute contains a good discussion of Alaska’s involuntary committee laws. The opinion affirms the commitment of a mentally ill individual on three consecutive occasions. The court found that the individual had suffered organic brain injury as a result of his substance abuse, and was a danger to himself and others.

Smith v. Kofstad addressed the time limit for executing on a judgment, and the effect passage of property by operation of law to the judgment debtor’s spouse had the judgment creditor’s effort to executive on the judgment – the property could not be executed on.

April 10, 2009

Ruest v. Alaska Petroleum Contractors addressed the State’s 50% share of any punitive damage award, and held that the parties to a case in which punitive damages are awarded cannot enter into a settlement post-verdict to avoid the State receiving its share of punitive damages. Consequently, the State’s interest in 50% of any punitive damage award attaches at the time the verdict is published, and not at final judgment.

April 3, 2009

In Gibson v. Nye Frontier Ford, Inc., the Alaska Supreme Court reaffirmed that it will do much to preserve an arbitration clause in a contract. Although it found that part of an arbitration provision was unconscionable, it also held that the unconscionable provision was severable, leaving the remainder of the arbitration agreement enforceable. The court did hold that requiring an employee to pay arbitration costs was not permitted by the Alaska Wage and Hour Act. As such, the employer could require arbitration of the employee’s claims only if the employer agreed to pay the arbitration costs.

We’ve hit a “perfect storm” of sorts for guns and the law.

First, we had heavily armed attorney Wayne Anthony Ross rejected for the post of Alaska Attorney General. This one made you catch your breath for a second since it’s the first time in state history a cabinet-level nominee has gone down in flames. But at least WAR accepted his fate and retired from the scene with as much dignity as he could muster. I think it significant that WAR did not strap on a Peacemaker and invite Hollis French (Anchorage Democratic Senator and fellow lawyer) to meet him out on 4th Street at high noon. (“Go ahead, Hollis. Make my day.”)

Next, the 10th anniversary of the Columbine shootings came up. This one made you catch your breath for a minute because of the awful memory of the senseless attack. It was particularly disconcerting to find out that all the motivations we had been lead to believe lay behind the tragedy were bogus. According to the myth busters, the shooters were not actually bullied, did not set out for revenge against the jocks, and were never part of the Trench Coat Mafia. Instead, the reasons for the terrible killings were just that Eric Harris was a maniacal psychopath and Dylan Klebold was not very good at picking his friends. Not real comforting for the fans of an ordered society who like explanations for what went wrong. Even Oprah was discouraged by it.

Now, we’ve got the Ninth Circuit jumping into the fray with both barrels blazing. On April 20, 2009, the Nines issued an important ruling in Nordyke v. King about the Second Amendment to the Constitution. This one made you hold your breath for a full half hour while sorting through the Scalia-esque twists and turns of constitutional law that are set out in the hefty opinion.

The Nordyke case arose because Alameda County, California denied some folks a permit to hold a gun show at the County Fairgrounds. The County based its decision on an ordinance it had adopted that made it a misdemeanor to pack a gun or ammo on County property. The Nordyke plaintiffs took exception to this, claiming in essence that the Second Amendment gave them the right to take a gun or ammo wherever they wanted to go.

The remarkable part of the opinion is that the Nines had to wrestle with the fundamental question of whether the Second Amendment even applied to the States at all. Apparently there was some doubt about the issue and other courts had rejected the notion. But rest assured gun advocates. The Ninth Circuit, in spite of its reputation as a den of liberality, found the Second Amendment applied to the States through the black art of "selective incorporation" under the Due Process Clause of the Fourteenth Amendment.

Yet the application of the Second Amendment to the State of California and its counties did not mean the Nordyke plaintiffs won their case. Instead, the Nines held the ordinance prohibiting guns and ammo on County property did not really infringe on the right to keep and bear arms. The Nordyke plaintiffs could keep their guns and pass them around amongst themselves all they wanted, just not on this particular spot. So in spite of the lofty constitutional issues involved, it was a half-a-loaf deal in the final analysis.

Here in Alaska, the fundamental question the Ninth Circuit confronted is a non-starter since the Constitution of the State of Alaska contains its own version of the Second Amendment. Section 19 of Article I to the Alaska Constitution even says the “individual right to keep and bear arms shall not be denied or infringed by the State or a political subdivision of the State.” This “individual right” phrase differs from the words of the federal Constitution. The unique Alaska language saved us the bother of having to pay much attention at all to the U.S. Supreme Court’s recent decision in District of Columbia v. Heller.

Still, I commend the Nordyke decision to your reading list. It’s a mini-course in constitutional law and it even brings up some old law school chestnuts that are perhaps better off forgotten, such as the Slaughter-House Cases.

Nordyke also has a short concurring opinion that’s worth reading. In the concurrence, Judge Gould feels compelled to point out that "[a]ll weapons are not ‘arms’ within the meaning of the Second Amendment, so, for example, no individual could sensibly argue that the Second Amendment gives them a right to have nuclear weapons or chemical weapons in their home for self-defense.” I’m thinking about highlighting this segment of the decision and sending it over to WAR. You know, just in case he might be getting any ideas about responding to the Alaska Legislature.

Folks who ought to know are saying that Justice Robert Eastaugh is retiring from the Alaska Supreme Court. My information is that Justice Eastaugh is going to be hanging up the black robe in early November 2009.

Justice Eastaugh has served on the Court for the last 15 years. He was appointed by Governor Wally Hickel. You can access Justice Eastaugh's biographical information on the Court System's website.

Given the last go-round between Govenor Palin's supporters and the Judicial Council over Justice Morgan Christen's appointment, it will be interesting to see how this upcoming vacancy on the State's highest court is handled.

(I haven't seen this item reported in the media or elsewhere yet. So now you can't ever say that the Alaska Law Blog is always way behind the current news cycle.)

4/15 UPDATE: Justice Eastaugh's retirement is now confirmed on the Alaska Judicial Council's website.

We are covering two weeks worth of opinions today.

Last week, the court issued Irby v. Fairbanks Gold Mining, Inc., where it held that a workers’ compensation claim was not untimely when the family of a deceased employee waited until after the five-year presumptive death period expired to file a successful presumptive death petition. The court relied on the fact that the employer had notice of the claim and was not prejudiced by the delay, as well as the fact that the family’s first presumptive death petition, filed soon after the industrial accident in which the employee likely died, had been denied for insufficient evidence. This case was a relatively straight-forward application of the doctrine of equitable tolling, as the employee’s family consistently asserted their rights in a different judicial forum. What is missing from the case is a discussion why the employer denied that the employee had died, given that the employee's bulldozer was found at the bottom of a tailings pond shortly after the employee (and his bulldozer) disappeared.

This week, the Alaska Supreme Court issued four opinions. In Allen v. State, Dept. of Health & Social Services, Div. of Public Assistance, the court considered whether the State could recover overpayments of food stamps from recipients, where the overpayment was caused by the State’s error. The court held that Alaska’s common law of equitable estoppel, which would normally have barred the State’s claim for repayment, was preempted by federal law, which required the State to recoup overpayments. The court, however, also held that the notice provided by the State to the recipients was insufficient and violated due process, and ordered the State to issue a new notice before seeking reimbursement. The court recommended that, in connection with the new notice, the State consider the hardship the beneficiaries would suffer as a result of the State’s recoupment efforts.

In In the Matter of the Adoption of S.K.L.H., the court addressed whether an adoption could be rescinded based on the birth mother’s misunderstanding as to the level of visitation she would have with the child that was being put up for adoption. The court held that the birth mother’s misunderstanding was not a basis for rescinding the adoption, but that the trial court should determine the proper amount and type of visitation between the birth mother and the child.

Ted W. v. State, Dept. of Health & Social Services, OCS, held that a father whose parental rights had been revoked had no standing to contest a finding that his child was a child in need of aid, even if the child had been temporarily placed in his custody after his parental rights were terminated.

Finally, in Clemensen v. Providence Alaska Medical Center, an elderly woman with Alzheimer’s was released by a hospital to her adult daughter. The elderly woman subsequently filed for divorce from her husband. Her husband brought suit against the hospital, claiming economic damages and emotional distress out of the fact that the hospital had promised to release the elderly woman only into his custody. The court affirmed the trial court’s dismissal of the husband’s claims that were based on the divorce filing, finding that, as a matter of law, there is no claim for damages arising out of a divorce. The court also held that the husband’s claim for breach of fiduciary duty, which sought damages independent of his divorce, was barred by the tort statute of limitations.

It is this last finding of the Alaska Supreme Court that is most interesting. In past decisions, the court has consistently applied the contract statute of limitations to claims for breach of fiduciary duty. In Clemensen, however, the court stated in a footnote that the source of the fiduciary duty will determine the proper statute of limitations. Thus, in some breach of fiduciary duty cases, the tort, and not contract, statute of limitations will apply. This is a significant break from prior Alaska case law, and it is surprising that it was done in a footnote, and when such a holding was not necessary to decide the case.

In Southeast Alaska Conservation Council v. State, the court held that Article IX, Section 7 of the Alaska Constitution, which bans dedicated funds, prohibited the legislature from directing that income earned on lands transferred by the State to the University of Alaska be placed in the University’s endowment fund. The court also rejected the State’s argument that Article IX, Section 7 did not apply to lands owned by the University, holding that University lands are State lands. The court concluded by finding that the land grant provision of the challenged legislation could not be severed from the unconstitutional portion of the challenged legislation.

In Cusack v. Cusack, the court considered a custody dispute. The court affirmed the trial court’s decision to award physical and legal custody to one parent, to no order family counseling, and to permit the parent with physical and legal custody the option of sending the child to boarding school.

There were three reported decisions issued by the Alaska Supreme Court this week.

In Wooten v. Hindon, an insurer had defended the insured under a reservation of rights, and the insured had retained its own counsel. The plaintiff settled with the defendant’s insurer. When the plaintiff attempted to dismiss the case with prejudice, because of its settlement with the defendant’s insurer, the defendant objected, and argued that it (the defendant/insured) was the prevailing party and should be awarded attorney’s fees. The Alaska Supreme Court rejected this argument, unsurprisingly finding that payment by the insurer to the plaintiff in complete settlement of the plaintiff’s claims against the insured meant that the insured was not the prevailing party.

In Progressive Casualty Ins. Co. v. Skin, the Alaska Supreme Court considered whether an automobile insurance policy covered the son of an insured for liability arising out of an accident that happened when the son was operating an ATV. Applying well-recognized principles of insurance contract interpretation, the court held that the policy’s liability coverage covered only accidents involving automobiles and trucks, and excluded coverage for accidents involving ATVs. The court, however, also held that the son was entitled to coverage under the policy’s medical payments provisions, as that part of the policy did not clearly exclude coverage for accidents that occurred while operating an ATV. The court held that the language in the medical payments provision of the policy was inconsistent with the language of in the policy’s liability coverage provision, and that inconsistency should be construed in favor of coverage.

Finally, in Brotherton v. State, Dept. of Revenue, CSSD, the Alaska Supreme Court considered the proper amount of child support to award in a child custody case.

While some members of Atkinson Conway & Gagnon have been using this blog to get their name in the paper, others, namely your humbled writer, have fallen by the wayside, as has been so directly (and unnecessarily) pointed out. That trend ends now, in large part because of Ayuluk v. Red Oaks Assisted Living, Inc., in which the Alaska Supreme Court expanded the scope of vicarious liability in Alaska. Under the normal rules, an employer is legally responsible for any harm caused by an employee only if that employee was acting within the “course and scope” of his or her employment. In Ayuluk v. Red Oaks Assisted Living, Inc., the Alaska Supreme Court held that an employer could be legally responsible for the acts of an employee, even if those acts are clearly outside the course and scope of their employment, if (1) the employee had, by reason of their employment, “substantial power or authority” over the victim, and (2) that power or authority played a “substantial factor” in bringing about the tort. While this holding is a logical extension of the Court’s previous decisions in the cases involving sexual harassment, it is a significant expansion of an employer’s possible liability. Although the “course and scope” of employment test will continue to be the predominate test for vicarious liability, there is now the possibility that an employer can be liable for even egregious torts (or crimes) committed by an employee, if that employee was able to commit that tort because of the power and authority granted to him by his employer.

The other decisions issued by the Alaska Supreme Court on February 20th and 27th do not, however, break any new ground. Kazan v. Dough Boys, Inc."> addresses a dispute arising out of the sale of a business and an “overbroad financing statement,” and stands for the rather unremarkable position that a court should not enforce a contract against just one of the parties, absent unconscionable terms. Alaska Exchange Carries Association, Inc. v. Regulatory Commission of Alaska applies the rules governing intervention, while State v. Smart held that the United States Supreme Court’s decision in Blakely v. Washington did not apply to persons convicted prior to the issuance of that opinion.

It seems every media outlet and blogger is trotting out a top ten list for 2008. The “Top Ten News Stories of 2008.” The "Top Ten Celebrity Meltdowns of 2008.” Even the "Top Ten Douchebags of 2008."

The Alaska Law Blog has to get in on this action. (No, not the douchebag action, the top ten action.) But there is no way I have the time to put together a list with ten things on it. So I’ve pared it back to just five entries. Hey, you get what you pay for. In this case, you only paid for a half-assed top ten list and that is exactly what you’re getting.

So, here are the top five law-related items of riveting interest for 2008:

No. 5: A contributor to the Alaska Law Blog provides weekly updates on Alaska Supreme Court decisions. Except that it turns out the weekly updates actually come out maybe once or twice a year. (You didn’t think I was going to make a top five list and leave us off of it, did you?)

No. 4: Administrative Law Judge Roy Pearson sues his local dry cleaner for $67 million because they lost a pair of his pants. Alas, Judge Pearson did not prevail on his claim that the sign “Satisfaction Guaranteed” meant the dry cleaner had to pay him whatever he asked for the lost pants. The court said “Satisfaction Guaranteed” established a reasonable man standard, not a subjective standard. (Where have we read that before?)

This news item could be more appropriately titled: “The Judge Is An Ass, Or Does This Lawsuit Make My Butt Look Big?” There was a lot of testimony at trial about Judge Pearson’s pants having three elastic waistband inserts sewn into them.

No. 3: Know your Learned Foote from your Learned Hand. This WSJ Blog story from earlier this month just warmed the cockles of my wizened heart. Some years back a guy named Fred Foote went to Harvard Law School. In Torts class one day they discussed a decision by New York Judge Learned Hand. Fred was so impressed that right then and there he decided to name his first born son “Learned” after the judge. Many years later, despite having plenty of time to sober up, Fred followed through on this vow. Fred’s son, Learned Foote, is now an undergraduate student at Columbia University, but young Learned is being coy about whether he’ll go on to law school.

No. 2: The U.S. Supreme Court does not appoint the next President. In some countries, the elections are rigged and the results are pre-ordained. Soviet satellites, banana republics, and African dictatorships all have had the benefit of free and open elections, as long as the vote of the people did not really count. We should be grateful that the U.S. is not one of those countries, . . . or at least it has not been one since the last change of power in Washington.

We can only hope that the Court has learned from past mistakes. This year the Court actually had the chance to take a case seeking to overturn Barack Obama's election. The lawsuit alleged Obama wasn't a natural-born citizen because his father was a Kenyan, which only made him half-American. In contrast, the paintiff who brought the case was a full natural-born American, yet still seemingly a half-wit. The Court declined to accept the case.

No. 1: Mrs. Palin went to Washington. Whether you think Governor Sarah Palin is the second coming of Ronald Reagan or Dan Quayle, you gotta admit she’s good for lawyers. We had a late summer blitzkrieg of lawsuits and administrative proceedings over Troopergate. These more or less boiled to do how much Sarah was pulling the strings to control her husband Todd. Two respected members of the Anchorage bar reached exactly opposite conclusions on the matter. All of this was fine. Except then they screwed up by not hiring a third lawyer to break the deadlock, which it seems to me is what you want to have happen when full employment for lawyers is the goal.

As it was, they left the whole thing as a tie. This gave the affair the flavor of a stylized Kabuki theater production. All fancy dress, prancing around, and a screeching soundtrack, with the actual plot a secondary consideration.

But thank goodness the legal frenzy the Governor touched off is going to carry over into 2009. The Governor is still being investigated for the travel perks she secured for her daughters, and some of the supporting cast of the Troopergate/Election saga are striking out on their own. Yes, despite the economic crisis in the Lower 48, the new year is not looking too shabby. (From a law blogging standpoint, that is.)

Alaskans have entirely the wrong idea about Vic Vickers, the unsuccessful candidate for the Republican nomination for U.S. Senate. People attacked Vickers as a “carpetbagger” because he has only lived in Alaska since January of this year. They took umbrage at this brash interloper from Outside, throwing his money around, trying to buy his way into elective office. The conspiracy theorists out there even postulated that Vickers was a Democratic operative whose real agenda was to smear Ted Stevens for Mark Begich’s benefit. (This theory, however, took a serious hit when Vickers publicly described Begich as "Ted Stevens on training wheels.")

But people, people, people, let’s take a “big picture” view of Vickers’ candidacy. We shouldn’t be attacking Vickers. Instead, we should be encouraging him. We should be encouraging him and any other millionaires with more money than sense who have a desire to throw away oodles of dough to become elected officials of the Greatland. In fact, the first thing that the Alaska Legislature should do when it reconvenes this winter is to pass a resolution commending Vickers for his participation in the election and asking him to please, please put up a bunch more money to try again.

Just think about it for a few nanoseconds. This guy spent something like $750,000, or maybe even $1 million, of his own money to campaign here. This money was all paid to Alaskans: Alaska TV stations, Alaska radio stations, Alaska newspapers, Alaska ad agencies, Alaska printers, etc. These local businesses are now in the process of passing along this money to the rest of us through those economic channels we all cherish so much. And, this money was all dollars that Vickers successfully pried out of the good citizens of Florida. I mean, its like Florida just loaded up a huge pile of cash on a semi-trailer truck and sent it up here for us to have fun passing around. As an Alaskan, how can you not be in favor of that?

We should embrace this as a business model and develop a cottage industry out of it. Take out ads in the Lower 48 encouraging rich guys who have high opinions of themselves (maybe that’s redundant) to run for office here. “Big. Wild. Wide Open Elections.” Set up a State commission, like the Alaska Film Office, to encourage wealthy Outsiders to try their luck at Alaska politics. Maybe even give them helpful hints, such as suggesting they legally changing their names to something like “Ned Stevens” before making the run.

Of course, we would have to do something about the pesky Alaska Constitution. (I mention the constitution here so that I can legitimately say this blog entry has a tie-in with the law.) The state constitution says that candidates for the Alaska Legislature have to live in Alaska for a minimum of three years and in their legislative district for one year. The constitutional requirements to run for governor are even worse. A candidate for governor has to live in Alaska for at least seven years. (Vickers sidestepped these requirement because he ran for federal office.) But I’m sure that if we look at this thing in the right spirit we can all get behind a “Carpetbagger Amendment” to the state constitution. We can just add an exception that lowers the residency requirements by a couple months for every $1 million in net worth that a candidate spends to campaign in Alaska.

It’s a great idea, don't you think? There will be more money flowing throughout Alaska and we will have more entertaining political campaigns to watch. And what is the worst thing that could possibly happen? That some know-nothing weirdo actually might get elected to public office? You know, I’m pretty sure that’s already happening in almost every election.

Chris Slottee, my esteemed colleague here at Atkinson, Conway & Gagnon, has already reported on the Alaska Supreme Court’s recent decision in Edenshaw v. Safeway, Inc. Chris’ blog post calmly notes that the decision may impose greater liability on property owners than was previously the case. I think that Chris has vastly understated the significance of the decision. This new decision totally knocks out one of the bulwarks of established tort law. I mean, what the heck happened to the Gritty Banana Peel Doctrine?

When I was in law school (back in the far, far recesses of the last century), they taught us fledgling lawyers that negligence was not the equivalent of strict liability. To be negligent and liable for someone’s injuries, you had to do something wrong. More specifically, you had fail to act in the manner that a reasonable person would have acted. Negligence law, good old Professor Dente said, accounted for the fact that BAD STUFF HAPPENS. Sometimes, its nobody’s fault and the plaintiff just has to take it in the shorts. (I'm paraphrasing the professor's comments here.)

This principle of negligence law meant that just because a guy injures himself by falling down in a grocery store does not mean the store owner is liable. If the guy slipped on a banana peel, the store owner is not responsible unless the owner should have cleaned the thing up. So if the banana peel is a fresh one that was not previously tromped upon, it indicates the damn thing just fell on the floor and the store owner can’t be expected to have known about it or to have picked it up. But if the banana peel is all nasty from being on the floor for awhile this demonstrates a reasonable property owner had time to discover the peel and pick it up. This is the Gritty Banana Peel Doctrine.

You probably think I’m making this up. I'm not. In my first-year casebook on Torts from 1977, there were two cases on banana peels. In Anjou v. Boston Elevated Ry. Co., 94 N.E. 386 (Mass. 1911) the plaintiff won because she provided proof of negligence. The banana peel she slipped on “felt dry, gritty, as if there were dirt upon it,” and it was “black, flattened out and gritty.” But in Joye v. Great Atlantic and Pacific Tea Co., 405 F.2d 464 (4th Cir. 1968) the plaintiff lost because there was no proof of negligence. “Plaintiff offered no direct evidence below as to how long the banana had been on the floor before the accident . . . the jury could not tell whether the banana had been on defendant’s floor for 30 seconds or 3 days.” (My Torts book also had a case about pizza on the floor, but to avoid confusing myself or anyone else I want to stick to one kind of food.)

The Alaska Supreme Court in Edenshaw threw the Gritty Banana Peel Doctrine into the dumpster. The Court said a plaintiff can maintain a negligence action without specific evidence showing that the property owner knew or should have known of the dangerous condition. The Court also did not pin the property owner's liability to him doing anything else in particular wrong (like stacking up the bananas in a faulty manner in the first place). In essence, the Court decided to entirely punt the question of sufficient proof of negligence to the jury. The plaintiff does not have to show the property owner did anything specifically wrong in order to roll the dice with the jury.

Under Edenshaw, it presumably will be enough for the plaintiff to show that he went into the defendant’s store, encountered a patch of gravity there, fell down and hurt himself. The poor trial court judge can only shrug her shoulders, hand the thing off to the jurors, and let them retreat to the back room to make sausage with it.

Many years ago the Alaska Supreme Court eliminated the old common law rules that had been developed in so-called premises liability cases. Those old rules had different standards depending on whether the plaintiff was classified as a trespasser, or a licensee, or an invitee. Since it was often hard to tell who was exactly what type of person, and since feudal law designed to protect landowners at all costs had fallen out of fashion, the Court chucked out these rules in favor of a plain reasonable care standard that applied to everyone. This change in the old rules was brilliant, visionary, super keen. It made life easier for everyone. But junking the Gritty Banana Peel Doctrine and cutting these cases free from any sort of objective proof standard? That’s just goofy.

I predict that Edenshaw will be distinguished into near oblivion as future cases are decided. (Write that down, folks, and remember that you heard it here first.)

The Court's Edenshaw decision only makes sense if you assume they really meant to say advance notice of a dangerous condition is not the only way to prove negligence; a myriad of other ways are permitted. Nevertheless, some sort of minimally adequate proof of negligence still has to be provided to get to the jury (reasonable minds differing and all that). The trial judge can be asked to verify this through a summary judgment or directed verdict motion. I have to admit, though, that the Edenshaw opinion does not come close to expressly stating this. But in my view this is what the opinion should have said.

Well, after a few months of having other things to occupy my time, namely these darling three month olds (Isaac & Aaden), it is time for me to renew Atkinson Conway & Gagnon’s attempt to, ahem, timely summarize the Alaska Supreme Court decisions of the week.

First up is Pebble Limited Partnership v. Parnell, S-13059/S-13060, in which the Alaska Supreme Court rejected an attempt to remove an initiative from the November ballot that will impose new requirements on mining in Alaska. The opinion has no real reasoning, as it’s actually an order with an opinion to follow, issued so that the State has time to print ballots for the election this fall. I won’t go into the arguments regarding the merits of the underlying mining initiative, but if you listen to the radio or watch TV for five minutes, you are almost sure to see ads from both sides of the issue.

The only other opinion of real interest is Edenshaw v. Safeway, Inc., S-12583, in which the Alaska Supreme Court held that to prevail on a premises liability claim in Alaska, a plaintiff does not need to show that the business owner had actual or constructive knowledge of the dangerous condition. Instead, the Court held there was only a basic reasonableness test, in which the business owner’s notice of a dangerous condition was a factor to consider, but not a dispositive or required one. This case is a departure from prior cases in which the Alaska Supreme Court held that the State of Alaska had to have actual or constructive knowledge of a defect in a highway to be liable if that defect caused an injury. In Edenshaw, the Court distinguished these prior cases by noting that a grocery store (which was where the injury occurred in Edenshaw) is a much more tightly controlled area, and thus it was more reasonable to impose a general duty of care on the business owner regardless of whether the business owner had actual or constructive knowledge of a dangerous condition on the property.

This opinion will have a significant effect in future litigation, as business owner now can be exposed to liability for injuries caused by dangerous conditions of which they were both not aware and had no reason to be aware. It is also certain to make premises liability cases more expensive and difficult to defend, as the question of the reasonableness of an owner’s actions will almost always be a fact question. Consequently, now that a business owner cannot rely on a lack of notice, constructive or actual, to avoid liability as a matter of law, it will be very difficult to obtain summary judgment or resolution of a premises liability case short of actual trial.

Let me tell you a secret. The secret is that there is an undisclosed rule of law that governs all of the big civil lawsuits. Lawyers know about this rule. But they either avoid speaking of it all (just like Lord Voldemort), or they talk of it only in guarded tones among themselves. Judges often apply the rule. But the judges will never, ever acknowledge that they are actually doing so. Instead, they will go out of their way to avoid disclosing the existence of the rule at all, writing at length about all kinds of legal esoterica to disguise what is really going on.

This secret rule is generally known by its initials. Those initials are: TFM. TFM stands for TOO FRIGGING MUCH. Actually, I’m fibbing about the "frigging." The “F” in TFM stands for a harsher word than “frigging.” But you get the idea.

TFM is not a new rule of law. It goes way back. But the U.S. Supreme Court just issued what has to be the quintessential decision invoking TFM. I speak, of course, about Exxon Shipping Co. v. Baker. This tarball has blackened all who have touched it. It was released from the hold of the Exxon Valdez just after midnight on March 24, 1989. It rolled around spoiling the most beautiful place on the face the Earth (Prince William Sound), ruined the lives of all sorts of sea creatures (humans among them), and was flushed out down the Alaska coastline all the way to the Aleutians. Then it landed with a plop in federal court in Anchorage, until it was picked up by the Ninth Circuit Court of Appeals. The Court of Appeals used it in a super slo-mo game of ping pong that left a black smear across the federal judiciary. The U.S. Supreme Court finally picked up the dripping mess and dunked it in a vat of WD-40 in an effort to mostly dissolve the damn thing.

We all knew it was coming. When the Big Court accepted cert on the case last fall, you could hear the chant in the hills: “TFM . . . TFM . . . TFM.” The public comments of the Governor and others showed that they knew what was going to happen. (A "kick in the gut" was how Gov. Palin characterized the Court's decision to take the case.) The High and Mighty Supremes did not take the case to just say: “Ditto, Ninth Circuit!” They were going to change the outcome in some way. The oral argument was another sign of things to come. In commenting on why the Supremes took the case, Justice Scalia joked that there was an interesting legal point or two in the case and some “2.5 billion other reasons.”

Still, you wanted to hope that there was at least some chance the large verdict would be upheld. Pristine Alaska wilderness wrecked. A thriving fishing economy ruined. The largest (and most profitable) oil company was responsible for the stupid debacle. A jury of 12 upstanding PFD recipients delivered a deservedly stiff rebuke. A conscientious trial judge carefully controlled the whole thing. If you couldn’t whack Exxon for a few billion dollars out of its petty cash fund in this instance, then when can you whack someone?

But the unspoken rule, TFM, says you can’t whack anybody this hard. Not even Exxon, I guess. Justice Souter wrote a 42 page opinion to explain the Big Court’s reasoning in creating a federal common law rule to limit punitive damages. He needn’t have gone to such lengths. He could just as easily said, “We all puckered up something fierce at the thought of two and a half BILLION (with a "B") dollars. So we just had to chop this thing down to something most of us could stomach.” That would have been a more honest assessment, but it would have required an express acknowledgement of the TFM rule.

One can legitimately debate the reasoning the Curiae Maximus used in its decision. If the purpose of punitive damages is to punish the wrongdoer and deter others, then why tie punitives to a rigid 1:1 ratio with compensatory damages? It is not hard to think of cases where really bad conduct could cause only minimal compensatory losses. The need to punish the bad actor and put a damper on other miscreants should dictate that no rigid 1:1 formula should be followed. And, are the compensatory damages the fisherfolk suffered in the case ($507.5 million) really a good measure for puntives? Exxon trumpeted the fact that it spent some $2.1 billion in an effort to clean up the spill. Wouldn’t tying the punitives to these expenses (or these expenses plus the fisherpeople's compensatories) have been a better measure of the proper amount? After all, aren’t these clean-up expenses part of overall compensation due for the spill even though they were not directly paid to the plaintiffs?

And, gosh, why adopt this as a rule of federal common law just applicable to maritime cases? This sidesteps the more important question of whether due process requires this same ratio as matter of constitutional law. Does the Constitution allow a greater ratio of punitives to compensatories to be employed? If so, why not go to the full limit the Constitution allows in this ugly case? At least why not explain the reasons for not going to the full constitutional limit for this awful and wholly avoidable disaster?

But this sort of quibbling is all very much beside the point. The whole case turned on the unspoken TFM rule. From Alaska's standpoint, its sad to say that $2.5 billion for despoiling the most fabulous place on Earth and groin-punching the citizenry who live and work there was just TOO FRIGGING MUCH.

One of Atkinson, Conway & Gagnon’s very own, Patrick B. Gilmore, received the 2008 Professionalism Award from the Alaska Bar Association. The award was announced at the May 1 Bench and Bar Luncheon, a part of the Bar’s Annual Convention.

The award was a surprise to Pat when he heard his name called. (Pat is better known as “Gil” amongst the cognoscenti of Alaska.) Gil had been lured to the luncheon by a longtime friend, knowing nothing about the award. He probably should have thought it strange that his wife, Chris, and 22 year old daughter, Casey, showed up at a Bar Association lunch. The fact that a couple of Pat’s clients were there as well could have been a tip off that something was in the works. But Gil was as low key as ever, oblivious to it all. (I guess no one ever said “professionalism” was necessarily synonymous with “swift on the uptake.”)

The Bar’s Professionalism Award is a true honor, serving as recognition from fellow lawyers of the respect with which the recipient is held. And really there could not be a better person for the award than Pat. He is a lawyer who quietly and efficiently goes about his client’s business. He is never flashy and never obstructive, but always effective. Unlike many lawyers who talk about the importance of pro bono work, but do not follow through and actually provide it, Pat has without fanfare given substantial time to handling cases for the domestic violence project. He is the embodiment of the highest ideals that every lawyer should strive to achieve. Pat is a throwback to a nobler age, a reminder that the law is a learned profession and not a mercenary pursuit.

So let us all raise a glass to Patrick Gilmore and congratulate him on a well-deserved award!

(Hey, I’m more than willing to make Pat the butt of jokes, but you have to hand it to a guy who gets the Professionalism Award. And besides, anyone who names his dog “Bluto” after the late, great Senator John Blutarsky is A-OK in my book.)

The State of Alaska just cratered on its claims against Eli Lilly & Company over Zyprexa. “Cratered” is a such a harsh word, though. Maybe “had their backbones dissolve into a puddle on the courtroom floor just before closing argument” would be a more accurate description of what happened. In wrapping up the case and dismissing the jurors, Judge Rindner might well have said: “Thank you very much, and please watch your step on the way out!”

I admit that I’m not really qualified to pass judgment on the State’s decision. The only information I actually have about the case is from watching the TV news, unless you count eavesdropping on other non-involved lawyers at the next table while I was eating lunch at the Sandwich Deck. (And it didn’t help that I was choking on a dry-as-death chicken sandwich at the time.) But I’m an American and an Alaska lawyer. So I’m free to go on at length over stuff I actually know nothing about.

The State gave up its claims worth a supposedly solid $200 million for $15 million. (Actually, the Wall Street Journal reported the State’s total claims were originally pegged at a nifty $1 billion.) The math itself shows you who got the better end of this deal. But really all you needed to see were the interviews on Channel 2 News last night. Assistant State Attorney General Ed "The Glide" Sniffen was talking at length about the settlement. He had to explain to everyone -- himself included -- why the State decided to take the deal. The Lilly lawyer said almost nothing at all on camera but was smiling as wide as the Hoosier farmlands.

I can understand the State’s discomfort about the case. The 8,000 pound elephant in the courtroom was the U.S. Supreme Court. The High and Mighty Court earlier this year ruled that defective product claims against medical device makers had to be given the big “No Way Jose!” under the Medical Device Amendment to the Food, Drug and Cosmetic Act. The creeping fear amongst the plaintiff-type lawyers is that the High and Mighties may well extend this same reasoning to another pending case that, like the Zyprexa lawsuit, involves drug labeling under the Act. (The High and Mighties should not be confused with the Tighty Whities, which can ride up, creating a whole different kind of “creeping fear.”)

Still, I would have thought that the State at least would have let the panel of 12 hometown Alaskans render a thumping fine verdict against Lilly. There was always time to compromise later on, while the case was up on appeal. With a bright and shiny jury verdict in hand the State just might have gotten a bit more consideration in the deal.

And what, my friends, does all this portend for the pitfall-laced lawsuit the State has in the works against the actuaries who advised on the State’s pension plans?

[FULL DISCLOSURE: I'm originally from Indianapolis (Lilly's HQ) and I own a small position in Lilly. My equity interest is so small that the bump up in Lilly stock the settlement provided today was only just enough to buy me a couple of lunches of food-like substances at the Sandwich Deck.]

Well, the Alaska Supreme Court did not issue any new opinions today. At Atkinson Conway & Gagnon, weeks like this are met with equal parts frustration and relief. Frustration that no new case law has been made that we can apply on behalf of our clients, and relief that the Alaska Supreme Court has not reached down with its invisible hand to gleefully scatter our carefully researched and briefed motions into chaos.

In short, it's a good Friday and time to head downstairs for the one of the best benefits of working at 420 L Street.

The Alaska Supreme Court issued two new opinions today. Moore v. Peak Oilfield Service Co. reaffirmed prior Alaska Supreme Court case law that a defendant in a civil personal injury lawsuit who is convicted of driving while intoxicated must be found to have acted negligently and reckless as a matter of law. The Court further clarified that such a ruling did not preclude the defendant driver from arguing that his or her negligence/recklessness was not a legal cause of the plaintiff's injury.

In Amerada Hess Pipeline Corp. v. Regulatory Commission of Alaska, the Alaska Supreme Court affirmed the Superior Court's finding that shipping rates charged by the owners of the Trans-Alaska Pipeline were unreasonable and unjust from 1997 to 2007 and that refunds must be given. The Alaska Supreme Court did not address the issues raised by the pipeline owners, but incorporated by reference the Superior Court's 44 page opinion.

Almost every week, the Alaska Supreme Court issues its written opinions on Friday. You can download free PDF versions of these opinions here. You can also subscribe to a free e-mail list that will e-mail you links to each week’s opinions here. Each week, I will try to post a summary of that week’s opinions, focusing primarily on those opinions addressing civil litigation matters. While Supreme Court Opinions dealing with family law (such as disputes over visitation with the family dog) or criminal matters (how to get barred from attending your own criminal trial) offer interesting reading at times, they are not particularly relevant to the issues the lawyers at Atkinson Conway & Gagnon normally face.

This week, there was only one opinion issued that is of interest. In Villaflores v. Alaska State Commission for Human Rights, Clarito Villaflores, who is Asian and over 40 years old, applied for a human resources position with ConocoPhillips. He was not hired. Mr. Villaflores then filed a complaint with Alaska’s Human Rights Commission, alleging that ConocoPhillips did not hire him because of his race and age. The Human Rights Commission rejected this claim and dismissed his case.

The primary issue on appeal was whether the Human Rights Commission’s decision was supported by substantial evidence. The Court noted that to prevail on a his employment discrimination case, Mr. Villaflores had to prove: (1) he belonged to a protected class; (2) he applied for and was qualified for the position he was denied; (3) his application was rejected despite his qualifications; and (4) the employer hired someone not in the same protected class. While Mr. Villaflores was in protected class (Asian and over 40), the Court found that he had failed to establish that he was qualified for the job. Specifically, his job application did not show that he had the requisite five to 10 years of human resources experience required by ConocoPhillips. Moreover, the person hired by ConocoPhillips did. Consequently, Mr. Villaflores claim was properly denied by the Human Rights Commission because Mr. Villaflores failed to make out a prima facie case of employment discrimination.

The Court also rejected Mr. Villaflores argument that a Seventh Circuit case, Milbrook v. IBP, Inc., 280 F.3d 1169 (7th Cir. 2002), required ConocoPhillips to hire the most qualified applicant, which, presumably, Mr. Villaflores argued was him. The Court noted that even if Mr. Villaflores had established that he was qualified for the position (which he had not), Milbrook gave the employer broad discretion to chose between equally qualified candidates.

While Villaflores v. Alaska State Commission for Human Rights does not change Alaska employment discrimination law, it is a good, short summary of some of the elements that an applicant claiming employment discrimination must prove. It also squarely rejects any reading of Milbrook that would tie the hands of an employer choosing between equally well-qualified applicants.

During the course of our business litigation and transactional work here at Atkinson Conway & Gagnon, we often investigate corporations, including making sure they are registered to do business in Alaska, that they are properly licensed, and identifying their officers, shareholders, and registered agents.

A valuable (and free) research tool is the Department of Commerce's Corporations Database. Anyone can use this (free) database to look up corporations registered in Alaska, determine when it was created, make sure it is in good standing, and find out who its shareholders are, as well as who is serving as officers, directors, and registered agent. Oftentimes, a corporation’s biennial reports are also available to download (again for free).

You can search the Corporations Database by name, by their Alaska Entity #, by registered agent, or by the name of their officers.

Another valuable tool is Department of Commerce’s business license search engine, which is also free and can be used to make sure that the company you are about to sign a contract with is actually licensed to operate in Alaska.

In today’s specialized and interconnected business world, banks, law firms, and accountants often find themselves drawn into litigation over financial statements that are either incomplete or false. The Enron and WorldCom cases are great examples of this. In those cases, plaintiffs, often shareholders and creditors, sue law firms, banks, and accountants, alleging that they are liable for their losses because they “aided and abetted” directors and officers who defrauded the company and shareholders. Atkinson Conway & Gagnon has litigated these claims on several occasions in Alaska, both in the course of defending banks and law firms and in representing corporations against accountants that have aided company officers and directors in defrauding the corporation.

This theory of liability, also known as “tortuous assistance of breach of fiduciary duty” can significantly expand the liability of accountants, banks, and law firms, including exposing them to joint and several liability in states that otherwise provide for strict allocation of fault, such as Alaska.

On January 15, 2008, the United States Supreme Court issued an important decision limiting the scope of “aiding and abetting claims.”. Ruling 4 to 3, the United States Supreme Court held that Section 10(b) of the Securities Exchange Act of 1934 did not authorize a private right of action against third parties for aiding and abetting violations of securities law. Instead, plaintiffs who wish to sue banks, accountants and law firms for securities law violations must show that they relied upon an affirmative material misrepresentations by those entities. While banks, law firms, and accountants may be subject to aiding and abetting liability when they have a direct relationship with aggrieved plaintiffs, this is an important decision that limits the liability faced by banks, accountants, and law firms in the shareholder lawsuits that are so often filed when negative financial information is released by corporations.

Atkinson Conway & Gagnon and all Alaskans are carefully watching the litigation arising out of the Exxon Valdez oil spill. After more than eighteen years, the case is still active. In late 2006, the Ninth Circuit affirmed a $2.5 billion punitive damage award against Exxon. With interest, the total punitive damage award against Exxon is estimated to be in excess of $4.5 billion. As expected, Exxon has appealed this decision to the United States Supreme Court.

The primary focus of Exxon’s appeal is the argument that punitive damages were not available under traditional maritime principles. Exxon is not seeking to just reduce the punitive damage award, but eliminate it entirely. The United States Supreme Court has a short summary of the issues it will be deciding.

Oral argument before the United States Supreme Court is scheduled for Wednesday, February 27, 2008. Below are links to the Supreme Court briefs that have been filed, including amicus briefs. Whatever the Supreme Court’s decision, it is certain that all Alaskans will be closely following this case and that it will have substantial impacts on both Alaskans and the law governing the availability punitive damages.

Primary briefs

Exxon's Appeal Brief

Plaintiff's Appeal Brief

Amicus Briefs

In support of Exxon

Chamber of Commerce amicus brief

Transport and Shipowners amicus brief

American Petroleum Institute amicus brief

Washington Legal Foundation amicus brief

Product Liability Advisory Council amicus brief

In support of Plaintiffs

Alaska Legislative Council Amicus Brief

Senator Stevens, Senator Murkowski, and Representative Young's amicus brief