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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. State, Commercial Fisheries Entry Commission v. Carlson (1/20/2012) sp-6645
Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
STATE OF ALASKA, )
COMMERCIAL FISHERIES ) Supreme Court No. S-13818
ENTRY COMMISSION, )
) Superior Court No. 3AN-84-05790 CI
Appellant, )
) O P I N I O N
v. )
) No. 6645 - January 20, 2012
DONALD H. CARLSON, )
WARREN HART, GERARD )
HASKINS, EARL WEESE, )
and LYLA C. WEESE, )
Individually and as Class )
Representatives on Behalf of All )
Persons Similarly Situated, )
)
Appellees. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Peter A. Michalski, Judge.
Appearances: Michael W. Sewright, Lance B. Nelson, and
Ruth Botstein, Assistant Attorneys General, Anchorage, and
John J. Burns, Attorney General, Juneau, for Appellant.
Loren Domke, Loren Domke, P.C., Juneau, for Appellees.
Before: Carpeneti, Chief Justice, Fabe, Winfree, Christen,
and Stowers, Justices.
FABE, Justice.
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I. INTRODUCTION
We decide one primary issue in this fifth appeal in this case. After our last
remand, the superior court entered a judgment awarding the class a principal refund of
$12.4 million with prejudgment interest exceeding $62 million. The question presented
is whether one of our previous decisions in this case, Carlson III, incorrectly decided that
the rate of prejudgment interest for unconstitutional commercial fishing license and
limited entry permit fee overpayments is the statutorily imposed punitive interest rate for
underpaid and overpaid taxes under Title 43 of the Alaska Statutes. Because the statute
establishing prejudgment interest for underpayment and overpayment of taxes does not
apply to the refund of overpayment of the commercial fishing fees involved in this case,
and because our earlier incorrect holding on this issue resulted in a manifest injustice, we
now conclude that our earlier decision on this issue must be overruled. We accordingly
remand this case for a new prejudgment interest calculation.
II. FACTS AND PROCEEDINGS
This is the fifth time this case has come before us. The case started in 1984
when the class sued the State, Commercial Fisheries Entry Commission (CFEC) on
behalf of all nonresident Alaska commercial fishers.1 The class included "all persons
who participated in one or more Alaska commercial fisheries at any time who paid non-
resident assessments to the State for commercial or gear licenses or permits."2 Arguing
that the State was illegally charging nonresidents more than it charged residents for
commercial fishing permits and licenses, the class demanded a refund of the difference
1 Carlson v. State, Commercial Fisheries Entry Comm'n, 798 P.2d 1269,
1270 (Alaska 1990) (Carlson I).
2 Id.
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between what they paid and what residents paid.3 Between 1984 and 2002, nonresident
commercial fishers paid three times as much as resident fishers for licenses and permits.4
3 Id. License fees are no longer at issue in this case; only limited entry fees
are.
4 From 1977 to 2001, AS 16.43.160(b) stated:
Annual fees established under this section shall be no
less than $10 and no more than $750 and shall
reasonably reflect the different rates of economic
return for different fisheries. The amount of an annual
fee for a nonresident shall be three times the amount
of the annual fee for a resident.
(Emphasis added.)
The legislature repealed this section in 2001 and added a new section on
nonresident fees. Ch. 27, §§ 5, 7, SLA 2001. Effective 2002, nonresident fees were
covered by AS 16.43.160(e):
For an entry permit or an interim-use permit issued for
calendar year 2002 and following years, the annual
base fee may not be less than $10 or more than $300.
The annual base fee must reasonably reflect the
different rates of economic return for different
fisheries. The fee for a nonresident entry permit or a
nonresident interim-use permit shall be higher than
the annual base fee by an amount, established by the
commission by regulation, that is as close as is
practicable to the maximum allowed by law. The
amount of the fee for a nonresident entry permit or a
nonresident interim-use permit may reflect [various
costs associated with fisheries management].
Ch. 27, § 5, SLA 2001 (emphasis added).
In 2005 the statute was amended to provide:
In addition to the annual base fee established by the
(continued...)
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Understanding the prejudgment interest issue in this appeal requires a brief review of the
earlier appellate decisions in this case.
A. Carlson I
In Carlson I we held that the different fees for residents and non-residents
implicated, but did not necessarily violate, the Privileges and Immunities Clause of the
United States Constitution.5 We concluded that under United States Supreme Court
precedent, the State may "charge non-residents a differential which would merely
compensate the State for any added enforcement burden they may impose or for any
conservation expenditures from taxes which only residents pay."6 We then remanded to
the superior court to determine whether the three-to-one fee differential met this
standard.7
4 (...continued)
commission under this subsection, a nonresident shall
pay an annual nonresident surcharge for the issuance
or renewal of one or more entry permits or interim-use
permits. The commission shall establish the annual
nonresident surcharge by regulation at an amount that
is as close as is practicable to the maximum allowed
by law.
AS 16.43.160(c); Ch. 16, § 3, SLA 2005.
5 Carlson I, 798 P.2d at 1274-76; U.S. CONST. art. IV, § 2, cl. 1 ("The
Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the
several States.").
6 Carlson I, 798 P.2d at 1274-75 (quoting Toomer v. Witsell, 334 U.S. 385,
399 (1948) (internal quotation marks omitted) (emphasis in original omitted)).
7 Id. at 1276-78.
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We conducted a similar analysis of the class's Commerce Clause8
challenge, and while we did not determine that the Clause was implicated, we similarly
remanded for a determination whether fees paid by non-residents were substantially
equal to the pro-rata shares of fees and taxes devoted to fisheries management paid by
residents.9
Next we addressed the question whether class members would be entitled
to a refund of overpaid fees if they prevailed on their constitutional claims. Although
we did not explicitly determine that the fees at issue here were taxes,10 we nonetheless
held that the tax refund statute codified at AS 43.15.010(a) (subsequently renumbered
AS 43.10.210(a))11 provided the basis for a potential refund for the class.12 We therefore
remanded to determine whether the class had met the statutory protest requirement,
thereby providing sufficient notice to the State, or whether the State had waived that
requirement.13 Finally, we noted, sua sponte, that there was "a specific statute of
8 U.S. CONST. art. I, § 8, cl. 3 ("The Congress shall have Power . . . [t]o
regulate Commerce with foreign Nations, and among the several States, and with the
Indian Tribes . . . .").
9 Carlson I, 798 P.2d at 1276-78. We also held that, assuming the three-to-
one ratio was constitutional, the CFEC was authorized by statute to impose the
differential fees. Id. at 1278-79.
10 Id. at 1280 ("[I]n the abstract, the class might avail itself of [the tax refund]
statute to recover any unconstitutionally extracted fees.").
11 See State, Commercial Fisheries Entry Comm'n v. Carlson, 65 P.3d 851,
870 n.119 (Alaska 2003) (Carlson III).
12 Carlson I, 798 P.2d at 1279-80 (reversing superior court's ruling that a
refund was not an available remedy).
13 Id.
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limitations applicable to claims for tax refunds," AS 43.05.275, which applied to the
class's refund claim.14
B. Carlson II
In Carlson II we concluded that the class's challenge to differential fees
based on residency did not implicate the Commerce Clause.15 We reaffirmed our
conclusions from Carlson I on the applicability of the Privileges and Immunities Clause
and set out a formula for determining whether the fee differential passed muster under
that Clause.16 We remanded for the superior court to apply this formula.17 We further
confirmed that AS 43.10.210 was the statute governing refund eligibility and that the
class had to satisfy the protest requirement of AS 43.10.210 in order to succeed on the
merits.18 We concluded by directing the superior court to determine "whether the filing
of this suit constituted notice sufficient to comply with the protest requirement of
AS 43.10.210(a), and whether[, as the class contended,] prejudgment interest is due
under AS 45.45.010."19
14 Id.
15 Carlson v. State, Commercial Fisheries Entry Comm'n, 919 P.2d 1337,
1340-41 (Alaska 1996) (Carlson II).
16 Id. at 1341-43.
17 Id. at 1344.
18 Id.
19 Id.
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C. Carlson III
Carlson III dealt with four sets of issues. First, we declined to readdress
the constitutional issues decided in Carlson I and II.20 We reasoned that two United
States Supreme Court decisions issued subsequent to our Carlson decisions did not
require us to reevaulate our earlier decisions.21 Second, we dealt with a series of
questions concerning what state expenditures and revenues were to be included in the
formula for determining whether the three-to-one fee differential produced substantial
equality of payment between residents and non-residents.22 Third, we concluded that the
class met the protest requirement - and thus provided sufficient notice to the State -
by filing its complaint, and that at this point in the litigation it was too late for the State
to claim that sovereign immunity protected it from this particular suit.23
Finally, and most importantly for this appeal, we held that because we had
applied Title 43's statutory limitations period and refund provision, Title 43's interest
provision for overpayment of taxes - AS 43.05.280 - applied to any refund that might
be due to the class.24
20 Carlson III, 65 P.3d 851, 859-60 (Alaska 2003).
21 Id. at 859-63.
22 Id. at 863-69.
23 Id. at 870-72, 873-74.
24 Id. at 874-75.
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D. Carlson IV
In Carlson IV25 we finally reached the question whether the three-to-one fee
differential violated the Privileges and Immunities Clause. We held that it did.26 We
therefore remanded to the superior court to determine whether the inequality in a given
year was "incidental," thus affording no refund, or "substantial," thus allowing a
recovery.27 We directed the superior court to calculate any refund owed to the class on
that basis.28
E. Remand Following Carlson IV
After determining the acceptable amount of inequality in the fee structure,
the superior court on remand found, based on calculations performed by the State, that
the principal refund that the State owed the class totaled $12,443,959.18. Using the
punitive interest rate for underpayments and overpayments of taxes under Title 43,
AS 43.05.280 and 43.05.225(a), prejudgment interest was calculated at 11%
compounded quarterly, totaling $62,356,738.10 through January 31, 2010. The superior
court then determined after the substantive issues were settled that the State owed the
class attorney's fees under Alaska Civil Rule 82. It awarded fees under the schedule
provided in Rule 82(b)(1) for cases involving money judgments that have been contested
with a trial.29 Under the schedule, attorney's fees were calculated to be $7,482,569.73.
25 State, Commercial Fisheries Entry Comm'n v. Carlson, 191 P.3d 137
(Alaska 2008) (Carlson IV).
26 Id. at 145.
27 Id. at 148.
28 Id.
29
Only one trial took place in this case, over three days in June 2000.
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With a cost award of $7,028.93, the total judgment against the State, including principal,
equaled $82,290,295.94.
The State appealed this judgment, requesting that we reconsider our holding
in Carlson III that prejudgment interest should be calculated under AS 43.05.280 and
AS 43.05.225. The State also argued that the superior court erred in its award of
attorney's fees.
Following oral argument in this case, we issued an order for supplemental
briefing, asking the parties to address three issues that we had previously either decided
or assumed: "(1) whether limited entry permit fees under Title 16 are taxes under
AS 43.10.210, (2) whether AS 43.05.275 provides the applicable statute of limitations
for refund of those fees, and (3) what statutory provision for prejudgment interest, if any,
applies to refunds of unconstitutionally extracted limited entry permit fees."
We decline to readdress the first two issues as it is unnecessary to reach
them. But we conclude that our previous holding in Carlson III that AS 43.05.280
provides the proper rate of prejudgment interest was incorrect and that this error
produced a manifestly unjust result which requires us to take the extraordinary step of
reversing our previous holding. We therefore remand for a new interest calculation
applying the proper rate of interest as provided by AS 09.30.070.
III. STANDARD OF REVIEW
The law of the case doctrine, which applies even to "questionable
decisions,"30 provides that "issues previously adjudicated can only be reconsidered where
there exist exceptional circumstances presenting a clear error constituting a manifest
30 Beal v. Beal, 209 P.3d 1012, 1016 (Alaska 2009) (Beal II) (citing Austin
v. Fulton Ins. Co., 498 P.2d 702, 704 (Alaska 1972)).
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injustice."31 The doctrine applies not only to issues explicitly addressed and decided on
appeal, but also to those "directly involved with or necessarily inhering in a prior
appellate decision" and those "that could have been part of a prior appeal but were not."32
We review attorney's fees awards for an abuse of discretion, reversing if
the award is "arbitrary, capricious, manifestly unreasonable, or [if it] stemmed from
improper motive."33 "Attorney's fees awards made pursuant to the schedule in Civil
Rule 82(b)(1) are presumptively correct."34
IV. DISCUSSION
A. Carlson III's Holding That AS 43.05.280 Provided The Appropriate
Rate Of Prejudgment Interest Was Clearly Erroneous And Led To A
Manifestly Unjust Result.
Carlson III was one of the most complex of our decisions in this case. Our
discussion of prejudgment interest was not the primary focus of that decision; before
addressing prejudgment interest, we decided three sets of issues with ten separate sub-
issues, turning only to prejudgment interest for three paragraphs of our 25-page
decision.35
31 Carlson III, 65 P.3d 851, 859 (Alaska 2003) (internal citations and
quotations omitted).
32 Beal II, 209 P.3d at 1017 (internal quotation marks and emphasis omitted).
33 Wagner v. Wagner, 183 P.3d 1265, 1266-67 (Alaska 2008) (quoting Ware
v. Ware, 161 P.3d 1188, 1192 (Alaska 2007)).
34 Byars v. Byars, 945 P.2d 792, 795 (Alaska 1997).
35 Carlson III, 65 P.3d at 874-75.
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Because there was no statute directly providing for prejudgment interest for
a refund upon overpayment of Title 16 fishing permit fees,36 we looked to the statute
providing for a refund of tax overpayments under Title 43, AS 43.05.280:
The introductory language of AS 43.05.275, applied to
the present case in Carlson I, is fundamentally the same as
the introductory language at issue here in AS 43.05.280 in
that both apply to a tax under this title. It is hard to imagine
applying section .275 and not section .280 to the present case
even if one interprets the latter more strictly than the former.
Alaska Statute 43.05.280 applies to all overpayment of taxes
under Title 43. This statutory section should therefore apply
to the provisions for recovery of overpayments laid out in
AS 43.10.210. Because AS [43.10.210] serves as the
primary justification for providing the class with a refund, the
prejudgment interest available under AS [43.05.280] in other
actions extends to the recovery of prejudgment interest for
overpayment of commercial fishing fees, even though these
are ostensibly created under Title 16.[37]
In short, we held that because Title 43's statute of limitations was parallel in structure to
Title 43's interest rate provision, the adoption of the former compelled the adoption of
the latter. Further, because we had relied on Title 43's procedures for recovering
overpayment, we concluded that Title 43's interest rates for overpayment must apply.
Although it was not discussed in our decision, as a result of this conclusion, the State was
required to pay the punitive38 interest rate of 11% compounded quarterly that is due for
36 Compare AS 16.43.160(b) providing that the CFEC "may charge interest
at a rate not to exceed the legal rate of interest established in AS 45.45.010 on fees more
than 60 days overdue."
37 Carlson III, 65 P.3d at 875 (footnotes omitted).
38 In North Slope Borough v. Sohio Petroleum Corp., 585 P.2d 534, 546
(Alaska 1978), we noted that "[t]he assessment of interest for late payment [of taxes] has
(continued...)
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overpayments and underpayments of taxes under Title 43.39 We conclude that our
decision on this issue was wrong because the statutory language, intent, and purpose of
Title 43's interest provision do not countenance its application to overpayment of
Title 16 fees.
As we noted in Carlson III, prejudgment interest may not be awarded
against the State unless the legislature or constitution has authorized it.40 But we
determined that Title 43's interest rate applied not because it was applicable by its own
terms, but because we had already relied on two other provisions of Title 43 in prior
decisions and it seemed consistent to apply the interest rate from that title. But by its
plain language, Title 43's interest provision does not apply to the fees at issue here.
Alaska Statute 43.05.280(a) provides: "Interest shall be allowed and paid on an
overpayment of a tax under this title at the rate and in the manner provided in
AS 43.05.225(1)."41 The State argues that the phrase "under this title" modifies "tax,"
38 (...continued)
no punitive element." But that case interpreted prior versions of AS 43.05.225 and .280
which provided a lower rate of interest than the current versions (8% versus 11%) and
did not compound quarterly. Id.; Ch. 94, § 1, SLA 1976; Ch. 166, § 2, SLA 1976. The
legislature subsequently increased the rate and made it compound to punish taxpayers
who chose to hold out rather than paying under protest. Ch. 23, §§ 2-3, SLA 1991; see
also 1991 Senate Journal 405 and discussion infra.
39 This is significantly higher than the general rate of prejudgment interest
provided by AS 09.30.070 which through the life of this case has varied between 3.5%
and 10.5% and which is not compounded. See How to Determine Pre-and Post-
Judgment Interest Rates - 2012, ALASKA COURT SYSTEM (Jan. 3, 2012),
http://www.courts.alaska.gov/int.htm.
40 65 P.3d at 875.
41 AS 43.05.225(1), in turn, assesses interest at a rate five points above the
Federal Reserve Discount Rate or 11% (whichever is higher), compounded quarterly.
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so that the tax must be imposed by Title 43 in order to permit interest payments on an
overpayment. Because the fees at issue here were imposed under Title 16, the State
argues that Title 43's interest provision does not apply. The class responds that
AS 43.05.280(a) "applies uniformly to all state tax refunds and to interest on refunds."
The class relies on Governor Jay Hammond's transmittal letter to the state legislature,
describing the bill that included the future section .280 and stating an intent to provide
for "uniform administrative and enforcement provisions for all of the State's tax
statutes."
The State's reading of the statute is the most natural reading. The State
argues that because Title 43 does not authorize overpayments, it is illogical to read
"under this title" as modifying "overpayment." We agree: Because Title 43 does not
authorize overpayments but does authorize a number of taxes, the phrase "under this
title" should be read as modifying "taxes" rather than "overpayment."
Read against other, related provisions in Title 43, the State's proposed
interpretation becomes even stronger. Alaska Statute 43.05.225(1), the section cross-
referenced by AS 43.05.280 as providing the appropriate interest rate for overpayment,
assesses interest against taxpayers only "when a tax levied in this title becomes
delinquent." (Emphasis added.) It would be anomalous for the legislature to have
assessed interest against the State for any overpayment of any tax, regardless of its
authorizing title, but to have assessed interest owed to the State only for underpayments
of those taxes specifically levied by Title 43.
Similarly, AS 43.05.280(c) provides that there is no interest due to a
taxpayer "[i]f an overpayment of a tax imposed by this title is refunded within 90 days."
(Emphasis added.) Under the class's view that AS 43.05.280(a) applies to all taxes
regardless of authorizing title, section .280(c) would create a 90-day interest-free
window for refunds of taxes levied under Title 43, but allow for no such window for
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those levies scattered throughout the rest of the Alaska statutes. We can see no rationale
for why the legislature would have held the State to a stricter payment window for
Title 16 fees than for Title 43 taxes. Accordingly, we conclude that the legislature must
have meant subsections (a) and (c) to have the same reach. The unambiguous language
of subsection (c) (as well as AS 43.05.225(1)) clarifies any arguable ambiguity in
subsection (a): The punitive interest rate provided by AS 43.05.280(a) applies only to
overpayment of taxes levied under Title 43.
When interpreting a statute, we do not stop with the plain meaning of the
text. Instead, we apply a sliding scale approach, where "[t]he plainer the statutory
language is, the more convincing the evidence of contrary legislative purpose or intent
must be."42 "We apply this sliding scale approach even if a statute is facially
unambiguous."43
The class rests its argument about the applicability of section .280 largely
on legislative intent. The class points to Governor Jay Hammond's transmittal letter as
providing for "uniform administrative and enforcement provisions for all of the State's
tax statutes."44 The letter, the class notes, points out that prior to the bill the State only
paid interest on overpayment of income taxes, but that passage of the bill "would set a
fair and uniform system for all taxes."45
42 Gov't Emps. Ins. Co. v. Graham-Gonzalez, 107 P.3d 279, 284 (Alaska
2005) (quoting Muller v. BP Exploration (Alaska) Inc., 923 P.2d 783, 788 (Alaska
1996)).
43 State, Dep't of Commerce, Cmty. & Econ. Dev., Div. of Ins. v. Alyeska
Pipeline Serv. Co., 262 P.3d 593, 597 (Alaska 2011).
44 1976 Senate Journal 45.
45 Id.
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While the letter refers to "all taxes," it is doubtful that Governor Hammond
or the legislature meant section .280 to apply to commercial fishing fees. Governor
Hammond's letter notes that the new bill required the State to "pay interest . . . on
overpayments if they are not refunded within 90 days after the overpayment arose."46
In other words, Governor Hammond's language suggests that subsection (c), which
establishes a 90-day interest-free window, is coextensive with subsection (a), which sets
the rate of interest. But subsection (c), as described above, is explicitly limited to taxes
under Title 43. If the legislature had truly intended section .280(a) to apply to all
overpayments, and not merely all taxes levied under Title 43, it would not have been
reasonable to have explicitly applied the parallel, limiting provision in .280(c) only to
those taxes "imposed by [Title 43]."47 The class makes no argument to explain why the
legislature may have done this, and we accordingly conclude that it did not.
Further, as Governor Hammond's letter makes clear, the bill that included
section .280 was offered largely to bring uniformity to the enforcement provisions of the
State tax codes.48 As part of this goal, section .280, as written at the time of its initial
passage, set the interest rate owed by the State for overpayment at eight percent,49 the
same rate then owed to the State for delinquency.50 It therefore created uniform interest
rates for overpayment and underpayment. The current version of section .280 continues
this goal, specifically pegging the overpayment rate to the underpayment rate.
46 Id.
47 AS 43.05.280(c).
48 1976 Senate Journal 45.
49 Ch. 94, § 1, SLA 1976.
50 Ch. 166, § 2, SLA 1976.
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But any conclusion that section .280 applies to overpayment of commercial
fishing fees runs contrary to this goal. Notably, Title 16 provides that if a fisher is late
in paying a fee, the State may charge interest as provided by AS 45.45.010 (currently
51 Our holding in Carlson III therefore created a system in which the
10.5% annually).
rate of interest owed to the fishers for overpayments of Title 16 fishing fees is
substantially higher than the rate of interest owed to the State for underpayments by the
fishers.
In Carlson III, we focused on the partial structural congruity between
Title 43's statute of limitations and Title 43's interest provision. But in doing so, we
undermined the goal of uniformity and created a massive incongruity between the
interest rate the State owed for overpayment and the interest rate a fisher would owe for
underpayment. It was therefore inconsistent with the legislature's goal of uniformity for
us to hold that the State owed the class the high, punitive interest rate of section .280.52
Our decision in Carlson I, which came more than a decade after the
legislature first adopted section .280, held that certain remedial provisions of Title 43
51 AS 16.43.160(b).
52 Although today we do not address our statement in Carlson I that
AS 43.05.275 set out the statute of limitations for the class's refund claims, Carlson I,
798 P.2d 1269, 1280 (Alaska 1990), we recognize that today's holding determining that
section .280 does not apply to the class's refund claims calls that statement into question.
The State argues that AS 43.05.275 is not a statute of limitations for court actions, but
rather sets out procedural time limits for administrative proceedings regarding disputes
over Title 43 taxes. But revisiting the statute of limitations is not necessary to today's
decision because the class first protested the overpayment when it filed this lawsuit and
thus the refund claims arose as of that date. See Carlson II, 919 P.2d 1337, 1344 (Alaska
1996) (noting that the class did not satisfy the protest requirement for a tax refund before
filing its complaint and remanding to determine whether the complaint met the protest
requirement of AS 43.10.210); Carlson III, 65 P.3d 851, 871 (Alaska 2003) (concluding
that the filing of a complaint satisfied the protest requirement).
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could be applied to an overpayment of fees under Title 16.53 This does not mean,
however, that the governor's earlier reference to section .280 as applying to "all taxes"
prospectively brings Title 16 fees under the ambit of section .280.
Nor does an examination of the legislature's purpose in adopting the high,
punitive interest rate of section .280 support applying that provision to the fees at issue
in this case. In 1991, sections .225 and .280 were amended to establish their current
interest rates.54 In his transmittal letter, Governor Walter Hickel wrote that the current
interest rate chargeable on certain unpaid and overpaid taxes
is a simple interest rate of 12 percent. Because the interest is
not compounded, taxpayers have an incentive to under-report
and prolong disputes over back taxes, since the longer that
back taxes remain unpaid, the lower the effective interest rate
becomes. As a result, the state ends up loaning billions of
dollars to its taxpayers at very low interest rates.[55]
In order to eliminate the incentive for delinquent taxpayers to hold out, the legislature
made interest compound. The purpose was to encourage delinquent taxpayers to pay
under protest, rather than refusing to pay at all.
As the State points out, though, with commercial fishing permit fees, a
fisher does not have an incentive to withhold payments, as the fees are generally paid in
advance and the desire for a permit will be sufficient motivation to pay. The legislative
purpose of the high interest rate thus does not support applying it in this case.
Neither legislative intent nor legislative purpose contradicts the
unambiguous statutory language limiting AS 43.05.280(a) to taxes levied under Title 43.
53 Carlson I, 798 P.2d at 1279-80.
54 Ch. 23, §§ 2-3, SLA 1991.
55 1991 Senate Journal 405 (emphasis in original).
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Section .280 therefore does not apply to overpayment of Title 16 fishing fees. It was
clear error for us to hold otherwise in Carlson III.
We thus turn to the question whether our erroneous prior holding created
a "manifest injustice."56 We conclude that it did. Under our erroneous decision in
Carlson III the State is liable for an interest payment of more than $62 million,
approximately five times the principal amount of refund damages in this case. This
overpayment represents a windfall to the class at the State's expense. It is manifestly
unjust to require the State to pay this massive punitive interest award when the clear
directive of the legislature was to limit the punitive interest rate only to overpayment and
underpayment of those taxes levied by Title 43. Thus, the interests of justice compel us
to correct our mistake. When, 22 years ago, we made the seemingly uncontroversial
assumption that overpaid fishing fees could be refunded through AS 43.10.210, we were
deciding only whether the class would be entitled to a refund of overpayments. But
following that ruling, we continued down a jurisprudential path that today finds the State
liable for more than $60 million in interest under a punitive interest rate statute that did
not even exist when we decided Carlson I.
The law of the case doctrine guides a court's discretion, but does not serve
as an absolute bar to reopening issues.57 The strong policy reasons for the doctrine
include "(1) avoidance of indefinite litigations; (2) consistency of results in [the] same
litigation; (3) essential fairness between the parties; and (4) judicial efficiency."58 In this
56 Carlson III, 65 P.3d 851, 859 (Alaska 2003).
57 See, e.g., Note, Successive Appeals and the Law of the Case, 62 HARV . L.
REV . 286, 287 (1948) ("[T]he doctrine should be treated as a guide to the court's
discretion rather than as a limitation on the power of the court.").
58 Beal II, 209 P.3d 1012, 1017 (Alaska 2009) (quoting Petrolane, Inc. v.
(continued...)
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case, these policy considerations do not weigh strongly against overruling our previous
decision. First, there is no reason to suspect our decision today will cause undue delay.
Any delay that might have sprung from our reconsideration of issues - including the
delay occasioned by our request for supplemental briefing and reargument - has already
occurred. Application of a new interest rate now requires only a new set of mathematical
calculations, not a new trial. Similarly, because our reconsideration does not create the
need for a new trial, concerns of judicial efficiency are only minimally implicated.
As to essential fairness, it is manifestly unfair to require the State to pay a
punitive interest award that is erroneous. Although the class may have had a reasonable
expectation of receiving prejudgment interest based on our holding in Carlson III, the
amount of that interest did not become clear until the remand immediately preceding this
appeal. Further, as discussed below, the class will still be entitled to an award of
prejudgment interest, albeit at a lower rate. And considerations of essential fairness are
served by respecting the constitutional separation of powers by protecting the
legislature's prerogative to determine when the State owes prejudgment interest.
Finally, we recognize that reconsidering a prior decision undermines the
goal of consistency, and we do not do so lightly. But loyalty to consistency alone should
not stop us from correcting this major error. We therefore partially overrule our decision
in Carlson III and hold that the prejudgment interest rate provision in AS 43.05.280 does
not apply to the class's refund in this case.59
58 (...continued)
Robles, 154 P.3d 1014, 1026 (Alaska 2007)).
59 We leave the rest of our holdings in Carlson III undisturbed.
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B. The Class Is Entitled To Prejudgment Interest Under The Doctrine Of
Assumpsit And AS 09.30.070.
The question becomes, then, whether the class is owed any prejudgment
interest at all. We conclude that it is at the rate established by AS 09.30.070.
In State v. Wakefield Fisheries, Inc., we concluded that one seeking to
recover an overpayment "is [not] limited to recovery according to the statutory provision,
AS [43.10.210]. The common law has long recognized a cause of action in assumpsit
to recover overpayments of taxes . . . ."60 We reasoned that "[b]ecause the statutory
remedies do not explicitly super[s]ede the common-law remedies . . . they are intended
as a supplement, and . . . the earlier remedy in assumpsit is still available."61
In Principal Mutual Life Insurance Co. v. State, Division of Insurance,
Department of Commerce & Economic Development, we cast doubt on that holding,
"question[ing] whether the common law remedy of a cause of action in assumpsit
survived the enactment of AS [43.10.210]."62 We did not, however, overrule Wakefield
Fisheries on that point. We decline now to decide the question whether the tax refund
statute at AS 43.10.210 supersedes the common law cause of action of assumpsit or
whether it merely codifies the right to recover on an assumpsit action for wrongfully
imposed taxes or fees.63 But under the unique circumstances before us, we conclude that
60 495 P.2d 166, 172 (Alaska 1972), overruled on other grounds by Principal
Mut. Life Ins. Co. v. State, Div. of Ins., Dep't of Commerce & Econ. Dev., 780 P.2d 1023,
1030 (Alaska 1989).
61 Id.
62 780 P.2d at 1030.
63 We also need not decide the question whether AS 43.10.210 was correctly
applied to the limited entry permit fees involved in this case. Both parties agree that
AS 43.10.210 provides the basis for the class's refund in this case. And in its
(continued...)
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this particular action should be considered as a common law action in assumpsit.64 And
as the State concedes in its brief, in an action for assumpsit the class is owed
prejudgment interest under AS 09.30.070.
Assumpsit is a quasi-contract cause of action.65 Under AS 09.50.250, the
State has waived sovereign immunity for actions sounding in quasi-contract.66 Alaska
Statute 09.50.280 provides that for actions brought pursuant to AS 09.50.250,
prejudgment interest may be assessed against the State "as provided under
63 (...continued)
supplemental briefing, the State not only retreated from its position in Carlson I that the
class was not entitled to a refund but also argued that citizens must have the right to
recoup wrongfully imposed taxes and fees (without distinction). We therefore do not
need to delve further into the relationship, if any, among limited entry permit fees,
assumpsit, and AS 43.10.210.
64 The State concedes this point in its brief.
65 The United States Supreme Court has described assumpsit as follows:
The action, brought to recover a tax erroneously paid,
although an action at law, is equitable in its function. It is the
lineal successor of the common count in indebitatus
assumpsit for money had and received. Originally an action
for the recovery of debt, favored because more convenient
and flexible than the common law action of debt, it has been
gradually expanded as a medium for recovery upon every
form of quasi-contractual obligation in which the duty to pay
money is imposed by law, independently of contract, express
or implied in fact.
Stone v. White, 301 U.S. 532, 534 (1937).
66 AS 09.50.250 provides: "A person or corporation having a contract,
quasi-contract, or tort claim against the state may bring an action against the state in a
state court that has jurisdiction over the claim."
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AS 09.30.070."67 The class is therefore entitled to prejudgment interest at a rate provided
by AS 09.30.070.
C. The Superior Court Did Not Abuse Its Discretion By Awarding
Attorney's Fees Under The Rule 82(b)(1) Schedule For Cases
Contested With Trial.
The superior court awarded the class attorney's fees under Alaska Civil
Rule 82(b)(1). It found that a three-day trial held in June 2000, the only trial held
throughout the history of the case, "constituted sufficient 'trial' to trigger the 'contested
with trial' provision." Fees calculated under this Rule were $7,482,569.73.
The State argues that the approximately $7.5 million attorney's fee award
was an abuse of discretion because: (1) the superior court should have applied the
formula for cases contested without trial; (2) a large fraction of the class did not receive
an award and the State prevailed on many issues; and (3) the fee award far exceeded full
reasonable attorney's fees. Because our decision today requires a new attorney's fees
calculation using the proper rate and amount of prejudgment interest,68 it is unnecessary
to address the last of the State's contentions.69 We address in turn the State's remaining
arguments.
67 We note that applying this interest rate is more consistent with the
legislature's stated intention of bringing uniformity to the enforcement provisions of the
State's revenue statutes. Even if the interest rate owed to class members for
overpayments occurring on or after August 7, 1997 may be lower than that provided by
AS 16.43.160(b), it will nonetheless more closely approximate AS 16.43.160(b)'s
effective interest rate than will the compound interest rate required by AS 43.05.280.
68 Civil Rule 82(b)(1) outlines a schedule of attorney's fees as a percentage
of the "judgment and, if awarded, prejudgment interest."
69 We note, however, that "[a]ttorney's fees awards made pursuant to the
schedule in Civil Rule 82(b)(1) are presumptively correct." Byars v. Byars, 945 P.2d
792, 795 (Alaska 1997).
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1. It was not an abuse of discretion to apply the "contested with
trial" formula.
The superior court held a three-day non-jury trial in June 2000. The
purpose of the trial was to "examine the [S]tate's methodology for implementing the
Carlson II formula" for calculating the appropriate fee differential between residents and
nonresidents.
The State argues that the trial was actually an evidentiary hearing that did
not dispose of all the essential facts of the case. It argues that the hearing consequently
should not be considered a "trial." The State points out that we referred to this
proceeding as an evidentiary hearing in Carlson III.70
But the trial court has broad discretion and is usually in the best position
to determine the nature of the proceeding before it. Moreover, during the proceeding,
the State referred to it as a "trial." And even if the proceeding could be characterized as
an evidentiary hearing, we have held that evidentiary hearings may be sufficient to
trigger a "contested with trial" Rule 82 award.71 The fact that the trial did not resolve
every issue in the case is not determinative. The superior court did not abuse its
discretion in finding that the 2000 trial allowed for the award of Rule 82 attorney's fees
under the schedule for cases "contested with trial."
The State also argues that the "contested without trial" schedule should be
used because the issues determined at trial "could just as easily have been submitted to
the court on the written record." Even taking this as true, the superior court did not base
its attorney's fee award on what could have happened - it based the award on what
actually happened. It was not an abuse of discretion for the superior court to award
70 Carlson III, 65 P.3d 851, 858 (Alaska 2003).
71 See, e.g., Ward v. Urling, 167 P.3d 48, 57 (Alaska 2007) (child support
case).
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attorney's fees based on the actual proceedings in the case instead of on what the State
now asserts could have happened. Finally, the State argues that the trial lasted "just three
days." But "[w]hether the trial lasts two days or twenty, the rule presumes the same
award."72
2. It was not an abuse of discretion to name the class the prevailing
party.
The State argues that the superior court abused its discretion by failing to
adjust the attorney's fee award to reflect the "mixed results achieved by class counsel."
It argues that most of the plaintiffs did not prevail in this case because they were
excluded from the class and that the State prevailed on a number of key issues, including
whether the fishing fees violated the Commerce Clause and calculation of "significant
components of the fisheries budget." It also argues that when each party prevails on
some issues, the trial court does not have to award fees.
It is true that the trial court has discretion not to award attorney's fees when
"each party prevails on a 'main issue.' "73 But the superior court did not abuse its
discretion here in finding that the class was the prevailing party and was thus entitled to
an award of attorney's fees.
Civil Rule 82 provides that "the prevailing party in a civil case shall be
awarded attorney's fees." The prevailing party is "the party who has successfully
prosecuted or defended against the action, the one who is successful on the 'main issue'
of the action and in whose favor the decision or verdict is rendered and the judgment
72 Reid v. Williams, 964 P.2d 453, 461 (Alaska 1998).
73 Shepherd v. State, Dep't of Fish & Game, 897 P.2d 33, 44 (Alaska 1995)
(citing Tobeluk v. Lind, 589 P.2d 873, 877 (Alaska 1979)).
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entered."74 The class successfully prosecuted the action and was successful in
establishing that the State violated the constitutional rights of the class members75 and
that the members are entitled to a refund. The class will receive a substantial judgment.
Although some original class members will not receive a refund, the prevailing party
here is the class itself, which won a substantial award.
Moreover, the issues that the State prevailed on do not lead to the
conclusion that the superior court abused its discretion in not using them to adjust the
award. Although in Carlson II we agreed with the State that the fee differential should
not be analyzed under the Commerce Clause, we did hold that it should instead be
analyzed under the Privileges and Immunities Clause.76 And we later found the
differential to be unconstitutional.77 The main issue here was the unconstitutionality of
the fee, and the State lost. Similarly, although in Carlson III we agreed with the State
on some of its calculations regarding its budget,78 we still determined that the State owed
the class a refund, which was the main issue. The class was clearly the prevailing party,
and the superior court did not abuse its discretion by failing to adjust the award based on
"mixed results" in this case.
V. CONCLUSION
We REVERSE our holding in Carlson III as to the proper rate of
prejudgment interest and REMAND for the superior court to determine a new interest
74 Id. (internal quotation marks omitted) (citingAdoption of V.M.C., 528 P.2d
788, 795 n.14 (Alaska 1974)).
75 Carlson IV, 191 P.3d 137, 145 (Alaska 2008).
76 Carlson II, 919 P.2d 1337, 1340-41 (Alaska 1996).
77 Carlson IV, 191 P.3d at 142-44.
78 Carlson III, 65 P.3d 851, 867 (Alaska 2003).
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award under AS 09.30.070 and to adjust the attorney's fee award under Rule 82(b)(1)
accordingly.
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