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.
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.
We conducted a similar analysis of the class's Commerce Clause
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,
In Carlson II we concluded that the class's challenge to differential fees based on residency
Carlson III dealt with four sets of issues. First, we declined to readdress the constitutional issues decided in Carlson I and II.
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.
In Carlson IV
E. Remand Following
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
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,"
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."
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.
Because there was no statute directly providing for prejudgment interest for a refund upon overpayment of Title 16 fishing permit fees,
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 punitive
As we noted in Carlson III, prejudgment interest may not be awarded against the State unless the legislature or constitution has authorized it.
The State's reading of the statute is the most natural reading. The State argues that
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 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 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."
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."
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."
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.
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 10.5% annually).
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.
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 could be applied to an overpayment of fees under Title 16.
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.
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
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. 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."
The law of the case doctrine guides a court's discretion, but does not serve as an absolute bar to reopening issues.
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
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...."
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]."
Assumpsit is a quasi-contract cause of action.
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,
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.
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.
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 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."
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
It is true that the trial court has discretion not to award attorney's fees when "each party prevails on a `main issue.'"
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 entered."
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.
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 award under AS 09.30.070 and to adjust the attorney's fee award under Rule 82(b)(1) accordingly.
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):
Ch. 27, § 5, SLA 2001 (emphasis added).
In 2005 the statute was amended to provide:
AS 16.43.160(c); Ch. 16, § 3, SLA 2005.
Stone v. White, 301 U.S. 532, 534, 57 S.Ct. 851, 81 L.Ed. 1265 (1937).