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Grimm v. Wagoner (9/19/2003) sp-5737
Grimm v. Wagoner (9/19/2003) sp-5737
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,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
WILLIAM GRIMM and MERRILL )
McGAHAN, ) Supreme Court No. S-10953
)
Appellants, ) Superior Court No. 3AN-02-
12950 CI
)
v. ) O P I N I O N
)
THOMAS H. WAGONER, STATE ) [No. 5737 - September 19,
2003]
OF ALASKA, DIVISION OF )
ELECTIONS, and LOREN LEMAN, )
in his official capacity as Lieutenant )
Governor, )
)
Appellees. )
________________________________)
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Peter A. Michalski, Judge.
Appearances: Arthur S. Robinson, Robinson &
Associates, Soldotna, and John M. Rice, Law
Office of John M. Rice, P.C., Juneau, for
Appellants. Jeffrey D. Jefferson, The
Jefferson Law Office, Kenai, for Appellee
Thomas H. Wagoner. Jan Hart DeYoung and
Sarah Felix, Assistant Attorneys General,
Anchorage, and Gregg D. Renkes, Attorney
General, Juneau, for Appellees State of
Alaska, Division of Elections, and Loren
Leman. James E. Fosler, Keesal, Young &
Logan, Anchorage, for Amicus Curiae Alaska
State Legislature.
Before: Fabe, Chief Justice, Eastaugh,
Bryner, and Carpeneti, Justices. [Matthews,
Justice, not participating.]
EASTAUGH, Justice.
I. INTRODUCTION
Alaska Statute 39.50.030(a) requires candidates for
elected office to file disclosure statements containing an
"accurate representation" of their financial affairs. State
senate candidate Thomas Wagoner filed a disclosure statement that
failed to disclose several actual or potential financial
interests. Two voters filed a private post-election enforcement
action under AS 39.50.100, claiming that AS 39.50.060(b) required
Wagoner to forfeit the election. The superior court conducted a
trial and held for Wagoner. We conclude that the superior court
did not err in applying a "substantial compliance" standard in
deciding whether Wagoner satisfied the disclosure law. We also
conclude that it did not err in alternatively ruling that if the
lawsuit was a Title 15 election contest, plaintiffs had to prove
that the omissions had an effect on the outcome of the election.
We therefore affirm.
II. FACTS AND PROCEEDINGS
Thomas H. Wagoner, a candidate for state Senate
District Q, filed his Public Official Financial Disclosure
Statement May 17, 2002. Wagoner was elected in the November 5,
2002 general election. He defeated the incumbent by 123 votes,
and also defeated two other candidates.
On November 18 William Grimm and Merrill McGahan, two
qualified voters, filed a civil action under AS 39.50.100 to
enforce AS 39.50, Alaska's Public Official Financial Disclosure
Law.1 Their complaint alleged that Wagoner materially and
substantially failed to disclose some of his business interests,
and sought an order preventing him from taking office. They also
moved for a temporary restraining order to enjoin the Division of
Elections from certifying the Senate District Q election results.
Their supporting memorandum explained that their civil action
sought to implement AS 39.50.060(b), which prevents the
lieutenant governor from certifying the election of "elected
officials" who fail to comply with AS 39.50.
The complaint did not name the Division of Elections as
a defendant. On November 25 the superior court ruled that the
Division of Elections was an essential party and denied Grimm and
McGahan's injunction motion as premature. Their amended
complaint included the Division of Elections and the lieutenant
governor as defendants, but on November 27 the superior court
again denied their injunction motion, finding irreparable harm
unlikely and the probability of success on the merits
"extraordinarily low." On the same day, the Director of the
Division of Elections certified Wagoner's election.
Alaska Public Offices Commission (APOC) staff reviewed
Wagoner's disclosures after Grimm and McGahan filed suit.
Informed by APOC that a fine would accrue for failure to file
properly, Wagoner amended his disclosure statement November 21 to
acknowledge additional business interests and associations.
Wagoner explained to APOC that he had believed certain matters,
including his position as officer of a homeowners' association in
California, did not have to be disclosed under the disclosure
law.
Following its audit, APOC staff issued a
"Recommendation for Commission Action." The staff found that
some of the new information provided by Wagoner, such as
disclosures relating to inactive business interests, did not need
to be disclosed under AS 39.50. But the staff also found that
two omissions did require disclosure - Wagoner's position in the
homeowners' association, and a business interest in Wagoner
Rental Properties, a real estate proprietorship Wagoner had
previously listed as a source of income. Wagoner had previously
disclosed the location of the rental properties, but failed to
include Wagoner Rental Properties as a business interest in the
business interest schedule of the disclosure form. The maximum
fine for these omissions, at ten dollars per day from the time
the disclosure statement was due until it was complete, was
$1,740, per staff calculations. Nevertheless, the staff
recommended that the fine be reduced to $150 because Wagoner was
an inexperienced filer, his omission of the business interest in
Wagoner Rental Properties was inadvertent, and he had cooperated
fully with APOC staff by correcting his omissions as quickly as
possible.
The APOC commissioners met in early December,
considered the audit, and accepted the staff recommendation.
APOC issued a December 13 order identifying disclosure
violations, and fined Wagoner $150 for the two omissions cited in
the staff recommendation. On the same day APOC issued its order,
Wagoner wrote to APOC, stating that a review of his financial
records with his personal accountant revealed three other
omissions that were potentially disclosable: the name of an
occasional tenant of Wagoner Rental Properties; a "loan" from his
mother used to pay for her convalescent care; and a Small
Business Administration loan that had been paid off. Wagoner
filed amendments to his disclosure statement reflecting these
matters. The APOC commissioners apparently had not taken action
as to these amendments at the time the present appeal was
commenced in our court.
On December 23 the superior court heard oral argument
on the parties' motions to establish the applicable law and for
summary judgment. On the day of oral argument Grimm and McGahan
filed a proposed second amended complaint alleging disclosure
failures not alleged in their earlier complaint.
By order of December 26, the superior court denied the
parties' motions for summary judgment, and ruled that the case
would be treated as an election contest. The court ruled that
failure to comply with AS 39.50 may constitute a "corrupt
practice" under the election contest statute, and that the
disclosure requirements did not create a constitutionally
impermissible qualification for office. The court also ruled
that in construing AS 39.50 together with AS 15.20, the proper
question before the court was whether Wagoner's alleged failures
to disclose were sufficient to change the result of the election
- the standard for contesting an election under AS 15.20.540.
The court rejected the plaintiffs' assertion that AS 39.50 should
be strictly construed.
Although it applied the general framework of an AS
15.20 election contest to the plaintiffs' challenge, the court
ruled that one procedural requirement for a Title 15 election
contest - the ten-voter requirement2 - was "overcome" by the
precedence clause in the ballot initiative that created Title
39's Public Official Financial Disclosure Law.3
Grimm and McGahan filed a petition for review of the
December 26 order. While that petition was pending in this
court, the superior court conducted a bench trial on January 2,
2003. On January 6 the superior court issued a memorandum
decision and judgment dismissing the plaintiffs' complaint.
The superior court dismissed on alternative theories.
The court ruled that if the plaintiffs' challenge were considered
an election contest under Title 15, it would fail because the
plaintiffs did not show that Wagoner's alleged nondisclosures had
an effect on the outcome of the election. The court
alternatively ruled that Wagoner had substantially complied with
the requirements of AS 39.50, and that he was therefore not
subject to forfeiture of office under AS 39.50.060(b).
Therefore, whether it was treated as a Title 15 election contest
or as an AS 39.50 enforcement proceeding, the plaintiffs'
challenge failed.
Grimm and McGahan appealed. We ordered accelerated
briefing and heard oral argument January 17 because January 21
was the day legislators were to be installed in office.4 We
issued a dispositive order January 17. The order affirmed the
superior court's judgment dismissing the plaintiffs' lawsuit.
This opinion explains our reasons for affirming.
III. DISCUSSION
A. Standard of Review
Questions regarding the application, interpretation,
and constitutionality of a statute are questions of law to which
we apply our independent judgment.5 We interpret the Alaska
Constitution and Alaska Statutes "according to reason,
practicality, and common sense, taking into account the plain
meaning and purpose of the law as well as the intent of the
drafters."6 We also use our independent judgment to review
whether the superior court applied an incorrect legal standard.7
"Because the public has an important interest in the
stability and finality of election results, we have held that
`every reasonable presumption will be indulged in favor of the
validity of an election.' "8
Under Alaska Civil Rule 52(a) a trial court's findings
of fact will not be set aside unless they are clearly erroneous.
We will reverse a trial court's findings only if we are left with
a definite and firm conviction that the court erred.9 We apply
our independent judgment to the trial court's application of law
to undisputed facts.10
B. It Is Not Necessary To Decide Whether AS
39.50.060(b) Provides a Post-Certification Remedy.
Plaintiffs claim that AS 39.50.060(b) requires that
Wagoner be ordered to forfeit his election. Because plaintiffs'
claims were tried after the Division of Elections certified
Wagoner's election, the state and amicus curiae Alaska State
Legislature argue that the remedies listed in AS 39.50.060(b) are
unavailable. Subsection .060(b) provides:
Any person failing or refusing to comply
with the requirements of this chapter, in
addition to the penalties prescribed, shall
forfeit nomination to office and may not be
seated or installed in office if the person
has not complied. Nominated, hired, or
appointed officials, commissioners, chairs,
or members of commissions or boards specified
in AS 39.50.200(b) may not be confirmed by
the legislature if compliance has not been
made. In the case of elected officials, the
lieutenant governor, or other certifying
authority, may not certify a person's
nomination for office or the person's
election to office if compliance was not made
within the time required. The nomination to
office or election to office shall be
certified to the highest vote getter for that
nomination for that office or election to
that office who has complied within the times
required and who shall be declared nominated
or elected. For purposes of this subsection,
a person is considered to have complied
within the time required if the person
complies within 30 days after the due date
established by this chapter.
The state argues that as a matter of statutory
construction, AS 39.50.060(b) does not authorize any sanction
that could operate after the candidate's election is certified.
The state contends that the first sentence of the subsection is a
"broad declaration of the principle that public officials should
not begin office without first complying with the public official
financial disclosure requirements," and that implementation of
the subsection in this case is governed by the sentence beginning
"[i]n the case of elected officials."11 The state asserts that
the certification clause in the third sentence of subsection
.060(b) only authorizes courts to prevent the lieutenant governor
from certifying the election of a noncomplying candidate.
It is not necessary to decide whether subsection
.060(b) provides a post-certification judicial remedy for
challenges to "elected officials." Because we hold for other
reasons that the superior court did not err in denying the
forfeiture remedy, see Parts III.D and E below, we do not have to
consider this alternative ground for affirming.
The state and the legislature also argue that we should
construe subsection .060(b) narrowly to avoid interfering with
the power delegated by the Alaska Constitution to each
legislative house to be "the judge of the election and
qualifications of its members."12 The legislature argues that
given this delegation, permitting a post-certification judicial
forfeiture remedy could implicate separation of powers
principles.
Because the result we reach today rejects Grimm and
McGahan's arguments on their merits, and consequently does not
disturb the certification of Wagoner's election, we do not have
to consider whether a different result might have raised
separation of powers questions of the sort the legislature
discusses in its amicus brief.
C. We Do Not Need To Decide Whether the Superior
Court Properly Applied Title 15 Election Contest
Standards.
The superior court order establishing the applicable
rule of law stated that a failure to disclose under AS 39.50
could be a "corrupt practice" under AS 15.20.540, and that the
proper question before the court was whether Wagoner's omissions
were sufficient to change the result of the election. "[A]ny
corrupt practice as defined by law sufficient to change the
results of the election" is a ground for an election contest
under AS 15.20.540.
On appeal Grimm and McGahan argue that the superior
court erred in applying Title 15 election contest standards to
their AS 39.50.100 action. Whether it erred in doing so presents
an ostensibly threshold question, but the superior court's
alternative grounds for entering judgment against the plaintiffs
make it unnecessary for us to decide this question. The superior
court resolved the case by applying Title 15 election contest
standards, and alternatively by applying AS 39.50 alone. Because
it was proper to dismiss plaintiffs' suit under either approach,
we do not need to address whether the superior court properly
applied Title 15 election contest standards. For reasons we
discuss below, the superior court did not err under either
analysis, and we therefore do not decide whether the superior
court erred by applying Title 15 standards to this AS 39.50.100
action.
D. The Lawsuit Cannot Succeed as a Title 15 Election
Contest Because Plaintiffs Did Not Demonstrate an
Effect on the Outcome of the Election.
Applying Title 15 election contest standards to
plaintiffs' lawsuit, the superior court ruled against them for
two reasons. First, it found that although Grimm and McGahan
demonstrated a "reckless violation" of the disclosure
requirements, they did not prove a "knowing violation, as is
required by all the other types of corrupt practices which could
lead to loss of this election contest." Second, it reasoned that
even if the plaintiffs had demonstrated a "corrupt practice,"
they failed to show that Wagoner's nondisclosures had an effect
on the outcome of the election, as AS 15.20.540 requires.
On appeal Grimm and McGahan argue that it was error to
apply a Title 15 analysis to their lawsuit, but they do not argue
that they demonstrated an effect on the outcome of the election.
It is unnecessary to address the superior court's first reason
for dismissing the lawsuit under Title 15 because the court's
second reason - the absence of a showing that Wagoner's alleged
failures had an effect on the outcome of the election - is
determinative. The superior court noted in its decision that
Grimm and McGahan "acknowledge that they do not have sufficient
evidence to prove the high standard of election contest cases.
They cannot show that the disclosure failures here were
sufficient to change the result of the election." Grimm and
McGahan challenge the application of Title 15 election contest
standards on appeal, but they do not challenge the superior
court's evidentiary findings under this standard. We therefore
accept the superior court's finding that Grimm and McGahan did
not demonstrate an effect on the outcome of the election. Given
this finding, the lawsuit could not succeed as a Title 15
election contest. The superior court did not err in holding that
plaintiffs did not satisfy Title 15.
E. Substantial Compliance Is the Proper Standard
Under AS 39.50.060(b).
The superior court alternatively dismissed the lawsuit
because it concluded that substantial compliance was the
appropriate standard under AS 39.50, and because it found that
Wagoner substantially complied with the chapter's disclosure
requirements. We consider first whether substantial compliance
was the correct standard for enforcing AS 39.50.060(b).
1. Neither the statute nor Alaska precedent
specifies the standard of compliance.
On appeal Grimm and McGahan argue that AS 39.50.060(b)
requires forfeiture for candidates who do not strictly comply
with the disclosure requirements of AS 39.50. The state and
amicus curiae Alaska State Legislature argue that substantial
compliance is the standard for avoiding penalties under
subsection .060(b).
The first sentence of AS 39.50.060(b) states that the
subsection applies to "[a]ny person failing or refusing to comply
with the requirements of [the] chapter." (Emphasis added.) The
third sentence states that "[i]n the case of elected officials,
the lieutenant governor . . . may not certify . . . the person's
election to office if compliance was not made within the time
required." (Emphasis added.) Neither sentence specifies the
level of noncompliance required to justify a penalty under
subsection .060(b). And neither indicates whether a failure to
strictly comply with the disclosure statutes is sufficient to
require forfeiture of office under subsection .060(b). We must
therefore determine what standard the legislature intended to be
applied when forfeiture is sought under AS 39.50.060(b).
In deciding to apply the substantial compliance
standard, the superior court reasoned that this standard was
needed to distinguish trivial from non-trivial errors and
omissions.
Grimm and McGahan essentially give three reasons why
strict compliance should be the appropriate standard. First,
they claim that "[t]he unambiguous language of AS 39.50.060(b) is
mandatory." We are unconvinced that the language of the statute
is clear and mandatory in the way plaintiffs think. Subsection
.060(b) does not specify the level of noncompliance necessary to
trigger a forfeiture of office. Contrary to plaintiffs'
supposition, the statute's statement that any person failing to
comply "shall forfeit nomination to office and may not be seated
or installed," does not indicate an appropriate level of
compliance.13 That the penalty for a violation may be mandatory
does not tell us how to decide whether a violation has occurred.
Second, the plaintiffs observe that AS 39.50.030
requires the disclosure of "all" relevant business interests and
sources of income, and implicitly argue that a mandate for strict
compliance exists in the disclosure requirements themselves.
This argument is also unpersuasive. Passages in AS 39.50.030(b)
undeniably require that disclosure statements must include "all"
or "each" relevant business interest or source of income.14 But
the mandatory and comprehensive language of these requirements in
subsection .030(b) does not clarify the level of noncompliance
necessary for forfeiture under subsection .060(b). The mandatory
and comprehensive language of the disclosure requirements is not
surprising. Less demanding language would make it impossible to
determine what disclosure is needed and the sufficiency of a
given disclosure enforcement. Nonetheless, it remains unclear
what level of noncompliance with the disclosure requirements can
lead to the forfeiture penalty described in subsection .060(b).15
The level of compliance required by the disclosure requirements
of subsection .030(b) does not specify the level of noncompliance
necessary to trigger the penalties described in subsection
.060(b).
Third, the plaintiffs assert that we have required
strict compliance in analogous situations, and cite Silides v.
Thomas,16 Falke v. State,17 and State, Alaska Public Offices
Commission v. Marshall18 in support. In Silides and Falke we
applied a strict compliance standard to the filing deadlines for
required election disclosures, and noted that election filing
deadlines are generally strictly enforced.19 In Marshall we
declared void the election of a local municipal officer who filed
a preelection disclosure form long after the election.20 In that
case we observed that the candidate's violations "cannot be
characterized as trivial," and expressly reserved the question
whether a trivial violation could trigger the forfeiture
sanction.21
These cases are distinguishable from the present
situation. We agree with the superior court that there is a
difference between strictly enforcing election filing deadlines,
and measuring the extent to which a disclosure complies with
substantive requirements. Determining whether a candidate's
disclosure statement is substantively in compliance with the
requirements of the disclosure law is markedly more subtle than
determining whether the statement was timely filed. Assessing
compliance with filing deadlines is straightforward; a statement
is either timely filed or it is not. Given the complexities of
assessing substantive compliance, it is not apparent why the
strict compliance standard applicable in the election-filing
deadline cases should apply here.
Grimm and McGahan also argue that a failure to comply
with the substance of AS 39.50.030 is actually a failure to
satisfy the filing deadline, because the statute requires
disclosure of all relevant interests.22 They reason that
Wagoner's disclosure statement was not complete, and was
therefore not timely. But this argument tells us nothing about
whether the timely filed disclosure was substantively sufficient.
Accepting the plaintiffs' logic, any disclosure deficiency no
matter how trivial would be an untimely filing.
We reserved in Marshall the question whether forfeiture
could be triggered by trivial failures to comply with disclosure
requirements.23 That reservation implicitly recognized the
difference between substantive compliance and compliance with
filing deadlines. We decline to merge substantive compliance
with deadline compliance, and conclude that neither the statute
nor Alaska precedent specifies the level of substantive
compliance required to avoid forfeiture of office under AS
39.50.060(b).
2. Applying a substantial compliance
standard is consistent with the "accurate
representation" language of AS 39.50.030(a).
Grimm and McGahan's private enforcement action under AS
39.50.100 seeking an AS 39.50.060(b) forfeiture necessarily
assumed that Wagoner failed to satisfy AS 39.50.030.24 Subsection
.030(a) requires that each disclosure statement "be an accurate
representation of the financial affairs of the public official or
candidate."25 The criterion for measuring compliance with the
substantive requirements of AS 39.50 is therefore whether the
disclosure provides an "accurate representation" of the
candidate's finances. To apply subsection .060(b)'s penalty
provisions, at a minimum a court would have to find that a
candidate failed to provide an "accurate representation" under
subsection .030(a). Is strict compliance with the disclosure
requirements necessary to provide an "accurate representation" of
a candidate's finances? The answer is "no."
"Accurate" means variously "in exact conformity to
fact," or "conforming closely to a standard."26 Use of
"representation" as part of the statutory standard is more
consistent with the latter definition. A "representation" is a
depiction or description,27 and the phrase "accurate
representation" implies close conformity rather than absolute
precision. An "accurate representation" does not necessarily
connote or imply flawless perfection; it can be achieved with
something less than absolute exactitude.
We therefore read "accurate representation" in
subsection .030(a) as not precluding a substantial compliance
standard for enforcement of subsection .060(b). A candidate can
"comply" with subsection .030(a) for the purposes of subsection
.060(b) without strictly complying with the substantive
disclosure requirements.
3. Substantial compliance is consistent
with the purposes of the chapter.
Enforcing AS 39.50.060(b) for failing to substantially
comply with the disclosure requirements is consistent with the
statutorily declared purposes of the disclosure statute. Alaska
Statute 39.50.010(a) lists these purposes:
(1) to discourage public officials from
acting upon a private or business interest in
the performance of a public duty;
(2) to assure that public officials in their
official acts are free of the influence of
undisclosed private or business interests;
(3) to develop public confidence in persons
seeking or holding public office, enhance the
dignity of the offices and make them
attractive to citizens who are motivated to
public service; and
(4) to develop accountability in government
by permitting public access to information
necessary to judge the credentials and
performance of those who seek and hold public
office.
These purposes call for an "accurate representation" of
a candidate's financial interests, but they do not require or
imply absolute precision. In the context of subsection .060(b),
mandatory forfeiture for public officials who do not strictly
comply with the substantive disclosure requirements is not
necessary to effectuate these goals. Grimm and McGahan
argue that "[d]isclosure of the candidate's financial and
business interests is required so that voters can make an
informed decision at the ballot box." Public access to accurate
information is necessary to ensure governmental integrity, but
minor errors in disclosure statements do not interfere with the
public's ability to judge the credentials of candidates for
public office. It would also seem that the expressed purpose of
attracting citizens to public office would be defeated if trivial
or inconsequential errors could deprive voters of the officers
they elected.28
Furthermore, subsection .010(b)(5) asserts that
"reasonable disclosure requirements do not have the effect of
chilling the exercise of the right of a qualified person to seek
or hold public office." The prospect of mandatory forfeiture of
elected office despite substantial compliance with AS 39.50 could
chill interest in public office.
4. A strict compliance standard would
thwart voter intent in contravention of Alaska
law.
We have often stated that "every reasonable presumption
will be indulged in favor of the validity of an election."29
There is a "well-established policy" favoring the stability of
election results in the face of technical errors or
irregularities not affecting election results.30 We have
explained this policy noting that "[c]ourts are reluctant to
permit a wholesale disfranchisement of qualified electors through
no fault of their own, and `[w]here any reasonable construction
of [a] statute can be found which will avoid such a result, the
courts should and will favor it.' "31
In light of this policy, plaintiffs in Title 15
election contests carry a heavy burden. We have defined
"malconduct" under AS 15.20.540 as "a significant deviation from
statutorily or constitutionally prescribed norms."32 And as
discussed previously, to maintain an election contest under AS
15.20.540, plaintiffs must demonstrate an effect on the outcome
of an election.
Rigidly applying a forfeiture sanction for
inconsequential violations is inconsistent with the presumptive
validity of election results, and the "well-established policy"
favoring election results in the face of technical
irregularities.33 Furthermore, applying a forfeiture sanction for
failures to strictly comply with disclosure requirements would
significantly undermine the high burdens we have applied in
election contests, and the statutorily required showing of an
effect on the outcome of the election.34 A strict compliance
standard under AS 39.50.060(b) would thwart voter intent in
contravention of Alaska law. Substantial compliance is more
consistent with Alaska's election jurisprudence.
Of course AS 15.20 contains substantive provisions that
are not duplicated in AS 39.50. But it would be anomalous to
impose the harsh remedy of forfeiture of elected office under AS
39.50.060(b) for an inconsequential disclosure omission given the
high causal standard applicable to election contests.
5. A substantial compliance standard is
supported by Alaska Public Offices Commission
regulations.
We also note that APOC regulations support the adoption
of a substantial compliance standard. Given the lack of
statutory specificity discussed above, APOC regulations serve as
a useful interpretive aid.
APOC's "[p]rocedures for incomplete statements from
candidates for state elective office" specify that the lieutenant
governor may not certify the election of a candidate who "has not
supplied required information on a major source of income,
interest in real property, business interest, loan, or trust."35
(Emphasis added.) Furthermore, 2 Alaska Administrative Code
(AAC) 50.127(d) states that if "information discovered after the
withdrawal-of-candidacy deadline indicates that a candidate . . .
has failed to comply substantially with the requirements of AS
39.50 . . . the staff of the commission shall undertake a
preliminary investigation." (Emphasis added.) Moreover, 2 AAC
50.110(c)(1) states that APOC staff may recommend a ten dollar
per day fine if the filer "failed to comply substantially with AS
39.50 . . . by failing to report in the filer's statement a major
source of income, interest in real property, business interest,
loan, trust, or other substantial financial interest." (Emphasis
added.)
Agency interpretations are not binding on our
interpretation of a statute,36 but APOC's regulations provide
useful guidance here. In the analogous context of administrative
appeals, when a question of law involves agency expertise we will
"defer to [an] agency's interpretation of a law unless it is
unreasonable."37 APOC's adoption of a substantial compliance
standard implies that APOC has interpreted its enabling statute
to require that standard or at least to be consistent with that
standard. Further, it would seem incongruous to impose a
forfeiture sanction if there is substantial but not strict
compliance, when substantial compliance is the standard APOC has
adopted in deciding whether to undertake an investigation or
impose a civil penalty.
Moreover, both the regulations and AS 39.50 contemplate
a graduated response for disclosure violations. Under 2 AAC
50.110 the civil penalty for incomplete disclosures increases
after fifteen days of lateness, and the maximum per diem fine is
available for continuous failures, or failures to comply
substantially with the disclosure requirements.38 Alaska Statute
39.50.060(a) provides criminal penalties for officials who
"refuse[] or knowingly fail[]" to comply, and sections .070 and
.080 prevent confirmation of executive officials and
commissioners until they comply. The opportunity to cure
disclosure defects in sections .070 and .080 for officials
subject to subsection .060(b), and the criminal penalties of
subsection .060(a), indicate a measured approach to disclosure
violations.39 Context implies that forfeiture of office is only
available for more serious offenses. Imposing a forfeiture
sanction for failing to strictly comply would produce
disproportionate results under this enforcement regime. Grimm
and McGahan argue that applying a substantial compliance standard
would "very likely create more, rather than fewer, conflicts in
the enforcement of election filing deadlines." But applying a
strict compliance standard for the forfeiture penalty is not
consistent with the enforcement regime. We also think that
reserving the post-election forfeiture penalty for failures to
substantially comply with the disclosure requirements will not
unduly burden APOC or the courts in enforcing the disclosure law.
For the reasons we discuss in Parts III.E.1-5, we
conclude that substantial compliance is the appropriate standard
for imposing the forfeiture remedy of AS 39.50.060(b).
F. The Superior Court Did Not Clearly Err in Finding
that Wagoner Substantially Complied with the
Requirements of AS 39.50.
Having determined that substantial compliance is the
appropriate standard under AS 39.50.060(b), we now consider
whether it was error to find that Wagoner substantially complied
with the disclosure requirements. On appeal Grimm and McGahan
argue generally that the superior court erred in finding
Wagoner's nondisclosures to be trivial; they specifically
challenge some of the superior court's determinations regarding
particular allegations of nondisclosure.
Deciding whether a candidate substantially complied
with AS 39.50 in the context of subsection .060(b) requires both
factual and legal determinations. A trial court must determine
whether a candidate violated the disclosure laws, and also
whether any possible violations rendered a candidate out of
substantial compliance. The overarching question is whether the
disclosures provided an "accurate representation" of the
candidate's finances.
In making this determination a trial court may
permissibly look to the opinion of the administrative agency
responsible for enforcing the disclosure law.40 APOC has both
administrative expertise and the dedicated responsibility of
policing disclosures under AS 39.50. Whether APOC found a
disclosure failure, fined a candidate, or assessed a reduced
penalty, for example, is relevant in analyzing a candidate's
compliance with AS 39.50.
1. The superior court did not err in
finding that several alleged failures did not
require disclosure.
Grimm and McGahan's complaint alleged that Wagoner
failed to disclose eight different interests. The superior court
found that six of the eight interests alleged related to
interests Wagoner was not required to disclose.
Counts I, V, and VII of the complaint alleged that
Wagoner failed to disclose interests in Got Fish, Nuka Island
Fishing Charters, and Chisik Island Charters, respectively. On
appeal the plaintiffs argue that the superior court erred in
concluding that these interests did not require disclosure
because AS 39.50.030 requires the disclosure of all business
interests, regardless of activity, and because there was business
activity for Got Fish. The activities alleged for Got Fish
include obtaining a business license and opening a checking
account.
Following its review of Wagoner's disclosures, APOC
staff noted that "[t]he Commission has never required inactive
businesses be reported." APOC staff considered that Wagoner
obtained a business license for Got Fish in order to obtain a
checking account, but staff concluded that Got Fish, Nuka Island
Fishing Charters, and Chisik Island Charters were inactive in the
reporting year, and did not require disclosure. The APOC
commissioners agreed, and did not find disclosure violations for
these three interests.
At trial the superior court considered testimony from
Wagoner and other evidence relating to the alleged business
interests. Relying in part on APOC's review of Wagoner's
omissions, the superior court determined that the interests
alleged in Counts I, V, and VII did not require disclosure. The
superior court distinguished between a candidate's obligation to
disclose an unprofitable business, and a candidate's permissible
omission of a non-operating business. In light of APOC's
determination, the superior court did not err in ruling that
these business interests did not require disclosure.
Count II of plaintiffs' complaint alleged that Wagoner
failed to disclose a partnership with the Navarre family. The
Navarres and the Wagoners co-own property in California. APOC
staff noted that Wagoner reported his fifty percent ownership
interest in the property, and stated that "[t]he law does not
require that the filer name other non-family owners of the
property." APOC staff did not find a disclosure failure in
Wagoner's omission of the Navarres as co-owners, and the
commissioners agreed.
The superior court stated that "one might infer an
implied partnership" from the joint ownership, but ruled that
Wagoner's accurate reporting of his ownership status was
sufficient under the statute. The superior court considered
testimony from Wagoner and APOC staff, and did not find the
existence of a business interest that required disclosure.
On appeal Grimm and McGahan argue that the "implied
partnership" was an oral partnership agreement under the Uniform
Partnership Act, that its existence was evidenced by its checking
account, and that Wagoner needed to disclose his dealings with
the Navarre family as a partnership interest. In light of APOC's
determination, the superior court did not err in ruling that
Wagoner did not need to report a partnership with the Navarre
family. Wagoner's disclosure of his own financial interest in
the property would reveal any potential conflict that might also
affect the interests of the co-owner. The plaintiffs suggest
that disclosing the partnership was necessary to reveal Wagoner's
relationship to the Navarre family, and argue that "Wagoner's
status as a Republican Moderate would have been called into
question" because "[t]he Navarres are historically strong
democratic candidates in the state." But AS 39.50.030(b)(4)
requires the disclosure of interests in real property owned by
the candidate, the candidate's spouse, spousal equivalent, or
child; it does not require the disclosure of non-family co-owners
or political affiliations.
Count IV of the complaint alleged that Wagoner failed
to disclose his membership in a Kenai fisherman's cooperative.
APOC staff noted that "[t]he Kenai fisherman's coop was not
founded until June 2002" and "therefore, it was not reportable on
Mr. Wagoner's 2002 statement." The APOC commissioners agreed
with the staff recommendation, and did not find a disclosure
violation for Wagoner's omission of his membership in the
cooperative.
The superior court concluded that Wagoner was not
required to disclose his cooperative membership, because the
evidence indicated that the cooperative was not founded until
after the reporting year. The plaintiffs do not specifically
challenge this ruling on appeal. Assuming their general argument
encompasses this ruling, we conclude that the superior court did
not err in ruling that Wagoner did not need to disclose his
membership in the cooperative. The disclosure law only requires
reporting of all information from the "preceding calendar year."41
Count VIII of the plaintiffs' complaint alleged that
Wagoner failed to disclose his interest in a commercial fishing
business, a commercial fishing vessel, and Alaska limited entry
permits. APOC staff noted that "Wagoner properly reported his
sources of income from commercial fishing and . . . is not
required to report his fishing vessel or limited entry permits."
The APOC commissioners agreed.
The superior court ruled that the facts and the law
supported APOC's conclusion that these interests did not require
disclosure. The plaintiffs do not specifically challenge this
determination on appeal. They argue instead that they did not
know the name of Wagoner's fishing business when they filed their
first amended complaint, and sought to amend this count in their
proposed second amended complaint which the court rejected. They
claim on appeal that Wagoner's fishing business should have been
disclosed under the name Wagoner Enterprises - an allegation not
made in their first amended complaint.42 Given the allegation
made in Count VIII, the superior court did not err in determining
that the fishing vessel and entry permits did not require
disclosure.
And contrary to Grimm and McGahan's contentions, we
note that any possible error with respect to Counts I, II, IV, V,
VII, or VIII would not necessarily constitute reversible error.
Because Grimm and McGahan have not convinced us that different
legal conclusions were required, we hold that the superior court
did not err in determining that the omissions alleged in these
counts did not require disclosure. But even if there were a
legal error regarding one of these omissions, it would not
invalidate the court's findings of substantial compliance.
Considering the relative insignificance of these alleged
violations, the superior court did not clearly err in finding
that Wagoner substantially complied with AS 39.50 for purposes of
subsection .060(b).
2. The superior court did not err in
finding that Wagoner's disclosure violations were
trivial.
Count III of the complaint alleged that Wagoner failed
to disclose that he was president of Vista Del Jacinto Homeowners
Association, a homeowners' association for a condominium he owns
in California. Wagoner's initial disclosure statement listed the
condominium as a real property interest, but the disclosure law
requires filers to report if they are officers or directors of
non-profit corporations.43 Wagoner failed to list his position in
the homeowners' association, and APOC staff thought that this was
a violation of the disclosure requirements. The APOC
commissioners agreed.
Count VI alleged that Wagoner failed to disclose his
interest in Wagoner Rental Properties, the company under which he
operates his real estate rental activities. Wagoner reported the
location of properties managed under the business and the
tenants; he also reported that the properties were a source of
income, but he failed to list the name of the business as a
business interest. APOC staff concluded that failing to list
Wagoner Rental Properties as a business interest violated the
disclosure requirements. The APOC commissioners agreed.
APOC staff concluded that these two omissions justified
assessing a fine, but recommended that it be reduced because
Wagoner was an inexperienced filer, because his omissions were
inadvertent, and because he cooperated fully with APOC staff to
correct his omissions. The APOC commissioners assessed a civil
penalty for Wagoner's failures, but reduced his penalty for
reasons specified in the staff recommendation and because Wagoner
listed the location of the properties and sources of income.
The superior court considered testimony from Wagoner
and other evidence, and considered the omissions alleged in
Counts III and VI in the context of Wagoner's entire disclosure
statement. The court ruled that the alleged omissions were
violations of the disclosure requirements, but that they were
"relatively trivial." The court found that "[t]he disclosures
that were made overlapped the areas missed and provided
sufficient basis for interested voters to understand the
candidate's interests." The court ruled that the violations "do
not justify application of AS 39.50.060(b)," and that Wagoner
substantially complied with AS 39.50 despite his disclosure
violations.
On appeal Grimm and McGahan argue that AS 39.50.060(b)
and the disclosure requirements should be strictly enforced, but
they do not convince us that the superior court clearly erred in
finding that Wagoner substantially complied with the disclosure
requirements. In a conclusory fashion Grimm and McGahan mention
that Wagoner's failures "cannot be characterized as trivial," but
they do not substantiate this proposition.
Wagoner's violations had little marginal consequence -
i.e., complete disclosure would have produced no significant
marginal benefit for the voting public. Both failures related to
interests partially disclosed in other portions of his disclosure
statement. Failing to list the homeowners' association despite
listing the relevant property, and failing to disclose the name
of the rental business despite listing the properties as a source
of income, were immaterial omissions because the incremental
disclosure provided by correctly completing the form would have
been small. We also note that the APOC staff recommendation and
the APOC order reduced Wagoner's fine to a nominal $150. In
light of these factors, the superior court did not err in finding
that Wagoner's failures were trivial. It was accordingly not
clear error to rule that Wagoner substantially complied with AS
39.50 for the purposes of subsection .060(b).
In conclusion, Grimm and McGahan's suit fails under AS
39.50 because substantial compliance is the appropriate standard
under AS 39.50.060(b), and because the court did not err in
finding that Wagoner substantially complied with the disclosure
requirements.44 And because the superior court did not err in
holding that plaintiffs could not prevail under either Title 15
or Title 39, we need not decide whether the superior court erred
in applying Title 15 election contest standards to this Title 39
enforcement action.
G. The Superior Court Did Not Err in Denying the
Motion To File a Second Amended Complaint.
In general, leave to amend pleadings should be
liberally granted.45 But trial courts have discretion to grant
or deny leave, and we will reverse a trial court's decision only
if we are left with a definite and firm conviction that the trial
court erred.46 Grimm and McGahan sought leave to file a
second amended complaint at the December 23, 2002 argument on
cross-motions for summary judgment. The superior court denied
leave to amend for several reasons. The court considered the
general preference for allowing liberal amendment, especially in
early stages of litigation, but noted that as parties got closer
to trial the policies against amendment carry greater weight.
The superior court considered prejudice to the opposing parties,
and observed that fairness concerns are amplified if there is
little time to prepare for trial. The court ultimately ruled
that "[b]ecause of the need to expedite trial and preparation for
election contest cases, and the statutory deadline for
complaints, the court will allow amendment any time within the 10
days following certification but not after." The superior
court's ten-day rationale was grounded in its reading of Title 15
election contest standards together with AS 39.50.47
Grimm and McGahan argue on appeal that the superior
court abused its discretion in denying them leave to file a
second amended complaint. They argue that their proposed second
amended complaint listed nondisclosures newly revealed in
discovery, and that the discovery schedule prevented plaintiffs
from alleging these omissions earlier. Furthermore, they argue
that the superior court provided no basis for applying the Title
15 deadline, that the superior court failed to balance the
hardships, and that the superior court made no finding that
amendment would prejudice the defendants.
We do not need to consider the superior court's Title
15 rationale for the denial; other factors fully justify the
denial. The superior court based its decision on prejudice to
the opposing party, the late stage of the litigation, and the
expedited trial schedule. We have noted that courts are normally
reluctant to allow amendments after summary judgment motions have
been filed.48 In this case plaintiffs sought leave to amend at
oral argument on cross-motions for summary judgment.
Despite the recent discovery, the highly accelerated
schedule culminating in the expedited trial justifies the
superior court's ruling. The court made very commendable efforts
in conducting the trial and resolving the case with great
dispatch. A highly expedited trial schedule was necessary to
ensure an opportunity for appellate review before the legislative
session was to open on January 21. Refusing to allow amendment
under these circumstances was not an abuse of the superior
court's discretion.
H. We Need Not Decide Whether AS 39.50.060(b)
Includes a Willfulness Requirement.
The superior court stated near the end of its
memorandum decision that "[t]he facts do not demonstrate the
knowing filing of an incomplete disclosure statement." (Emphasis
added.) On appeal Grimm and McGahan take this sentence out of
context, and suggest that the court erroneously read a scienter
requirement into AS 39.50.060(b). Plaintiffs conclude that the
court was "confus[ed]" about the required mental states, given
the court's earlier conclusion that plaintiffs demonstrated a
"reckless violation."
It does not appear that the superior court's analysis
of the merits depended on a requirement that plaintiffs prove a
"knowing" violation. But even if the reference revealed some
analytical error, it only could have affected the "corrupt
practice" issue relevant to a Title 15 challenge. Because the
court had an independent reason for dismissing plaintiffs' action
as a Title 15 election contest - the plaintiffs' failure to prove
an effect on the outcome of the election - any possible error
regarding mental state is harmless. And there is no reason to
think Wagoner's mental state had anything to do with the superior
court's conclusion that Wagoner substantially complied with the
disclosure requirements of AS 39.50.
IV. CONCLUSION
We therefore AFFIRM the judgment of the superior court.49
_______________________________
1 Formerly the Alaska Conflict of Interest Law. See Former AS
39.50 (1998).
2 A Title 15 election contest may be brought by "[a] defeated
candidate or 10 qualified voters." AS 15.20.540.
3 Section 3 of the 1974 Initiative Proposal No. 2 provides:
"In case of conflict between provisions of this chapter and other
provisions contained in the Alaska statutes, the provisions of
this chapter shall take precedence." (The published version of
the proposal replaced "Act" with "chapter.")
4 Plaintiffs filed an emergency motion to convert their
petition for review (Supreme Court Case No. S-10924) into an
appeal. We denied the motion as moot because they had already
filed a direct appeal (Supreme Court Case No. S-10953). We
treated plaintiffs' motion for expedited consideration of the
petition as having been filed in the direct appeal, and set an
accelerated briefing schedule for the appeal. We denied the
plaintiffs' petition January 14, 2003.
5 McConkey v. Hart, 930 P.2d 402, 404 (Alaska 1997)
("Questions of the application and constitutionality of [a]
statute . . . are questions of law subject to this court's
independent judgment."); Todd v. State, 917 P.2d 674, 677 (Alaska
1996) (explaining that "questions of constitutional law and
statutory interpretation" call for the application of our
"independent judgment").
6 Native Vill. of Elim v. State, 990 P.2d 1, 5 (Alaska 1999).
7 Guttchen v. Gabriel, 49 P.3d 223, 225 (Alaska 2002).
8 Dansereau v. Ulmer, 903 P.2d 555, 559 (Alaska 1995)
(citation omitted) (quoting Turkington v. City of Kachemak, 380
P.2d 593, 595 (Alaska 1963)).
9 Walden v. Dep't of Transp., 27 P.3d 297, 301 (Alaska 2001).
10 Alaska Travel Specialists, Inc. v. First Nat'l Bank of
Anchorage, 919 P.2d 759, 762 (Alaska 1996).
11 AS 39.50 does not define "elected official" in its
definitions section - AS 39.50.200 - but we hold that a
successful legislative candidate is an "elected official" as that
term is used in AS 39.50.060(b).
12 Alaska Const. art. II, 12.
13 AS 39.50.060(b) (emphasis added).
14 See generally AS 39.50.030. Thus, AS 39.50.030(b)(1) states
that disclosure statements "must include . . . the source of all
income over $1,000 during the preceding calendar year" and AS
39.50.030(b)(3) states that disclosure statements "must
include . . . the identity and nature of each interest owned in
any business." (Emphasis added.)
15 We compare in Part III.E.2 the mandatory and comprehensive
language of AS 39.50.030(b) with the requirement in subsection
.030(a) that each disclosure statement be an "accurate
representation of the financial affairs of the . . . candidate."
16 Silides v. Thomas, 559 P.2d 80 (Alaska 1977).
17 Falke v. State, 717 P.2d 369 (Alaska 1986).
18 State, Alaska Pub. Offices Comm'n v. Marshall, 633 P.2d 227
(Alaska 1981).
19 Falke, 717 P.2d at 373 (disqualifying conflict-of-interest
statement filed ten minutes late because "election law filing
deadlines are to be strictly enforced"); Silides, 559 P.2d at 86-
87 (applying substantial compliance standard to financial
disclosure statement where statutory requirements were ambiguous
and strict compliance impossible for candidate in Juneau, but
applying strict compliance to filing appointment of treasurer
notification because "statutory candidate election deadlines are
normally strictly enforced").
20 Marshall, 633 P.2d at 235-37 (holding that filing
preelection report long after election could not be characterized
as trivial so as to avoid application of forfeiture sanction).
21 Id. at 235 ("[T]hus we need not resolve at this time whether
a `trivial' violation can preclude applying the forfeiture
sanction.").
22 See supra note 14.
23 Marshall, 633 P.2d at 235.
24 AS 39.50.100 permits "[a] qualified Alaska voter [to] bring
a civil action to enforce any of the sections of this chapter."
AS 39.50.060(b) provides a penalty for "[a]ny person failing or
refusing to comply with the requirements of [the] chapter." The
disclosure requirements of AS 39.50 are set out in section .030.
25 AS 39.50.030(a) (emphasis added).
26 Webster's II New College Dictionary 8 (1995).
27 Id. at 941.
28 See AS 39.50.010(a)(3).
29 See, e.g., Dansereau v. Ulmer, 903 P.2d 555, 559 (Alaska
1995) (quoting Turkington v. City of Kachemak, 380 P.2d 593, 595
(Alaska 1963)).
30 Carr v. Thomas, 586 P.2d 622, 625-26 (Alaska 1978).
31 Id. at 626 (quoting Reese v. Dempsey, 153 P.2d 127, 132
(N.M. 1944)).
32 Hammond v. Hickel, 588 P.2d 256, 258 (Alaska 1978) (relying
on Boucher v. Bomhoff, 495 P.2d 77, 80 (Alaska 1972)).
33 See Dansereau, 903 P.2d at 559; Carr, 586 P.2d at 626.
34 See Hammond, 588 P.2d at 258; AS 15.20.540.
35 2 Alaska Administrative Code (AAC) 50.127(c) (2003).
36 Storrs v. State Med. Bd., 664 P.2d 547, 552 (Alaska 1983).
37 Lopez v. Adm'r, Pub. Employees' Ret. Sys., 20 P.3d 568, 570
(Alaska 2001). See also Storrs, 664 P.2d at 552 ("[A] statutory
construction adopted by those responsible for administering a
statute should not be overruled in the absence of `weighty
reasons.' " (quoting Kelly v. Zamarello, 486 P.2d 906, 910
(Alaska 1971))); Sanford v. State, 24 P.3d 1263, 1266 (Alaska
App. 2001) (looking to administrative agency's interpretation of
statute in attempting to resolve ambiguity in statute).
38 2 AAC 50.110 (2003).
39 See AS 39.50.060, .070, .080.
40 2B Norman J. Singer, Sutherland Statutory Construction
49:03 (6th ed. 2000) ("[P]ractical interpretation of a statute by
the . . . officers charged with its administration and
enforcement . . . constitutes an invaluable aid in determining
the meaning of a doubtful statute."). See also cases cited supra
note 37.
41 AS 39.50.030(b)(1)-(8). The disclosure statement Wagoner
completed called for the disclosure of business interests held
"between January 1, 2001 and December 31, 2001," and other
interests for "calendar year 2001."
42 Because allegations relating to Wagoner Enterprises were not
included in the complaint the court considered, we do not address
the legal status of Wagoner's disclosures for this business
interest. We consider the superior court's refusal to grant
leave to amend plaintiffs' complaint below in Part III.G. We
note, however, that Wagoner Enterprises is listed on Wagoner's
initial disclosure statement as a source of income. Any possible
failure with respect to Wagoner Enterprises was very probably
inconsequential; there would have been little or no incremental
benefit of listing Wagoner Enterprises as a business interest,
because it was listed as a source of income.
43 AS 39.50.030(b)(2).
44 Grimm and McGahan also argue that the superior court erred
in finding that Wagoner was "forthcoming" in providing
information to APOC. This was a permissible finding given the
superior court's opportunity to assess Wagoner's credibility and
its permissible reliance on APOC's analysis. But to the extent
the superior court found that Wagoner voluntarily disclosed his
financial interests, that finding was immaterial to the superior
court's ruling on substantial compliance.
45 O'Callaghan v. Rue, 996 P.2d 88, 100 (Alaska 2000); see also
Alaska R. Civ. P. 15(a) (noting that "leave [to amend pleadings]
shall be freely given when justice so requires").
46 O'Callaghan, 996 P.2d at 100.
47 AS 15.20.550 states that an election contest "may be brought
in the superior court within 10 days after the completion of the
state review."
48 O'Callaghan, 996 P.2d at 101; Jennings v. State, 566 P.2d
1304, 1312 (Alaska 1977).
49 Our holding also makes it unnecessary to consider Wagoner's
argument that applying a forfeiture sanction to non-incumbent
candidates would result in an equal protection violation. We
observe that although Wagoner asserts on appeal that "Title 24
does not include a forfeiture penalty for omissions," AS
24.60.250 includes forfeiture language similar to that found in
AS 39.50.060(b).
