Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions


Touch N' Go
«, the DeskTop In-and-Out Board makes your office run smoother.

  This site is possible because of the following site sponsors. Please support them with your business.
www.gottsteinLaw.com

You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Interior Cabaret, Hotel, Restaurant & Retailers Assoc. v. Fairbanks North Star Borough (05/12/2006) sp-6012

Interior Cabaret, Hotel, Restaurant & Retailers Assoc. v. Fairbanks North Star Borough (05/12/2006) sp-6012, 135 P3d 1000

     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


INTERIOR CABARET, HOTEL, )
RESTAURANT & RETAILERS ) Supreme Court No. S- 11481
ASSOCIATION, )
) Superior Court No. 4FA-03-1791 CI
Appellant, )
) O P I N I O N
v. )
) No. 6012 - May 12, 2006
FAIRBANKS NORTH STAR )
BOROUGH, )
)
Appellee. )
)

          Appeal  from the Superior Court of the  State
          of    Alaska,   Fourth   Judicial   District,
          Fairbanks, Randy M. Olsen, Judge.

          Appearances:     Peter   J.    Aschenbrenner,
          Aschenbrenner  Law Offices, Inc.,  Fairbanks,
          for  Appellant.  Joseph W. Miller,  Assistant
          Borough Attorney, and A. René Broker, Borough
          Attorney, Fairbanks, for Appellee.

          Before:    Bryner,  Chief Justice,  Matthews,
          Eastaugh,  Justices.   [Fabe  and  Carpeneti,
          Justices, not participating.]

          EASTAUGH, Justice.
          MATTHEWS, Justice, concurring.
I.   INTRODUCTION
          Interior   Cabaret,  Hotel,  Restaurant   &   Retailers
Association  (ICHRRA) sued the Fairbanks North  Star  Borough  to
challenge a proposed sales tax on alcoholic beverages on theories
the  tax would be illegal and the ballot question was misleading.
The borough then changed the proposed tax and the ballot question
and  voters approved the proposal.  ICHRRA amended its  complaint
and  challenged the enacted tax.  Does the taxs exemption for two
cities  within the borough mean that the tax is not areawide,  as
AS  29.35.150 requires?  Is the tax the boroughs only sales  tax,
in  violation of the policy embodied in AS 04.21.010(c)(2), which
is  intended  to  prevent discriminatory  taxation  of  alcoholic
beverage  sales?  And is ICHRRA the prevailing party,  given  the
changes  the borough made before submitting the proposal  to  the
voters?
          Despite  the  exemptions,  we  hold  that  the  tax  is
areawide.    We  also  hold that the tax  does  not  discriminate
against  sales of alcoholic beverages, because the  borough  also
imposes a sales tax on hotel rooms.  Finally, we hold that it was
not  an  abuse  of  discretion to find that ICHRRA  was  not  the
prevailing party.  We therefore affirm the judgment below.
II.  FACTS AND PROCEEDINGS
          The  Fairbanks North Star Borough Assembly in July 2003
enacted Ordinance 2003-46, which proposed a referendum imposing a
sales  tax on sales of alcoholic beverages.  The proposed  ballot
question asked:  Shall the Fairbanks North Star Borough  levy  an
areawide  5%  tax on the retail sale of alcoholic beverages  with
limited exemptions for alcoholic beverage sales taxed by the City
of  Fairbanks  and the City of North Pole, thereby  reducing  the
property  tax dollar for dollar?  Ordinance 2003-46 contained  an
implementing  ordinance  that would become  effective  if  voters
approved the proposed tax.
          ICHRRA  filed suit on August 8 to prevent the  proposed
question  from  being placed on the October  7  election  ballot.
ICHRRA  alleged that the ballot question was misleading and  that
Ordinance  2003-46 proposed an invalid tax.   On  August  22  the
superior court denied ICHRRAs motion for a preliminary injunction
to  prevent  Ordinance 2003-46s question from  appearing  on  the
ballot.   The  borough assembly then enacted  Ordinance  2003-52,
which replaced Ordinance 2003-46.  The ballot question, as stated
by  Ordinance  2003-52,  asked: Shall the  Fairbanks  North  Star
Borough  levy an areawide 5% tax on the retail sale of  alcoholic
beverages with limited exemptions for alcoholic beverage sales to
the  extent taxed by the City of Fairbanks and the City of  North
Pole?  Borough voters approved this proposed tax.
          ICHRRA  then amended its complaint, alleging  that  the
tax  violates state law on the theories the tax is not  areawide,
as  AS  29.35.150 requires, and is a discriminatory sales tax  on
alcoholic  beverages,  in violation of AS  04.21.010(c)(2).   The
superior  court  granted summary judgment to  the  borough.   The
court  found that ICHRRA was a public interest litigant  and  was
therefore not liable to the borough for attorneys fees, but  also
declined  to award ICHRRA prevailing party attorneys  fees  under
the catalyst theory.
          ICHRRA  appeals  the superior courts grant  of  summary
judgment  in favor of the borough and its ruling that ICHRRA  was
not the prevailing party.1
III. DISCUSSION
          A.   Standard of Review
          Summary  judgment  is appropriate  where  there  is  no
genuine  issue  as to any material fact and . . .  any  party  is
entitled  to judgment as a matter of law. 2  We review grants  of
summary  judgment  de novo.3  We draw all factual  inferences  in
favor of, and view the facts in the light most favorable to,  the
party   against   whom  summary  judgment  was  granted.4    When
interpreting  statutes  we  use a sliding-scale  approach,  under
which  the clearer the statutory language is, the more convincing
legislative  history must be to justify another  interpretation.5
We  give  liberal  construction . . .  to  the  powers  of  local
government units.6
          We  review for abuse of discretion the superior  courts
prevailing  party  determination when awarding  attorneys  fees.7
Prevailing  party  determinations will ordinarily  be  overturned
only if they are manifestly unreasonable.8
     B.    The  Sales  Tax  Authorized by  Ordinance  2003-52  Is
Areawide Within          the Meaning of AS 29.35.150.

          Alaska  Statute 29.35.150 requires that borough  taxing
power be exercised on an areawide basis.9  Areawide is defined by
AS  29.71.800(1)  to mean throughout a borough, both  inside  and
outside all cities in the borough.
          When this dispute arose, AS 29.45.650(a) provided that
          Except  as  provided in AS  04.21.010(c),  AS
          29.45.750, and in (f), (h), (i), and  (j)  of
          this  section, a borough may levy and collect
          a  sales tax on sales, rents, and on services
          provided  in the borough. The sales  tax  may
          apply   to  any  or  all  of  these  sources.
          Exemptions may be granted by ordinance.[10]
          
ICHRRA  argues  that  [a] borough sales tax  is  cumulative,  not
incorporating, reduced or sliding to take account of the rate  of
city  sales  taxation, and that Ordinance 2003-52s  exemption  of
alcoholic  beverage sales to the extent they are taxed by  cities
within the borough renders the tax illegal as not areawide.
          Alaska  Statute  29.71.800(14) defines  nonareawide  to
mean: throughout the area of a borough outside all cities in  the
borough.  Because a borough could attempt to exercise its  powers
in  some,  but  not  all, cities within the  borough,  the  terms
areawide  and nonareawide as defined by AS 29.71.800(1) and  (14)
are  not  mutually  exclusive.  That is, not  every  exercise  of
borough  power  that is not areawide is necessarily  nonareawide.
We therefore consider whether the boroughs sales tax on alcoholic
beverages is not areawide.
          ICHRRA  argues  that  the tax is not  areawide  because
Ordinance  2003-52  defined the exemptions by geography.   ICHRRA
similarly  argues that the juxtaposition of the  terms  levy  and
collect   in  various  statutes11  prohibits  the  borough   from
          collecting sales taxes in some parts of the borough but not
others.   These arguments are unavailing.  Ordinance 2003-52  and
the  implementing ordinance define exemptions  in  terms  of  any
applicable city sales taxes rather than by geography.   Ordinance
2003-52s  ballot question asked whether sales should be  exempted
to  the  extent taxed by the City of Fairbanks and  the  City  of
North  Pole.  The implementing ordinance likewise exempts  retail
sales  of alcoholic beverages to the extent that [they] are taxed
by   any  other  municipality  within  the  borough  and  exempts
wholesale sales by a bona fide alcoholic beverage distributer.12
          The  words  of  AS 29.45.650(a) indicate that  boroughs
have broad power to create exemptions.  The second sentence of AS
29.45.650(a) authorizes boroughs to apply a sales tax to  any  or
all  of  the  sources listed in the first sentence.   The  second
sentence  therefore allows taxes on sales, rents,  and  services.
The  legislatures use of any or in addition to all indicates that
boroughs may be selective in determining which sources to  tax.13
We  interpret  statutes so that no part will  be  inoperative  or
superfluous,  void, or insignificant.14  This principle  suggests
that  the  third sentence in AS 29.45.650(a) (Exemptions  may  be
granted by ordinance.) is intended to authorize boroughs to grant
exemptions  on some basis other than source, because  the  second
sentence  in  that  subsection gives boroughs  authority  to  tax
sources  selectively, without reference to the third  sentence.15
Furthermore,  AS 29.45.650(a) does not purport to limit  boroughs
powers to grant exemptions, and [w]e should not be quick to imply
limitations on the taxing authority of a municipality where  none
are expressed.16
          We also note that AS 29.45.650(c) mandates an exemption
from  borough use taxes to the extent the person has paid a sales
tax  on  the  source when the sales tax was levied in any  taxing
jurisdiction whether inside or outside the state.  Therefore,  if
a  borough  levies a five percent use tax on a commodity,  but  a
city  within the borough has already levied a five percent  sales
tax  on  the sale of that commodity, AS 29.45.650(c) exempts  the
boroughs  use tax in its entirety.  Yet this would not mean  that
the  boroughs  use  taxes  are  not  areawide.   Here,  the  taxs
exemptions  operate in the manner described in  AS  29.45.650(c).
We  therefore conclude that the exemptions do not mean  that  the
tax is not areawide.
          ICHRRA argues that Ordinance 2003-52 has tied the hands
of  the  local lawmakers, in alleged violation of our holding  in
City  of  St. Marys v. St. Marys Native Corp.17  ICHRRA correctly
points out that the exemptions in Ordinance 2003-52 may have made
the  sales  tax  more palatable to some voters;  it  argues  that
because  borough voters approved both the tax and the exemptions,
repeal of or reduction in the exemptions would be a new tax or an
increase  in the rate of levy.  ICHRRA reasons that the  assembly
therefore  cannot repeal the exemptions without  voter  approval.
This,  ICHRRA argues, is a violation of the separation of  powers
because  it  takes  budget authority away from the  assembly  and
places  it  in the hands of the voters.  ICHRRA also argues  that
Ordinance  2003-52 violates separation of powers  principles  and
delegates  taxing  power to city governments by committ[ing]  the
          Assembly to honor both the City of Fairbanks[s] and the City of
North  Poles  power  to raise taxes out of  the  Boroughs  share.
(Emphasis in original.)
          In  St. Marys we concluded that when a local government
grants  an  exemption  by  ordinance and  the  exemption  is  not
subjected  to  a  public vote, it may repeal  that  exemption  by
ordinance  without a public vote.18  The negative implication  of
this statement may be that when exemptions are approved by public
vote,  they  may  not be repealed by a mere ordinance.   But  the
statement  from  St.  Marys quoted above does  not  suggest  that
exemptions may not be approved by public vote, or that  repealing
exemptions as part of the tax scheme would violate separation  of
powers principles.
          Moreover,  AS  29.45.650(a) provides that  [e]xemptions
may  be granted by ordinance.  (Emphasis added.)  The use of  the
permissive  term may suggests that ordinances are  not  the  sole
means by which exemptions may be granted.19  We therefore do  not
read  AS  29.45.650(a) as either precluding the adoption  through
referendum  of  a  sales tax with exemptions  or  mandating  that
repeal of an exemption adopted in this manner would require voter
approval.20   We  see  no separation of powers  problem  with  an
areawide tax that includes voter-approved exemptions that require
voter approval for repeal.
          Nor do we conclude that the tax violates separation  of
powers  principles by delegating taxing authority to the  cities.
ICHRRA  correctly  points out that under the current  exemptions,
the  boroughs  portion  of the tax will be  decreased  if  cities
within   the  borough  raise  their  sales  taxes  on   alcoholic
beverages.   ICHRRA  therefore implies  that  city  councils  may
increase their sales taxes on alcoholic beverages to the level of
borough taxation at no political cost because the increase  would
not affect the total tax paid by constituents.  But boroughs have
broad  power  to  craft exemptions,21 and whether the  exemptions
should  hinge on the application of city sales taxes is a  policy
question  for  the  borough.  Because  the  legislature  has  not
expressly  limited the boroughs taxing powers  to  preclude  this
type of exemption,22 we decline to imply such a limit.23
          As   justification  for  the  exemptions,  the  borough
asserts that it and the cities may not impose double taxation  on
any  transaction;  it therefore contends that Ordinance  2003-52s
exemptions  are required.  Because we conclude that  the  tax  is
areawide,  we need not consider this contention.  But we  observe
that  article  X,  section  1 of the Alaska  Constitution  merely
announces  a purpose of preventing the duplication of tax-levying
jurisdictions.   It  is  not  a  per  se  prohibition  on  double
taxation.  Furthermore, AS 29.45.700(a) specifically contemplates
double  taxation  by providing that [a] city in  a  borough  that
levies  and collects areawide sales and use taxes may levy  sales
and  use taxes on all sources taxed by the borough in the  manner
provided for boroughs.  Double taxation therefore does not appear
to  be expressly proscribed by either the Alaska Constitution  or
sound public policy, as the borough suggests.
          ICHRRA  also  argues in passing that the  boroughs  tax
regime  creates  an impossible administrative burden  of  dealing
          with two tax regimes on the same transaction with two tax
collecting  authorities.  Fairbanks North Star Borough  Ordinance
(FNSBO)  3.59.040(A)(3)  requires  merchants  within  cities   to
collect  a  five  percent  sales tax on all  sales  of  alcoholic
beverage, and remit the boroughs portion to the borough  and  the
citys  portion, if any, to the city.  This is not on its face  an
impossible administrative burden, and ICHRRA has not attempted to
make  the  showing necessary to demonstrate burdensomeness.   Nor
has it suggested to us any basis in Alaska law for invalidating a
tax  because  of  the administrative burden  the  tax  places  on
merchants.
          We  therefore conclude that the sales tax on  alcoholic
beverages  as  proposed in Ordinance 2003-52 and  implemented  in
FNSBO  3.59.010-.180 is areawide.  We next consider  whether  the
sales   tax   on   alcoholic  beverages   is   valid   under   AS
04.21.010(c)(2).
     C.   The Sales Tax Authorized by Ordinance 2003-52 Is Not  a
          Discriminatory Tax on Alcoholic Beverages, in Violation
          of AS 04.21.010(c)(2).
          
          Alaska Statute 04.21.010(c)(2) prohibits municipalities
from  imposing  a sales tax on alcoholic beverages  unless  sales
taxes are imposed on other sales within the municipality.  ICHRRA
argues  that  a tax on a single [other] commodity is insufficient
under  AS 04.21.010(c)(2) to allow the borough to impose a  sales
tax  on alcoholic beverages.  ICHRRA also argues that even  if  a
sales   tax  on  a  single  other  transaction  may  satisfy   AS
04.21.010(c)(2), the boroughs tax on hotel room  transactions  is
not a qualifying tax.
          1.    Alaska Statute 04.21.010(c)(2) requires  a  sales
tax  on  only a single               source other than  alcoholic
beverages.

          When  interpreting  statutes  we  use  a  sliding-scale
approach, under which the clearer the statutory language is,  the
more  convincing  legislative history must be to justify  another
interpretation.24  The text of AS 04.21.010(c)(2) does not clearly
indicate  how many other sources must be taxed before  a  tax  on
alcoholic  beverages is permitted.  The legislatures use  of  the
plural term sales taxes suggests a requirement that more than one
other source must be taxed before AS 04.21.010(c)(2) allows a tax
on  sales of alcohol.  But the legislative history indicates that
AS  04.21.010(c)(2) requires that only one other source be taxed.
We  discussed this legislative history in Lagos v. City & Borough
of Sitka.25
          In  1980 the legislature inadvertently deleted from the
statute  then governing borough taxation powers language  similar
to  that  now  found  in AS 04.21.010(c)(2).26   The  legislature
realized this mistake and enacted AS 04.21.010(c)(2) in 1985.27
          Senator Eliason, one of the 1985 legislations sponsors,
stated  that  [u]nder  this language, no they  cant  discriminate
between alcohol or food or clothing or any other commodity  thats
sold  in the market. . . . [T]he intent of the legislation is  to
treat them all equally.28  Senator Eliason later stated that
          [t]he  only limitations were placing on local
          government is the fact that they cannot  take
          a  specific sales tax on a specific industry.
          What  were saying is that if you want to  tax
          liquor  and whatever else you might  want  to
          tax,  thats  alright.  But we  want  to   its
          keeping any specific industry  going out  and
          point  and saying, Were going to tax you  and
          no  one  else. . . . They can . . . impose  a
          ten  percent tax on liquor and tobacco   that
          wouldnt be in violation of this provision.  .
          . .  If the proposition read, Shall we have a
          ten percent tax on tobacco only? they couldnt
          under this provision.29
          
          Senator  Eliasons interpretation finds support  in  the
Senate   Finance   Committee  testimony  of  Tamara   Cook,   the
legislative  affairs  committee  staff  member  who  drafted  the
legislation.  Cook testified that [a]s I read this language, if a
municipality, whether it be a city or a borough, in fact  imposed
a  sales tax on anything other than alcohol, it would be free  to
then also include alcohol within its sales tax structure.30
          According  to  the committee minutes, Senator  Kerttula
shared this view:
          Senator Kerttula advised of his understanding
          that under the proposed provision a tax could
          be  imposed by a municipality if two or  more
          things  were taxed.  One commodity,  however,
          cannot  be  selected for  taxation.   Senator
          Eliason    concurred   in    the    foregoing
          understanding,  noting  that  the   amendment
          attempts  to avoid zeroing in on one specific
          industry for a specific tax.31
          
          Moreover, our case law supports the conclusion  that  a
sales  tax  imposed  on  a  single  other  source  satisfies  the
requirements of AS 04.21.010(c).  In Lagos we considered  whether
AS  04.21.010(c)  prohibited the taxation of sales  of  alcoholic
beverages  at  a  higher rate than the rate for  sales  of  other
commodities.32  We stated in dictum that the legislature intended
[AS 04.21.010(c)(2)] to prohibit the imposition of discriminatory
sales taxes . . . in the form of . . . a sales tax imposed solely
on  the  sale of alcoholic beverages.33  This statement, although
not   controlling  here,  reflects  an  understanding   that   AS
04.21.010(c)(2)  only  requires a sales tax  on  a  single  other
source  before  a  borough may impose a sales  tax  on  alcoholic
beverages.   We therefore conclude here that a tax  on  a  single
other source satisfies the requirements of AS 04.21.010(c).
          2.   The boroughs room tax satisfies the requirement of
AS                  04.21.010(c)(2).

          The borough charges an eight percent sales tax on hotel
and motel room rental transactions.34  In City of Homer v. Gangl,
we  held that a similar bed tax was a sales tax.35  We relied  on
the  inclusion of the term rents in AS 29.53.415 (the predecessor
          to AS 29.45.650(a)) in concluding that the term sales tax
included a tax on commercial sleeping accommodations.36
          ICHRRA  argues  that the boroughs  room  tax  does  not
satisfy the requirement of AS 04.21.010(c)(2) that sales taxes be
imposed  on  other  sales  within  the  municipality.   (Emphasis
added.)  ICHRRA argues that only a tax on a commodity may satisfy
this  requirement.  Blacks Law Dictionary defines sale  as  [t]he
transfer  of  property  or title for a price.37   Alaska  Statute
29.45.650(a)  authorizes municipalities to levy a  sales  tax  on
sales,  rents,  and on services.  This can be read  as  seemingly
distinguishing  among  sales taxes on these  sources.   But  more
broadly, it can be read as eliminating distinctions among  sales,
rents, and services by explicitly characterizing a municipal  tax
on   rents   and   services  as  a  sales  tax.   Arguably,    AS
04.21.010(c)(2)s  use of on other sales would be  meaningless  if
the  legislature  did not intend to differentiate  between  sales
taxes  on sales, rents, and on services in defining the  type  of
additional sales tax required to justify a sales tax on alcohol.38
According  to  this reading, a sales tax on a rent or  a  service
could not be an enabling sales tax under AS 04.21.010(c)(2).
          But  we  are  not persuaded that the non-discrimination
principle embodied in AS 04.21.010(c)(2) requires that the  other
sales  tax be imposed on a transaction involving the transfer  of
property   or   title.   The  distinction  between   transactions
involving  the  exchange  of  money for  goods  and  transactions
involving the exchange of money for services or the occupancy  or
use  of  property in the context of AS 29.45.650(a) is not always
clear.39  For example, the sale of an alcoholic beverage at a bar
or  restaurant includes a service component when the bartender or
server prepares and serves the drink.  Moreover, it seems logical
to conclude that AS 29.45.650(a)s broad characterization of sales
taxes  as  including taxes on both rent and services should  help
guide  us  in  determining  whether a  tax  satisfies  subsection
.010(c)(2).
          Nor  has  ICHRRA directed us to any legislative history
that  persuades  us  that distinctions among  sales,  rents,  and
services should be read into AS 04.21.010(c)(2).  As noted above,
Senator  Eliason mentioned sales taxes on various commodities  as
examples  of  sales taxes that would satisfy AS  04.21.010(c)(2),
but  he  emphasized that [t]he only limitations were  placing  on
local  government is the fact that they cannot  take  a  specific
sales  tax on a specific industry.  What were saying is  that  if
you  want to tax liquor and whatever else you might want to  tax,
thats  alright.40   And  Tamara Cooks  Senate  Finance  Committee
testimony  that if a municipality . . . imposed a  sales  tax  on
anything  other  than  alcohol, it would be  free  to  then  also
include  alcohol within its sales tax structure41 supported  this
interpretation.  These comments reflect a legislative  intent  to
grant  municipalities  wide  discretion  in  complying  with   AS
04.21.010(c)(2).
          In  light  of this evidence of legislative  intent,  we
decline  to  import  into AS 04.21.010(c) the  distinction  among
sales,  rents,  and  .  . . services suggested  by  one  possible
reading of AS 29.45.650(a).  Given the constitutional command  to
          give a  liberal construction . . . to the powers of local
government units,42 we cannot say that the qualifying  sales  tax
under AS 04.21.010(c) must be imposed on a commodity.
          ICHRRA also argues that the room tax is not an areawide
tax  because  it exempts [o]perators located within the  city  of
Fairbanks.43  ICHRRA asserts that because the room tax is invalid
as  a nonareawide tax prohibited by AS 29.35.150, it cannot serve
as the enabling tax under AS 04.21.010(c)(2).
          But  like the sales tax on alcoholic beverages at issue
in  this  case,  the  room tax operates throughout  the  borough,
subject  to an exemption to the extent the same transactions  are
taxed by the City of Fairbanks.44  For the reasons discussed above
in  Part III.B, the room tax is areawide within the meaning of AS
29.35.150.   The  boroughs  room  tax  therefore  satisfies   the
requirement of AS 04.21.010(c)(2).  Because the borough imposes a
valid  sales  tax on another source, its sales tax  on  alcoholic
beverages does not violate AS 04.21.010(c)(2).
     D.   The  Superior  Court Did Not Abuse  Its  Discretion  by
          Refusing  To Find that ICHRRA Was the Prevailing  Party
          Under the Catalyst Theory.
          
          DeSalvo v. Bryant held that the catalyst theory can  be
an appropriate method for determining prevailing party status for
attorneys fees purposes when a lawsuit brings about relief  in  a
manner  other  than  formal judgment.45  To establish  prevailing
party  status under the catalyst theory, a party must demonstrate
(1) that it achieved the goal of the litigation by succeeding  on
any  significant issue which achieves some of the benefit  sought
in  bringing the suit, and (2) that there is a causal  connection
between the defendants action generating relief and the lawsuit.46
Once the party makes this prima facie showing, the opposing party
may  demonstrate that the lawsuit lacked colorable merit or  that
the defendants action was wholly gratuitous.47
          ICHRRA  argues  that  because the  borough  before  the
election substituted Ordinance 2003-52 for Ordinance 2003-46  the
superior  court  abused  its discretion in  refusing  to  declare
ICHRRA  the  prevailing  party.  The superior  court  found  that
ICHRRA had not prevailed on a significant issue.
          ICHRRA  initially challenged the proposed  implementing
ordinance  contained  in  Section 3 of Ordinance  2003-46.   This
implementing  ordinance would have become  effective  if  borough
voters  had  approved the tax as proposed by  Ordinance  2003-46.
Ordinance  2003-52  did  not  include the  proposed  implementing
ordinance  set  out in Section 3 of Ordinance 2003-46.   Instead,
Ordinance  2003-52 called for the borough assembly  to  adopt  an
implementing  ordinance.  We cannot say that the  superior  court
abused  its  discretion in finding that ICHRRA was not successful
in  a  significant  issue despite the boroughs adoption  of  this
change.
          ICHRRA  also  points out that Ordinance  2003-52  omits
from  the  ballot question the representation that  the  proposed
sales tax on alcoholic beverages would reduc[e] the property  tax
dollar for dollar.  ICHRRAs original complaint catalogues various
alleged  problems  with Ordinance 2003-46s ballot  question,  but
          does not mention the quoted language.  Nor does the quoted
language  appear  in  ICHRRAs  memorandum  in  support   of   its
unsuccessful  motion for a preliminary injunction.  ICHRRA  seems
to have objected to this language for the first time in its reply
memorandum in support of its motion for a preliminary injunction.
This indicates that ICHRRA did not view the inclusion or omission
of these words as particularly important.
          Moreover,  although ICHRRA certainly  opposed  specific
language of the ballot question in Ordinance 2003-46, this  issue
was  peripheral  to  its main contention that  the  proposed  tax
violated  AS  29.35.150  and  AS 04.21.010(c)(2).   We  therefore
cannot  say  that  the superior court abused  its  discretion  in
finding that ICHRRA did not prevail on a significant issue in the
litigation.48
          We  recently  held  in Halloran v. State,  Division  of
Elections  that  it  is  generally inappropriate  to  invoke  the
catalyst  theory  when legislative action moots the  lawsuit  and
provides  the  relief  sought.49  Because courts  are  not  well-
positioned to divine post-litigation legislative motivation,  the
catalyst  approach should be applied only when the very  clearest
expression of legislative purpose is present.50  ICHRRA notes that
chronology  of  events  ordinarily plays  an  important  role  in
establishing  causation  for  catalyst  theory  purposes.51    To
establish  a  causal  connection between  the  [boroughs]  action
generating  relief and the lawsuit,52 ICHRRA therefore emphasizes
the  enactment of Ordinance 2003-52 while ICHRRAs  motion  for  a
preliminary injunction was pending.  Because we decided  Halloran
after  appellate briefing was completed in this case,  we  assume
ICHRRA  could not have anticipated a need to present more  direct
evidence  of  legislative motivation.  But  the  superior  courts
determination that ICHRRA was not the prevailing party because it
did  not  succeed  on  a  significant issue  was  not  manifestly
unreasonable,53 so it is unnecessary to remand to allow ICHRRA to
gather   and   present  any  potential  evidence  of  legislative
motivation.
IV.  CONCLUSION
          The   judgment  of  the  superior  court  is  therefore
AFFIRMED.
MATTHEWS, Justice, concurring.
          I  have  some difficulty with the courts interpretation
of AS 04.21.010(c)(2).  In its original form the statute required
local  governments  to tax other sales when  they  taxed  alcohol
sales.  I would have construed this provision to mean that  local
governments  needed to tax the sales of a substantial  number  of
other   commodities  in  order  to  satisfy   the   other   sales
requirement.   The  evident purpose of  the  requirement  was  to
prevent  excessive and discriminatory taxation of alcohol  sales.
Because  alcohol  is  often  abused,  causing  numerous  societal
problems that are costly for local governments, it is an easy and
logical  target  for  differential  taxation.   The  other  sales
language  aimed  to constrain taxes on alcohol by  requiring  the
same  tax  on the sales of other commodities.1  If the  tax  rate
were  set too high consumers of the other commodities would voice
their  protests  to  their  elected  representatives.   But  this
constraint could only be potentially effective if the sales of  a
number of commodities consumed by the voting public were taxed.2
          The  other  sales language was deleted  accidently  and
five  years  later  it  was reenacted in substantially  the  same
terms.3  The rule of statutory interpretation that a statute, and
each part of a statute, is presumed to serve some useful purpose4
argues  for  interpreting  the  new  statute  as  I  would   have
interpreted the original one.  But the legislative history points
in  a different direction.  As the opinion of the court explains,
the staff member who drafted the new statute, and some members of
the  Senate  Finance Committee who reviewed it, including  a  co-
sponsor,  expressed  the  view that  the  new  statute  could  be
complied with by taxing just one additional commodity.
          It  is tempting to say that this history should not  be
dispositive.  Many of the criticisms leveled against reliance  on
legislative history seem to apply here.5  The full Senate was not
necessarily  aware  of  the colloquy in  committee  and  did  not
necessarily  agree  with the interpretation offered  there.   The
same  is true with respect to the House of Representatives, which
concurred  in  the passage of the statute, and the Governor,  who
decided not to veto it.  Further, those who must comply with  the
statute, and those seeking its enforcement, are charged only with
that  notice which the text of the act gives them, not that which
can be gleaned from the legislative history.
          This  court, however, has given considerable weight  to
legislative  history.   Indeed,  we  rejected  similar  arguments
against the use of legislative history in Lagos v. City & Borough
of  Sitka.6   There  we concluded, based on  the  same  committee
proceedings  referred to here, that AS 04.21.010(c)(2)  prohibits
differential   rates  of  sales  taxes  on  alcohol   and   other
commodities.7   We have stated that when legislative  history  is
sufficiently clear it can alter what might otherwise appear to be
the   plain  meaning  of  the  statutory  language.8   Here   the
interpretation  suggested  by  the  legislative  history  is  not
inconsistent  with the language of the statute.  Troublingly,  it
does  go a long way towards nullifying the acts effectiveness  in
municipalities  that  have not found it  necessary  to  impose  a
general sales tax.
          Based  on  our general approach to legislative history,
the  specificity of the legislative history in this case, and the
fact  that  the  interpretation  supported  by  the  history   is
consistent  with  the  literal language of  the  act,  I  concur,
hesitantly,  with  todays  opinion  as  to  the  meaning  of   AS
04.21.010(c)(2).   I agree without reservation  to  the  opinions
resolution of all other points.
_______________________________
     1     The  borough  has  filed a separate  appeal  from  the
superior courts ruling that ICHRRA is a public interest litigant.
See Fairbanks N. Star Borough v. Interior Cabaret, Hotel, Rest. &
Retailers Assn, Supreme Court Case No. S-11612.

     2     West  v.  Umialik Ins. Co., 8 P.3d 1135, 1137  (Alaska
2000) (quoting Alaska R. Civ. P. 56(c)).

     3    Rockstad v. Erikson, 113 P.3d 1215, 1219 (Alaska 2005).

     4    Id.

     5     Bartley  v. State, Dept of Admin., Teachers Ret.  Bd.,
110  P.3d  1254,  1258 (Alaska 2005) (noting that  under  Alaskas
sliding-scale approach to statutory interpretation,  the  plainer
the  language  of  the  statute,  the  more  convincing  contrary
legislative history must be) (internal quotation marks omitted).

     6    Alaska Const. art. X,  1.

     7    Contl Ins. Co. v. U.S. Fid. & Guar. Co., 552 P.2d 1122,
1125 (Alaska 1976), disapproved on other grounds by Farnsworth v.
Steiner, 638 P.2d 181, 185 n.5 (Alaska 1981).

     8    Jerue v. Millett, 66 P.3d 736, 740 (Alaska 2003).

     9     AS  29.35.150 requires boroughs to exercise the powers
as  specified  and  in  the  manner  specified  in  AS  29.35.150
29.35.180  on  an  areawide  basis.  AS  29.35.170(a)  authorizes
boroughs to assess and collect sales taxes.

     10     In  2005  the legislature amended AS 29.45.650(a)  to
provide that [a] borough may wholly or partially exempt a  source
from  a borough sales tax that is taxed by a city in that borough
under  AS  29.45.700.  See ch. 30,  1, SLA 2005.  The statute  as
amended would thus explicitly allow the tax proposed by Ordinance
2003-52  as  against an areawide objection such as ICHRRA  raises
here.   The  amendment to subsection .650(a) became effective  on
August  24,  2005.   Ch.  30,  SLA  2005.  The  version   of   AS
29.45.650(a)  quoted  in the text therefore controls  this  case.
For  ease  of discussion, we will refer to the version quoted  in
the text and applicable here as AS 29.45.650(a).

     11    See AS 29.35.170(a); AS 29.45.650(a); AS 29.45.660(a);
AS 29.45.700(a), (b).

     12      Fairbanks  North  Star  Borough  Ordinance   (FNSBO)
3.59.040(A)-(B).

     13     See City of Homer v. Gangl, 650 P.2d 396, 399 (Alaska
1982)  (If all means the same thing as any or all, then the words
any  or . . . are superfluous.) (interpreting predecessor  to  AS
29.45.650(a)).

     14     City of St. Marys v. St. Marys Native Corp.,  9  P.3d
1002, 1008 (Alaska 2000) (internal quotation marks omitted).

     15     See Gangl, 650 P.2d at 399 (We have previously  noted
that   the  term  sales  tax  carries  no  such  connotation   of
generality,  and that selective sales taxes by boroughs  are  not
unusual.) (citing Liberati v. Bristol Bay Borough, 584 P.2d 1115,
1123 (Alaska 1978)).

     16    Liberati, 584 P.2d at 1121.

     17     City of St. Marys v. St. Marys Native Corp.,  9  P.3d
1002 (Alaska 2000).

     18    St. Marys, 9 P.3d at 1007-08.

     19    See Kiokun v. State, Dept of Pub. Safety, 74 P.3d 209,
214  (Alaska  2003) (holding that statute stating Department  may
organize search party when person is lost is permissive and  does
not  require  search).   But  cf.  Whitson  v.  Municipality   of
Anchorage,  608 P.2d 759, 761 (Alaska 1980), interpreting  former
AS  29.53.170, which has since been repealed.  See ch.  74,   88,
SLA  1985.   Former AS 29.53.170(a) provided that  the  assemblys
power  to  impose a property tax shall be exercised by  means  of
general  ordinances.   (Emphasis added.)   Whitson  held  that  a
proposed amendment to the Anchorage Municipal Charter that  would
have  required  voter  approval of any new  property  tax  or  an
increase  in  the rate of levy contradict[ed] the command  of  AS
29.53.170[]  that  taxes shall be levied  by  general  ordinance.
Whitson, 608 P.2d at 761.

     20    Because the assembly has not attempted to repeal these
exemptions,  we  need  not decide here whether  it  could  do  so
without voter approval.

     21    See supra notes 15-17 and accompanying text.

     22     Indeed,  after  ICHRRA filed  suit,  the  legislature
amended  AS  29.45.650(a) to allow boroughs to  craft  exemptions
based on the application of city taxes.  See supra note 10.

     23     See  Liberati v. Bristol Bay Borough, 584 P.2d  1115,
1121  (Alaska 1978) (We should not be quick to imply  limitations
on  the  taxing  authority  of  a  municipality  where  none  are
expressed.).

     24     Bartley v. State, Dept of Admin., Teachers Ret.  Bd.,
110 P.3d 1254, 1258 (Alaska 2005).

     25    Lagos v. City & Borough of Sitka, 823 P.2d 641 (Alaska
1991)  (holding  that AS 04.21.010(c) prohibits taxing  sales  of
alcoholic beverages at rate higher than other commodities).

     26     See  id.  at  643  n.3 (citing Senate  Finance  Comm.
Proceedings,  May  7,  1985 (testimony of  Senator  Eliason)  and
Senate  Finance  Comm.  Proceedings, May 8,  1985  (testimony  of
Senator Ray)).

     27    See ch. 74,  20, SLA 1985.

     28     Lagos, 823 P.2d at 644 (quoting Senate Finance  Comm.
Proceedings, May 8, 1985 (testimony of Senator Eliason)).

     29    Id.

     30      Id.  at  644  n.4  (quoting  Senate  Finance   Comm.
Proceedings, May 7, 1985 (testimony of Tamara Cook)).

     31    Senate Finance Comm. Minutes, May 8, 1985.

     32    Lagos, 823 P.2d at 642.

     33    Id. at 645 (emphasis added).

     34    FNSBO 3.58.020(A).

     35     City  of Homer v. Gangl, 650 P.2d 396, 398-99 (Alaska
1982).

     36    Id. at 398.

     37    Blacks Law Dictionary 1337 (7th ed. 1999).

     38    See City of St. Marys v. St. Marys Native Corp., 9 P.3d
1002,  1008  (Alaska 2000) (noting that we interpret statutes  so
that  no  part  will  be  inoperative  or  superfluous,  void  or
insignificant).

     39     Blacks Law Dictionary defines service as [t]he act of
doing something useful for a person or company for a fee and [a]n
intangible commodity in the form of human effort, such as  labor,
skill, or advice.  Blacks Law Dictionary 1372 (7th ed. 1999).  It
defines rent as [c]onsideration paid, usu. periodically, for  the
use or occupancy of property.  Id. at 1299.

     40     Lagos  v. City & Borough of Sitka, 823 P.2d 641,  644
(Alaska 1991) (quoting Senate Finance Comm. Proceedings,  May  8,
1985  (testimony of Senator Eliason)) (emphasis added).   Senator
Eliasons  comments were made approximately three years  after  we
decided  Gangl,  650  P.2d 396 (Alaska 1982).   We  presume  that
Senator  Eliason  and the other legislators  were  aware  of  our
reliance  on  the inclusion of the term rents when  we  concluded
that  the citys bed tax was a sales tax within the meaning of  AS
29.53.415, the predecessor to AS 29.45.650(a).  See id.  at  398.
We   therefore  interpret  these  statements  as  rejecting  fine
distinctions among sales taxes on sales, rents, and services  for
the purposes of AS 04.21.010(c).

     41     Lagos,  823  P.2d at 644 n.4 (quoting Senate  Finance
Comm.  Proceedings,  May  7,  1985 (testimony  of  Tamara  Cook))
(emphasis added).

     42    Alaska Const. art. X,  1.

     43    FNSBO 3.58.030(B).

     44     FNSBO 3.58.030(B)(3) states that operators within the
City of Fairbanks are exempt from the room tax except that

          [i]f the city of Fairbanks imposes a room tax
          less than the boroughs, operators in the city
          of  Fairbanks shall collect the borough  room
          tax  imposed  by this chapter and  remit  the
          taxes to the borough.  The borough will  then
          remit to the city of Fairbanks its portion of
          the tax.
          
     45    DeSalvo v. Bryant, 42 P.3d 525, 530 (Alaska 2002).

     46    Id. at 530.

     47    Id.

     48     This  conclusion renders it unnecessary  to  consider
whether  AS 09.60.010(b), which prohibits discrimination  in  the
award of attorneys fees based on the factors that we have used to
determine public interest litigant status, applies to this case.

     49    Halloran v. State, Div. of Elections, 115 P.3d 547, 552
(Alaska 2005).

     50    Id.

     51    See DeSalvo, 42 P.3d at 530.

     52    Id.

     53    Jerue v. Millett, 66 P.3d 736, 740 (Alaska 2003).

     1     In Lagos v. City & Borough of Sitka, 823 P.2d 641, 645
(Alaska  1991), we concluded, in line with this purpose, that  AS
04.21.010(c)(2)  requires that the alcohol sales  tax  rates  not
exceed  the rate of taxation imposed upon . . . other commodities
sales.

     2     Taxes  on  commodities or services mostly consumed  by
nonresidents would not comport with the rationale of the statute,
because  nonresidents are not directly represented  on  municipal
assemblies.

     3    This history is detailed in Lagos, 823 P.2d at 643-44.

     4     See Municipality of Anchorage v. Sisters of Providence
in  Washington, Inc., 628 P.2d 22, 29 (Alaska 1981), rejected  on
other  grounds  by  Alaska  Public  Employees  Assn  v.  City  of
Fairbanks, 753 P.2d 725 (Alaska 1988).

     5     Justice  Scalia,  a  frequent critic,  has  questioned
whether   legislative  history  accurately  reflects  legislative
intent.  He contends that

          it  is  a  fiction  of Jack-and-the-Beanstalk
          proportions  to  assume  that  more  than   a
          handful of those Senators and Members of  the
          House who voted for the final version of  the
          [legislation], and the President  who  signed
          it, were, when they took those actions, aware
          of  the  drafting evolution  that  the  Court
          describes;  and  if  they  were,  that  their
          actions  in voting for or signing  the  final
          bill show that they had the same intent which
          that  evolution suggests was in the minds  of
          the drafters.
          
Bank One Chicago, N.A. v. Midwest Bank & Trust Co., 516 U.S. 264,
279  (1996)  (Scalia, J., concurring).  Justice Scalia  has  also
raised   notice-based  concerns  about  relying  on   legislative
history, remarking that

          [i]t may well be true that in most cases  the
          proposition  that  the words  of  the  United
          States  Code  or the Statutes at  Large  give
          adequate  notice to the citizen is  something
          of  a  fiction,  albeit one required  in  any
          system of law; but necessary fiction descends
          to  needless farce when the public is charged
          even with knowledge of Committee Reports.
          
United  States v. R.L.C., 503 U.S. 291, 309 (1992)  (Scalia,  J.,
concurring) (citation omitted).

          While  Justice Scalia wrote alone in Bank One  and  was
joined  only  by  Justices  Thomas  and  Kennedy  in  his  R.L.C.
concurrence,  a  number  of commentators have  noticed  a  marked
decline  in  the Supreme Courts use of legislative history  since
Justice Scalia joined the court.  E.g., James J. Brudney &  Corey
Ditslear, The Decline and Fall of Legislative History?   Patterns
of  Supreme Court Reliance in the Burger and Rehnquist  Eras,  89
Judicature  220, 222 (2006); Michael H. Koby, The Supreme  Courts
Declining Reliance on Legislative History: The Impact of  Justice
Scalias Critique, 36 Harv. J. on Legis. 369, 385-87 (1999).   But
see   Charles  Tiefer,  The  Reconceptualization  of  Legislative
History in the Supreme Court, 2000 Wis. L. Rev. 205 (2000).

          Indeed,  the  voting alignment in the  recent  City  of
Rancho Palos Verdes v. Abrams case suggests that most members  of
the  court  may  be  moving away from a traditional  reliance  on
legislative  history.  125 S. Ct. 1453 (2005).   Justice  Scalia,
the  author  of  the  opinion of the court, looked  only  to  the
statutes  text,  and  its  express or implicit  indications,  for
interpretative  guidance.   Id. at 1459.   By  contrast,  Justice
Breyer,   joined  by  Justices  OConnor,  Souter,  and  Ginsburg,
advocated  examination of context, not just literal  text,  as  a
guide to Congress intent in respect to a particular statute.  Id.
at  1462.   Only  Justice Stevens counseled  examination  of  all
relevant  evidence, including not only text and the structure  of
the  statutory scheme but also legislative history, to  ascertain
Congressional  intent.  Id. at 1463 (Stevens, J.,  concurring  in
the judgment).

     6    823 P.2d at 644-45.

     7    Id. at 643-45.

     8     A  typical statement of our approach is found in Homer
Electric Assn v. Towsley, 841 P.2d 1042, 1043-44 (Alaska 1992):

               Generally,  the most reliable  guide  to
          the  meaning of a statute is the words of the
          statute  construed in accordance  with  their
          common  usage.  Lagos v. City  &  Borough  of
          Sitka,  823  P.2d  641,  643  (Alaska  1991).
          However,  even  where the statutory  language
          considered   alone  seems   to   leave   room
          reasonably   for   only   one   meaning,   we
          nonetheless  may consult legislative  history
          and  the  rules  of  statutory  construction,
          realizing that sometimes language that  seems
          clear  in  the abstract takes on a  different
          meaning when viewed in context.  North  Slope
          Borough  v. Sohio Petroleum Corp.,  585  P.2d
          534,  540  (Alaska 1978); State v. Alex,  646
          P.2d  203,  208 n.4 (Alaska 1982).   In  such
          cases  the legislative history and  rules  of
          construction  must present a compelling  case
          that  the literal meaning of the language  of
          the  statute  is  not  what  the  legislature
          intended.  University of Alaska v. Geistauts,
          666 P.2d 424, 428 n.5 (Alaska 1983) (Where  a
          statutes    meaning   appears    clear    and
          unambiguous,  .  .  . the party  asserting  a
          different meaning has a correspondingly heavy
          burden  of demonstrating contrary legislative
          intent.); State v. Alex, 646 P.2d at 208  n.4
          (under  Alaskas  sliding-scale  approach   to
          statutory interpretation, the more plain  the
          language  of the statute the more  convincing
          the  evidence of contrary legislative  intent
          must be).
          
This site is possible because of the following site sponsors. Please support them with your business.
www.gottsteinLaw.com
Case Law
Statutes, Regs & Rules
Constitutions
Miscellaneous


IT Advice, Support, Data Recovery & Computer Forensics.
(907) 338-8188

Please help us support these and other worthy organizations:
Law Project for Psychiatraic Rights
Soteria-alaska
Choices
AWAIC