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.

 

You can search the entire site. or go to the recent opinions, or the chronological or subject indices. RBG Bush Planes, LLC v. Alaska Public Offices Commission (11/25/2015) sp-7063

RBG Bush Planes, LLC v. Alaska Public Offices Commission (11/25/2015) sp-7063

           Notice:   This opinion is subject to correction before publication in the P                    ACIFIC  REPORTER.  

           Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  

                                                                                                                        

           303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email  

                                                                                                                          

           corrections@akcourts.us.  



                       THE SUPREME COURT OF THE STATE OF ALASKA                                      



RBG  BUSH  PLANES,  LLC,                                        )  

                                                                )          Supreme  Court  No.  S-15397  

                     Appellant,                                 )  

                                                                                                                                           

                                                                )          Superior Court No. 3AN-11-13052 CI  

           v.                                                   )  

                                                                                               

                                                                )          O P I N I O N  

                                  

ALASKA PUBLIC OFFICES                                           )  

COMMISSION,                                                                                                            

                                                                )          No. 7063 - November 25, 2015  

                                                                )  

                     Appellee.                                  )  

                                                                 

_______________________________ )  



                                                                                                              

                     Appeal from the Superior Court of the State of Alaska, Third  

                                                                                                                    

                     Judicial District, Anchorage, Catherine M. Easter, Judge.  



                                                                                                         

                     Appearances:  Timothy A. McKeever and Scott M. Kendall,  

                                                                                                                       

                     Holmes Weddle & Barcott, PC, Anchorage, for Appellant.  

                                                                                                                   

                     Janell M. Hafner, Assistant Attorney General, and Michael C.  

                                                                                                          

                      Geraghty, Attorney General, Juneau, for Appellee.  



                                                                                                              

                     Before: Winfree, Stowers, and Bolger, Justices. [Fabe, Chief  

                                                                             

                     Justice, and Maassen, Justice, not participating.]  



                                           

                      STOWERS, Justice.  



I.         INTRODUCTION  



                                                                                                                                        

                     Alaska  law  forbids  corporations  from  making  direct  contributions  to  

                                              1  And in 2010 a corporation that provided a service to a  

candidates for public office.                                                                                                             



candidate for less than a "commercially reasonable rate" or the "normal charge . . . in the  

                                                                                                                                       



           1         AS   15.13.074(f).  


----------------------- Page 2-----------------------

market" was deemed to have made a contribution to the candidate equal to the difference                                                                            



                                                                                                                                               2  

between the commercially reasonable rate and the amount charged.                                                                                   



                            In September 2010 RBG Bush Planes, LLC (Bush Planes) allowed two  

                                                                                                                                                                                



candidates for the Lake and Peninsula Borough Assembly to travel on a series of pre- 

                                                                                                                                                                                



existing flights throughout the borough.  Bush Planes charged the candidates a fraction  

                                                                                                                                                                       



of the fuel costs associated with those flights.  The Alaska Public Offices Commission  

                                                                                                                                                              



(Commission)  investigated  these  charges,  determined  that  Bush  Planes'  fractional  

                                                                                                                                                                   



fuel-cost methodology did not represent a commercially reasonable rate, and assessed  

                                                                                                                                                                      



a $25,500 fine against Bush Planes for making illegal corporate contributions.  Bush  

                                                                                                                                                                             



Planes appealed to the superior court, which affirmed the Commission.  

                                                                                                                            



                            Bush Planes again appeals, arguing (1) that the Commission erred when it  

                                                                                                                                                                                      



found  Bush  Planes  had  violated  Alaska  law  and  (2)  that  the  fine  the  Commission  

                                                                                                                                                             



imposed was unconstitutionally excessive. Bush Planes also appeals the superior court's  

                                                                                                                                                                          



denial  of  Bush  Planes'  motion  to  supplement  the  record  with  allegedly  recently  

                                                                                                                                                                      



discovered evidence and related briefing suggesting Commission bias against Bush  

                                                                                                                                                                             



Planes.  We affirm the superior court's decisions for the reasons discussed below.  

                                                                                                                                                                



II.           FACTS AND PROCEEDINGS  

                                               



              A.            Facts  



                            Bush  Planes  is  a  limited  liability  company  that  holds  title  to  several  

                                                                                                                                                                        



airplanes.  It is owned by a revocable trust created for Robert B. Gillam, and it operates  

                                                                                                                                                                      

as a private carrier under Part 91.3  

                                                                 



              2             2AlaskaAdministrativeCode(AAC)50.250(a)(3)(G),(c)(2006). Wenote                                                                                     



that 2 AAC 50.250 has since been amended, but this appeal concerns the pre-amendment                                                                   

language in effect in 2010.                   



              3              General Operating and Flight Rules, 14 C.F.R. pt. 91 (2015).  As a Part 91  

                                                                                                                                                                                   

                                                                                                                                                            (continued...)  



                                                                                         -2-                                                                                 7063
  


----------------------- Page 3-----------------------

                                             Gillam is involved in the politics surrounding mining development in the                                                                                                                                                                    



Bristol Bay area, and he hired George Jacko to be his "eyes and ears in Bristol Bay."                                                                                                                                                                                           



Jacko traveled throughout the Lake and Peninsula Borough and flew on Bush Planes'                                                                                                                                                                                          



aircraft for his travel.                                                 Jacko asked Gillam if he could offer flights to two candidates for                                                                                                                                               



the Lake and Peninsula Borough Assembly, Nana Kalmakoff and Michelle Ravenmoon.                                                                                                                                                                          



Gillam consulted counsel and later approved allowing the two candidates to fly with                                                                                                                                                                                                 



Jacko on Bush Planes' flights. But Gillam also required that the fuel costs for each flight                                                                                                                                                                                       



be recorded.   



                                             In 2010 Jacko traveled with Kalmakoff and Ravenmoon on two separate                                                                                                                                                        



trips:    one from September 3 through September 6 and another from September 17                                                                                                                                                                                                           



through September 18.                                                           While some of the flights included both candidates, on others                                                                                                                                  



only Kalmakoff or Ravenmoon was present.                                                                                                                    Bush Planes invoiced Ravenmoon and                                                                                         

Kalmakoff for a fractional portion of the fuel costs related to the flights they took.                                                                                                                                                                                                           4  



Ravenmoon paid a total of $351.55, and Kalmakoff paid $1,184.60.  

                                                                                                                                                                                                 



                                             After the election the Commission received two complaints from the Lake  

                                                                                                                                                                                                                                                                                   



and Peninsula Borough regarding the trips Ravenmoon and Kalmakoff took with Jacko.  

                                                                                                                                                                                                                                                                                                       



The Commission dismissed the complaints without filing charges, but the Commission  

                                                                                                                                                                                                                                                         



staff continued investigating the allegations.  

                                                                                                               



                                             By March 9, 2011, the investigation had produced sufficient information  

                                                                                                                                                                         



that  the  Commission's  assistant  director,  Jerry  Anderson,  intended  to  have  the  

                                                                                                                                                                                                                                                                                       



                       3(...continued)  



                                                                                                                                                                                                                                                                                    

operator Bush Planes may only charge a candidate for public office an amount that does  

                                                                                                                                                                                                                                                                             

not                "exceed                             the                amount                            required                              under                       the                applicable                                 state                   or             local  

                                                          

law." 14 C.F.R. § 91.321(a)(3).  



                       4                     Bush Planes intended to bill the candidates for half of the fuel used on each  

                                                                                                                                                                                                                                                                                     

flight. Bush Planes actually billed the candidates more than one-half of the fuel costs due  

                                                                                                                                                                                                                                                                                        

to an accounting error.  That discrepancy does not affect our decision.  

                                                                                                                                                                                                              



                                                                                                                                              -3-                                                                                                                                  7063
  


----------------------- Page 4-----------------------

Commission's staff file a complaint.                                                   By March 30, 2011, Anderson directed one of the                                                                



Commission's staff attorneys to begin drafting a complaint. But the Commission's staff                                                                                                             



continued investigating the allegations into April, and the Commission's staff did not file                                                                                                           



a complaint until July 7, 2011.                            



                B.              Proceedings  



                                The Commission staff's complaint alleged that Bush Planes had violated                                                                                    



AS   15.13.074(f),   which   prohibits   a   corporation   from   making   a   contribution   to   a  



                        5  

candidate.                                                                                                                                                                                                    

                             "Contribution" is defined in both AS 15.13.400 and former 2 AAC 50.250.  



                                                                                                                                                                                                   

Relevant here are two definitions previously contained in 2 AAC 50.250.   The first  



                                                                                                                                                                                                          

definition specifically excluded from the meaning of "contribution" the "provision of a  



                                                                                                                                                                                                         

service  .  .  .  to  a candidate .  .  .  if the entity  providing the service .  .  .  is paid  at a  

                                                                                                                                                                           6     The second  

                                                                                                                                                                                            

                                                                                                                                                             

commercially reasonable rate within a commercially reasonable time." 



definition stated:  

                         



                                The provision of goods or services without charge, or at a  

                                                                                                                                                                          

                                charge that is less than the normal charge for the goods and  

                                                                                                                                                                     

                               services in the market, is a contribution unless a lower rate is  

                                                                                                                                                                          

                                extended to all campaigns.  If goods or services are provided  

                                                                                                                                                         

                                at less than the normal charge in the market, the amount of  

                                                                                                                                                                        

                                the nonmonetary contribution is the difference between the  

                                                                                                                                                                      

                               normal charge for the goods or services at the time of the  

                                                                                                                                                                      

                                                                                                                        [  ]  

                                contribution and the amount charged. 7 

                                                                                                    



                                The staff alleged that charging Ravenmoon and Kalmakoff fractional fuel  

                                                                                                                                                                                                    



costs alone was not commercially reasonable.  The staff also alleged that a fuel-only  

                                                                                                                                                                                     



                5               The complaint also included allegations against Gillam, McKinley Capital                                                                                    



Management, Ravenmoon, and Kalmakoff.                                                                    Only the charges against Bush Planes are                                                     

relevant to this appeal.             



                6               2 AAC 50.250(a)(3)(G) (2006) (emphasis added).  

                                                                                                                                     



                7               2 AAC 50.250(c) (2006) (emphasis added).  

                                                                                                                      



                                                                                                   -4-                                                                                           7063
  


----------------------- Page 5-----------------------

valuation "ignore[d] all of the other normal and customary expenses associated with                                                                                                                                                                                                                                               



aircraft use" and noted the following additional expenses: "[o]il,                                                                                                                                                                                        maintenance, an engine  



reserve . . . , a propeller reserve . . . , insurance, hang[a]r fees, . . . inspection fees," and                                                                                                                                                                                                                                      



the   pilot's   salary.     Thus,   the   staff   claimed   that   Bush   Planes   had   not   charged   a  



commercially reasonable rate and had made a prohibited corporate contribution to both                                                                                                                                                                                                                                               



candidates.  



                                                     1.                        The Commission hearing                                                   



                                                     The Commission members heard the case against Bush Planes during one                                                                                                                                                                                                              



day of testimony presided over by an administrative law judge.                                                                                                                                                                                            One of the main issues                                             



during the hearing was whether Bush Planes had charged the candidates a commercially                                                                                                                                                                                                       



reasonable rate.   



                                                     Gillam testified regarding Bush Planes' costs. He stated that he owned the                                                                                                                                                                                                           



hangar in Anchorage where Bush Planes stored its aircraft and personally paid for the                                                                                                                                                                                                                                                    



"heat, lights, taxes, [and] maintenance" related to the hangar.                                                                                                                                                                                       He did not testify as to                                                               



how much he paid, nor did he provide Bush Planes' maintenance costs or the cost to run                                                                                                                                                                                                                                                  



each of Bush Planes' aircraft on a per-hour basis.                                                                                                                                                  Gillam noted that McKinley Capital                                                                                   



paid the pilots' salaries and benefits in exchange for Bush Planes making its aircraft                                                                                                                                                                                                                                  



available to McKinley Capital when it needed them for its business.                                                                                                                                                                     



                                                     Greg    O'Keefe,   McKinley   Capital's   chief   financial   officer,   testified  

                                                                                                                     8       O'Keefe testified that the amount of time Bush Planes'  

regarding Bush Planes' costs.                                                                                                                                                                                                                                                                                           



aircraft spent in the air did not affect Bush Planes' fixed costs.  But he did not provide  

                                                                                                                          



values for these fixed costs or the agreement between McKinley Capital and Bush Planes  

                                                                                                                                                                                                                                                                                                                            



regarding piloting services.  

                                                                         



                           8  

                                                                                                                                                                                                                                                                                                                                 

                                                     It appears McKinely Capital handles certain accounting functions for Bush  

Planes.  



                                                                                                                                                                      -5-                                                                                                                                                                          7063  


----------------------- Page 6-----------------------

                                           O'Keefe further testified that Bush Planes does not set aside money for                                                                                                                                                        



maintenance reserves or propeller reserves and that Bush Planes' maintenance costs do                                                                                                                                                                                      



not   depend  on  the   number   of   hours   flown   other   than   "a   hundred-hour   annual"  



maintenance.   He testified that the variable costs, the ones "you would incur as a result                                                                                                                                                                     



of operating the plane," would be "the fuel, perhaps a little bit of oil, maybe some                                                                                                                                                                             



Windex . . . and maybe some minor supplies like air sickness bags, things like that."                                                                                                                                                                            



                                           Glen Alsworth testified regarding airfare. Alsworth, the mayor of the Lake                                                                                                                                               



and Peninsula Borough, was also the president of a for-profit air carrier, Lake Clark Air.                                                                                                                                                                                            



Alsworth was provided with the flight plan for the trips the candidates took, and he                                                                                                                                                                                       



asserted that it would cost $950 per hour multiplied by the flight hours to charter these                                                                                                                                                                          



flights and that there would be standby and overnight charges.                                                                                                              

                                                                                                                                                   9 for each leg of the two itineraries. These  

                                          Alsworth also provided seat fares                                                                                                                                                                                     



fees  ranged  from  $60  to  $400.                                                                                       Alsworth  stated  that  $1,240  "would  be  just  

                                                                                                                                                                                                                                                                     



a . . . screaming deal" for a passenger taking all of the flights in the first trip and that  

                                                                                                                                                                                                                                                                       

$500 for the entire second trip was possible but would be "the steal of the century."10  

                                                                                                                                                                                                                                             

                                           David Wilder, owner of Lake and Peninsula Airlines,11  testified that the  

                                                                                                                                                                                                                                                                         



charter cost for the first trip would be approximately $10,450 and the seat fare would be  

                                                                                                                                                                                                                                                                            



$2,500.  For the second trip, Wilder estimated a charter cost of $2,800 and a seat fare of  

                                                                                                                                                                                                                                                                             



                     9                    As used in the hearing, a seat fare is the amount a carrier would charge                                                                                                                                            



someone who wanted to purchase a seat on a pre-existing charter flight.                                                                                                                                          



                      10                  Using Alsworth's seat fares, Kalmakoff should have paid $1,125 for her  

                                                                                                                                                                                                                                                                         

participation in the first trip and $560 for her participation in the second trip. Kalmakoff  

                                                                                                                                                                                                                                                 

paid Bush Planes $1,184.60.                                                                          Similarly, Alsworth's seat fares indicate Ravenmoon  

                                                                                                                                                                                                                                           

should  have  paid  $1,040  for  her  participation  in  the  first  trip  and  $100  for  her  

                                                                                                                                                                                                                                                                       

participation in the second trip, but Ravenmoon only paid $351.55.  

                                                                                                                                                                                          



                      11                   Wilder was also a member of the Lake and Peninsula Borough Assembly  

                                                                                                                                                                                                                                                   

until he lost his seat to Ravenmoon in the 2010 election.  

                                                                                                                                                        



                                                                                                                                     -6-                                                                                                                            7063
  


----------------------- Page 7-----------------------

                                                                                                                                                                                                                12  

approximately $700.                                                            When asked about charging $306                                                                                                          for a seat fare on the first                                                      



itinerary, Wilder indicated that it would be "impossible for us . . . .                                                                                                                                                                        It doesn't make                                      



economic sense . . . when somebody else is paying $9,000 for a charter and you go well,                                                                                                                                                                                                                



we're going to let two more people hop on for 300 bucks, . . . I wouldn't do that."                                                                                                                                                                                                                        He  



noted that $306 was "not in the ballpark."                                                                         



                                                2.                      The Commission's decision                                                 



                                                TheCommission,with theadministrativelawjudge's assistance,foundthat                                                                                                                                                                                         



the lowest commercially reasonable rates supported by the evidence presented were the                                                                                                                                                                                                                         



seat fares to which Alsworth had testified. Comparing those seat fares with the amounts                                                                                                                                                                                                   



Bush   Planes   charged   the   candidates,   the   Commission   found   that   Bush   Planes   had  



undercharged Ravenmoon by $788.45 and Kalmakoff by $500.40.                                                                                                                                                      



                                                The Commission specifically addressed whether Bush Planes' fuel-only                                                                                                                                                                   



methodology   represented a commercially reasonable rate.                                                                                                                                                                   It noted that one of the                                                       



Commission's advisory opinions had indicated that it might be sufficient to charge a                                                                                                                                                                                                                                



                                                                                                                                       13  

candidate the "actual cost" of a flight,                                                                                                                                                                                                                                                           

                                                                                                                                              but it (1) disavowed the concept of using actual  



                                                                                                                                                                                                                                                                                                          

costs when a candidate flies on a company plane "in an area where market rates for seat  



                                                                                                                                                                                                                                                                                                      

fares can be ascertained" and (2) held that even under an actual-cost methodology, Bush  



                                                                                                                                                                                                                                                                          

Planes needed to account for both its variable and fixed costs.   But the Commission  



                                                                                                                                                                                                                                                                                                               

found that Bush Planes had failed to provide a "credible cost-based valuation taking all  



                                    

costs into account."  



                        12                      Bush Planes charged Ravenmoon $306.21 for the first set of flights.                                                                                                                                                          



                        13                      See  STATE OF                                     ALASKA, D                                EP 'T OF                   ADMIN., A                              LASKA  PUB. O                                      FFICES  COMM'N  



ADVISORY                                         OP .,                     AO                    06-03-CD,                                          at              5            (Oct.                        31,                  2006),                            available                                    at  

                                          

http://aws.state.ak.us/ApocReports/Paper/Download.aspx?ID=4877 (hereinafterP                                                                                                                                                                                                                           EREZ  

OP.).  



                                                                                                                                                        -7-                                                                                                                                            7063
  


----------------------- Page 8-----------------------

                                         TheCommission                                        next considered thepenalty                                                          toimpose                       on Bush Planes and  



discussed several factors.                                                       It noted that Gillam was Bush Planes' principal and that he                                                                                                                        



had previous experience with the Commission, including a $100,000 settlement in 2010                                                                                                                                                                        



related to alleged campaign disclosure violations.                                                                                                            The Commission found that Bush                                                               



Planes had "substantial assets and . . . sophisticated management" and that its conduct                                                                                                                                                  



had "great potential to alter the outcome of elections to the detriment of candidates not                                                                                                                                                                        



so favored." The Commission further found that Bush Planes "engaged in a questionable                                                                                                                                             



practice without adequately exploring its legality, . . . embroil[ing] two unsophisticated                                                                                                                                 



candidates in itswrongdoing." Therefore,theCommission                                                                                                                             concluded "astrong                                            deterrent  

fine [was] necessary" and imposed a penalty of $25,500.                                                                                                                         14  



                                         The Commission also imposed $10,668 in investigation and adjudication  

                                                                                                                                                                                                                                     

                                                                                                              15  Thus, the Commission's final award against Bush  

costs and $19,100 in attorney's fees.                                                                                                                                                                                                                       

                                                                                                



Planes was for $55,268:  $25,500 in fines, $10,668 in adjudication and investigation  

                                                                                                                                                                                                                                   



costs, and $19,100 in attorney's fees.  

                                                                                                     



                                         3.                   The superior court's ruling  

                                                                                                                                    



                                         BushPlanesappealedtheCommission's decisionsto thesuperior court, and  

                                                                                                                                                                                                                                                                 



the parties completed their briefing in November 2012. Approximately six months later,  

                                                                                                                                                                                                                                                            



shortly before the scheduled oral argument, Bush Planes filed a motion to supplement  

                                                                                                                                                                                                                                       



the record arguing that it had recently obtained "clear evidence that [the Commission]  

                                                                                                                                                                                                      



                     14                  The maximum statutory penalty is $50 per day per violation until the                                                                                                                                                    



violation is remedied. AS 15.13.390(a).                                                                                        Despite each candidate participating in two                                                                                     

separate   itineraries,   the   Commission   based   the   fine   on   a   single   violation   for   each  

candidate and calculated the number of days since the violation until the violation was                                                                                                                                           

remedied as 255 days.                                                  Thus, $50 x 255 days x 2 violations = $25,500.                                                                                                        



                     15                  Alaska  Statute  15.13.390(b)  states  that  when  the  Commission  finds  a  

                                                                                                                                                                                                                                                                       

violation "the commission shall assess . . . the commission's costs of investigation and  

                                                                                                                                                                                                                                                                

adjudication[] and . . . reasonable attorney fees."  

                                                                                                                                    



                                                                                                                                  -8-                                                                                                                       7063
  


----------------------- Page 9-----------------------

and the [Commission's] Staff . . . were biased and prejudiced against it."                                                                                                                                                                                                                                                                            Bush Planes   



argued that                                         thenewevidencedemonstratedthatBushPlanes was                                                                                                                                                                                                      denied"its                                         fundamental  



due process right to an impartial tribunal."                                                                                                             



                                                              Bush Planes claimed that it only obtained the new evidence after the close                                                                                                                                                                                                                                                   



of the briefing and that the importance of the evidence, along with its unavailability to                                                                                                                                                                                                                                                                                                                 



Bush   Planes   during   the   earlier   briefing,   justified   supplementing  the   record   and   its  



briefing.   The Commission opposed the motion, noting that Bush Planes had obtained                                                                                                                                                                                                                                                                   



much of the evidence it wanted to introduce approximately four months earlier and that                                                                                                                                                                                                                                                                                                            



none of the evidence was sufficient to demonstrate impermissible bias or prejudice.                                                                                                                                                                                                                                                                                



                                                               Superior   Court Judge Catherine M.                                                                                                                                          Easter   affirmed   the Commission's   



decision   regarding   Bush   Planes'   liability.     She   also   held   that   the   fine   was   not  



unconstitutionally excessive and that it was not an abuse of discretion.                                                                                                                                                                                                                                                                             Judge Easter   



denied the motion to supplement the record without comment and did not reach the                                                                                                                                                                                                                                                                                                                   



merits of Bush Planes' due process argument.                                                                                                                          



                                                              Bush Planes now appeals the Commission's finding of liability and the                                                                                                                                                                                                                                                                 



penalty it imposed, as well as the superior court's denial of its motion to supplement the                                                                                                                                                                                                                                                                                                           



record and file a supplemental brief.                                                                                                          



III.                            STANDARD OF REVIEW                                                                    



                                                               "Where the superior court is acting as an intermediate court of appeals, we                                                                                                                                                                                                                                                            

                                                                                                                                                                          16 using one of four standards of review depending  

directly review the agency decision"                                                                                                                                                                                                                                                                                                                              



on the issues on appeal:  

                                                                            



                                                               The "substantial evidence" test is used for questions of fact.  

                                                                                                                                                                                                                                                                                                                                                        

                                                               The  "reasonable  basis"  test  is  used  for  questions  of  law  

                                                                                                                                                                                                                                                                                                                                  



                                16                            Alaska Police Standards Council v. Parcell                                                                                                                                                                      , 348 P.3d 882, 886 (Alaska                                                                     



2015) (quoting                                                           West v. Municipality of Anchorage                                                                                                                                    , 174 P.3d 224, 226 (Alaska 2007))                                                                                                   

 (internal quotation marks omitted).                                                                                    



                                                                                                                                                                                                    -9-                                                                                                                                                                                      7063
  


----------------------- Page 10-----------------------

                         involving agency expertise.                          The "substitution of judgment"          

                         test   is   used   for   questions   of   law   where   no   expertise   is  

                         involved.   The "reasonable and not arbitrary" test is used for                                            

                         review of administrative regulations.                                [17]  



                         We review a superior court's ruling on a motion to supplement the record  

                                                                                                                                                      

for  abuse  of  discretion.18                      The  superior court  abuses  its  discretion when  it  acts  in  a  

                                                                                                                                                               

                          

manifestly unreasonable manner.19  

                                                



IV.          DISCUSSION  



                         Bush Planes  argues that (1) the Commission erred in finding that Bush  

                                                                                                                                                        



Planes  made  an  illegal  corporate  contribution  to  a  candidate;  (2)  the  Commission  

                                                                                                                                          



imposed an unconstitutionally excessive fine on Bush Planes; and (3) the superior court  

                                                                                                                                                        



abused its discretion when it denied Bush Planes' motion to supplement the record and  

                                                                                                                                                           



allow its supplemental brief.  We conclude that none of these decisions was erroneous  

                                                                                                                                               



and affirm.  

         



             A.          The Commission Did Not Err When It Found That Bush Planes Made  

                                                                                                                                                       

                         An Illegal Corporate Contribution.  

                                                                     



                         Bush Planes challenges the Commission's determination that Bush Planes  

                                                                                                                                                      



violated the prohibition on corporate contributions to candidates.  Bush Planes argues  

                                                                                                                                                      



that  (1)  the  phrase  "commercially  reasonable  rate"  is  ambiguous;  (2)  because  

                                                                                                                                         



"commercially reasonable rate" is ambiguous, the Commission should have deferred to  

                                                                                                                                                              



             17          Skvorc v. State, Pers. Bd.                    , 996 P.2d 1192, 1196-97 (Alaska 2000) (quoting                            



Handley v. State, Dep't of Revenue                                , 838 P.2d 1231, 1233 (Alaska 1992)).                      



             18          Southwest Marine, Inc. v. State, Dep't of Transp. &Pub. Facilities, Div. of  

                                                                                                                                                               

Alaska Marine Highway Sys. , 941 P.2d 166, 172 (Alaska 1997).  

                                                                                                             



             19          Tobeluk  v.  Lind,  589  P.2d  873,  878  (Alaska  1979)  ("We  will  not  

                                                                                                                                                 

interfere . . . unless it is shown that the court abused its discretion by issuing a decision  

                                                                                                                                                  

which is arbitrary,capricious,manifestlyunreasonable, or which stemsfroman improper  

                                                                                                                                                 

motive.").  



                                                                             -10-                                                                       7063
  


----------------------- Page 11-----------------------

Bush Planes' actual-cost methodology; and (3) the Commission ignored Bush Planes'   



evidence that it did not incur any costs other than the variable fuel costs it charged the                                                                                                     



candidates.  



                               1.	            The           Commission's                            Perez              Opinion                  rendered                   the          terms  

                                              "commercially   reasonable   rate"   and   "normal   charge   in   the  

                                              market" ambiguous.   



                               The   Commission's   finding   that   Bush   Planes   is   liable   for   campaign  



violations   centers   on   the   proper   interpretation   of   two   phrases:     (1)   "commercially  

reasonable rate" and (2) "normal charge in the market."                                                                            20  

                                                                                                                                                                         

                                                                                                                                          Bush Planes argues these  



                                                                                                           

phrases are ambiguous while the Commission disagrees.  



                                                                                                                                                                                     

                               A regulation is ambiguous when "[it] is capable of two or more equally  



                                                      21  

                                                                                                                                                                                                 

logical interpretations."                                  And "ambiguous statutory or regulatory requirements must be  



                                                                                                                                                                                           

strictly construed in favor of the accused before an alleged breach may give rise to a civil  



                     22  

                                                                                                                                                                                                

penalty."                  This rule has its genesis in the doctrine of vagueness, which requires that the  



                                                                                                                                                                                                  23  

                                                                                                                                                                                                        

law "give the ordinary  citizen  fair  notice of what is  and what is not prohibited." 



                                                                                                                                                                                         

"People should not be required to guess whether a certain course of conduct is one which  



               20              2 AAC 50.250(a)(3)(G), (c) (2006). Bush Planes briefly argues that using                                                                                   



two different phrases in the regulation makes the regulation inherently ambiguous, but                                                                                                         

we disagree and interpret them similarly here.                                                



               21              State v. Bernard, 625 P.2d 311, 313 (Alaska 1981) (per curiam).  Because  

                                                                                                                                                                                   

the question of regulatory ambiguity presented here is a question of law not involving  

                                                                                                                                  

agency expertise, we review it under the substitution of judgment standard. See Alaska  

                                                                                                                                                                                       

Pub. Offices Comm'n v. Stevens, 205 P.3d 321, 324-26 (Alaska 2009).  

                                                                                                                                                   



               22              Stevens, 205 P.3d at 326.  

                                                                              



               23             Id.  at  325  (quoting  VECO Int'l,  Inc.  v.  Alaska  Pub.  Offices  Comm'n,  

                                                                                                                                                                                

753 P.2d 703, 714 (Alaska 1988)).  

                                                               



                                                                                              -11-	                                                                                       7063
  


----------------------- Page 12-----------------------

                                                                                                                            24  

is apt to subject them to criminal or serious civil penalties."                                                                  But to take advantage of                        



any regulatory ambiguity, the accused party's interpretation may not be "strained or                                                                        

outlandish."25  



                                                                                                                                                                               

                            In the abstract, "commercially reasonable rate" and "normal charge in the  



                                                                                                                                                                   

market" do not appear ambiguous because they focus the analysis on the price available  



                                                                                                                                                                                   

on the open market.  But the Commission injected ambiguity into these phrases when it  



                                                                                                                                           26  

                                                                                                                         

released a 2006 advisory opinion referred to as the Perez Opinion. 



                            The Perez Opinion considered whether Alaska law required the governor  

                                                                                                                                                                  



to reimburse the state for travel on state aircraft when the governor engages in both state  

                                                                                                                                                                            

business and campaign-related activities.27                                                   The opinion noted that the state may not  

                                                                                                                                                                              



make a contribution to a candidate and concluded that "if the governor's reelection  

                                                                                                                                       



campaign reimburses the state at a reasonably commercial rate . . . for state-provided  

                                                                                                                                                       



              24             VECO Int'l             , 753 P.2d at 714 (citing                         Gottschalk v. State                    , 575 P.2d 289, 290              



(Alaska 1978)).   



              25            See Bernard, 625 P.2d at 313 ("That one [interpretation] is more logical  

                                                                                                                                                                       

than the other does not cure the ambiguity of the regulation when the less logical method  

                                                                                                                                                                      

is not strained or outlandish."); see also Theodore v. State, 407 P.2d 182, 189 (Alaska  

                                                                                                                                                 

 1965) ("We agree with appellant that a vague . . . regulation, the breach of which carries  

                                                                                                                                                                        

a criminal penalty, should be strictly construed in favor of the accused.  However, we  

                                                                                                                                                                               

believe  that  a  common  sense,  unstrained,  reading  of  both  descriptions  provides  a  

                                                                                                                                                                                  

reasonably  concise  description  of  the  areas  and  leaves  no  room  for  the  argument  

                                                                                                                                                                 

advanced by appellant.").  

                            



              26            See  PEREZ   OP.,   supra   note   13.     The   opinion   is   known   as   the   "Perez  

                                     

Opinion" because it was requested by Governor Frank Murkowski's Administrative                                                                        

Director, Linda Perez.                          Id.  at 1.   



              27            Id. at 1.  

                                         



                                                                                      -12-                                                                                 7063
  


----------------------- Page 13-----------------------

                                                                                                                                                                       28  

travel, state-provided travel would not be a prohibited contribution."                                                                                                       The opinion   



continued:  



                               Because reimbursement is required . . . , we must address                                                                  

                               what             constitutes                  a       commercially                         reasonable                    rate         for  

                               reimbursement.   There are probably many possibilities.                                                                            One  

                               obvious method might be to determine the state's actual costs                                                                     

                               and reimburse those costs                                     .  Another method is suggested in                                          

                                federal regulation . . . . Using either of these methods for                                                                         

                                determining the value of state-provided travel would satisfy                                                                 

                               the requirement of payment at a commercially reasonable                                                             

                               rate.[29]  



                               But  "actual  cost"  is  inconsistent  with  the  market-based  approach  that  

                                                                                                                                                                                                  



"commercially reasonable rate" and "normal charge in the market" seem to require.  

                                                                                                                                                                                                              



Actual cost leaves no accounting for profit margin, an almost ever-present aspect of a  

                                                                                                                                                                                                         



commercially reasonable rate. And an actual-cost methodology changestheregulation's  

                                                                                                                                                                                



focus from a broad, market-based analysis of available fares to identifying the costs  

                                                                                                                                                                                               



specific to an individual service provider.  Thus, the Commission's interpretation of the  

                                                                                                                                                                                                     



regulation in the Perez Opinion inserted ambiguity into the regulation's meaning.  In  

                                                                                                                                                                                                      



light of this ambiguity, we will strictly construe the regulatory language in Bush Planes'  

                                                                                                                                                                                           



favor so long as Bush Planes' interpretation of the regulation is not strained.  

                                                                                                                                                                



                               2.	             Bush  Planes'  interpretation  of  the  actual-cost  methodology  

                                                                                                                                                                          

                                               endorsed in the Perez Opinion is strained.  

                                                                                                                                   



                               Bush Planes argues that the Perez Opinion "can reasonably be read as  

                                                                                                                                                                                                      



contemplating that the primary purpose [of a flight] must pay for all costs the primary  

                                                                                                                                                                                         



                28             Id.  at 5.   



                29             Id.   at 5-6 (emphasis added).                                           The Perez Opinion went on to endorse a                                                           



valuation   method   involving   first-class,   coach,   and   charter   fares   depending   on   the  

circumstances, but it specifically noted that the Commission was not precluding other  

                                                                                                                                                                                                

valuation methods.                            Id.  at 6.   



                                                                                                 -13-	                                                                                          7063
  


----------------------- Page 14-----------------------

purpose would otherwise incur, and candidates pay only those actual costs caused by                                                                                                                                                                                                        



their additional activity."                                                           Bush Planes asserts that the evidence before the Commission                                                                                                        



was that the only additional costs Bush Planes incurred because of the candidates'                                                                                                                                                                         



presence on its flights were for fuel and minor incidentals. Thus, Bush Planes contends,                                                                                                                                                                            



these additional costs are all Bush Planes needed to charge the candidates under an                                                                                                                                                                                                        



actual-cost methodology.   



                                             The Commission responds that an actual-cost methodology must account                                                                                                                                                        



for fixed costs and that other companies incorporate fixed costs into their fares.                                                                                                                                                                                                  The  



Commission arguesthat                                                            BushPlanes' failure to include                                                                        these costs renders                                            its actual-cost  

methodology invalid.                                                    30  



                                             We conclude that Bush Planes' interpretation of "actual cost" is strained.  

                                                                                                                                                                                                                                                                                                       



Bush Planes' additional-costs methodology fails to recognize that Bush Planes is the  

                                                                                                                                                                                                                                                                                         



beneficiary of unique advantages: it does not pay for pilots or hangar fees. The idea that  

                                                                                                                                                                                                                                                                                       



Bush Planes could use its "actual costs" when it possesses these advantages is patently  

                                                                                                                                                                                                                                                                         



unreasonable, especially considering that the Perez Opinion gave no indication that the  

                                                                                                                                                                                                                                                                                          



 State enjoyed  similar  advantages  when the Perez Opinion endorsed  the actual-cost  

                                                                                                                                                                                                                                                              



methodology. As Gillamtestified, "Ifyou knowanything aboutAlaskaairplanes, there's  

                                                                                                                                                                                                                                                                              



a lot of expense."  That expense is not simply the cost of fuel.  It is all of the costs that  

                                                                                                                                                                                                                                    



surround the operation of the plane.  

                                                                                                    



                                             Bush Planes' interpretation of the relevant language is clearly not what was  

                                                                                                                                                                                                                                                                                       



intended by "actual cost" in the Perez Opinion.   The Perez Opinion was providing  

                                                                                                                                                                                                                                                                  



                       30                    Determining whether Bush Planes adopted a strained interpretation of the                                                                                                                                                                     



regulations at issue here is a question of law that does not implicate agency expertise.                                                                                                                                                                                                               

Therefore, we apply our independent judgment when reviewing this issue.                                                                                                                                                                                           Skvorc v.   

State, Pers. Bd.                                   , 996 P.2d 1192, 1196-97 (Alaska 2000) (quoting                                                                                                                    Handley v. State, Dep't                                    

of Revenue                            , 838 P.2d 1231, 1233 (Alaska 1992)).                                                                    



                                                                                                                                           -14-                                                                                                                                    7063
  


----------------------- Page 15-----------------------

                                                                                                                                                                       31  

guidance regarding what would be a commercially reasonable rate.                                                                                                            No reasonable   



person   would   read   the   Perez   Opinion   and   believe   that   in   trying   to   determine   a  



commercially reasonable rate, he could charge only his additional costs when he was the                                                                                                                    



recipient of significant cost reductions not generally available.                                                               



                                Bush Planes' argument to the contrary is not persuasive.                                                                                         Its argument   



ignores the regulation's attempt to place all candidates in the same position by creating                                                                                                      



a level playing field.                              This is best exemplified by the fact that the regulation requiring a                                                                                        



service   provider   to   bill   for   the   normal   charge   in   the   market   did   not   apply   if   the  

                                                                                                                      32     Additionally, the practical effect of  

discounted charge was offered to all candidates                                                                      .                                                                                       



requiring  a  commercially  reasonable  rate  is  that  it  prevents  one  candidate  from  

                                                                                                                                                                                                     



benefitting from an advantage that other candidates may not have because they are not  

                                                                                                                                                                                                           



as well connected.  

                                               



                                Bush  Planes  also  argues  that  its  fuel-only  approach  was  a  reasonable  

                                                                                                                                                                                       



interpretation of its allegedly competing obligations under state and federal law.  But  

                                                                                                                                                                                                        



Bush Planes' basic premise - that there is tension between state and federal law - is  

                                                                                                                                                                                                              



incorrect. 14 C.F.R. § 91.321(a)(3) permits a private air carrier to charge candidates for  

                                                                                                                                                                                                           



elected office an amount that does not "exceed the amount required under applicable  

                                                                                                                                                                                         



state or local law."  Bush Planes contends that to ensure compliance with this federal  

                                                                                                                                                                                                 



regulation  it  must  charge  the  candidates  the  lowest  possible  rate  and  to  ensure  

                                                                                                                                                                                                 



compliance with state law it must charge the highest possible rate.  

                                                                                                                                                       



                31              PEREZ  OP.,  supra  note   13,  at  5-6.  



                32              2  AAC  50.250(c)  (2006).  



                                                                                                    -15-                                                                                                       7063  


----------------------- Page 16-----------------------

                         We read 14 C.F.R. § 91.321(a)(3) as a carve-out provision to allow private                                                  



                                                                                                             33  

air carriers to operate within the boundaries of state law.                                                                                          

                                                                                                                   So long as Bush Planes  



                                                                                                                                                    

complies with state law, including the Commission's regulations, it will not violate  

                                               34   There is no reason to believe that a fuel-only approach was  

                                                                                                                                                          

                       

 14 C.F.R. § 91.321(a)(3). 



necessary to avoid violating federal regulations.  

                                                                    



                         Thus,  we  hold  that  Bush  Planes'  interpretation  of  the  actual-cost  

                                                                                                                                           



methodology approved in the Perez Opinion was strained.  As a result, we affirm the  

                                                                                                                                                           



Commission's decision because the Commission was not required to defer to Bush  

                                                                                                                                                       



Planes'   interpretation   and   could   enforce   its   own   reasonable   interpretation   of  

                                                                                                                                                           

"commercially reasonable rate."35  

                                                   



            B.	          The Fine The Commission Imposed Against Bush Planes Was Not  

                                                                                                                                                         

                         Unconstitutionally Excessive.  

                                                               



                         The Commission assessed a $25,500 fine against Bush Planes, as well as  

                                  



$29,768 in investigation and adjudication costs and attorney's fees. Noting that its total  

                                                                                                                                                         



contribution was $1,288.25 - the amount the candidates underpaid for the flights using  

                                                                                                                                                       



the  Commission's  calculations  -  Bush  Planes  argues  that  the  award  against  it  is  

                                                                                                                                                             



            33           The        Federal            Aviation            Administration's                    public          notice         regarding  



promulgation of 14 C.F.R. § 91.321(a) stated that the regulation permitted the carrier "to                                                                  

acceptpayment                in accordancewith                   stateor       local law."CarryingCandidatesin Elections,                      

70   Fed.  Reg.  4980-01   (Jan.   31,   2005)   (emphasis   added)   (codified   at   14   C.F.R.   §  

91.321(a)).  



            34           Bush Planes cites no cases where a Part 91 carrier was found to have acted  

                                                                                                                                                       

permissibly under state law and impermissibly under 14 C.F.R. § 91.321(a)(3), nor has  

                                                                                                                                                           

our independent research identified such a case.  

                                                                                



            35           BecauseweconcludetheCommissiondid not need to defer to Bush Planes'  

                                                                                                                                                    

interpretation of "commercially reasonable rate" and "normal charge in the market," we  

                                                                                                                                                            

do not address Bush Planes' claim that the Commission ignored evidence regarding its  

                                                                                                                                                             

actual costs.  

             



                                                                            -16-	                                                                      7063
  


----------------------- Page 17-----------------------

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          36  

unconstitutionally excessive and cites to our punitive damages cases for support.                                                                                                                                                                                                                                                                                                                                                                                                                                                     Bush  



 Planes    also    discusses    a    number    of    factors    that    it    believes    demonstrates    the  



unreasonableness of the penalty. These factors include (1) that Bush Planes made a good                                                                                                                                                                                                                                                                                                                                                                                                                                           



 faith effort to comply with ambiguous regulations; (2) that this was Bush Planes' first                                                                                                                                                                                                                                                                                                                                                                                                  



 violation; (3) that the violation was a "one-time event"; (4) that Bush Planes was trying                                                                                                                                                                                                                                                                                                                                                                                                                                        



 to comply with the Perez Opinion and federal law; (5) that this was not a particularly                                                                                                                                                                                                                                                                                                                                                                                              



 serious violation; (6) that the amount of the illegal contribution was not so large as to                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



 imply corruption; and (7) that there was no special harm because there was no indication                                                                                                                                                                                                                                                                                                                                                                                                                



 that   the   candidates   would   not   have   taken   these   flights   if   charged   the   seat   fare   the  



 Commission endorsed.   



                                                                                      Bush Planes additionally argues that the Commission's fine calculation,                                                                                                                                                                                                                                                                                                                                



 which relied on the number of days between the offense and when the violation was                                                                                                                                                                                                                                                                                                                                                                                                                                                             



 remedied,   was   not   reasonably   related   to   the   offense   and   that   the   Commission   was  



 actually ready to file a complaint in March but chose to wait to file to trigger a higher                                                                                                                                                                                                                                                                                                                                                                                                                                     



 fine.   Bush Planes contends that the days after March should not have been counted                                                                                                                                                                                                                                                                                                                                                                                                                                



 against it when calculating the fine.                                                                                                                                                               



                                           36                                         Bush Planes argues that we should consider both the fine and the costs and                                                                                                                                                                                                                                                                                                                                                                                  



 fees awarded against it when determining whether the penalty was excessive.                                                                                                                                                                                                                                                                                                                                                                                                                                                               We  

 disagree. The costs and fees awarded here appear similar to those awarded under Alaska                                                                                                                                                                                                                                                                                                                                                                                                                                      

 Rule of Civil Procedure 82, which are intended "to partially compensate a prevailing                                                                                                                                                                                                                                                                                                                                                                                                         

party for the costs to which he has been put in the litigation in which he was involved."                                                                                                                                                                                                                                                                                                                                                                                                            

De Witt v. Liberty Leasing Co. of Alaska                                                                                                                                                                                                                           , 499 P.2d 599, 602 (Alaska 1972) (discussing                                                                                                                                                                                

 attorney's fees under Alaska Rule of Civil Procedure 82).                                                                                                                                                                                                                                                                                                                        The compensatory nature of                                                                                                                                               

 these costs and fees means that they are not intended to penalize a person who commits                                                                                                                                                                                                                                                                                                                                                                                                                           

 a violation of Alaska's campaign finance laws and are imposed without specific regard                                                                                                                                                                                                                                                                                                                                                                                                                                         

 for the seriousness of the offense. Thus, we hold that the costs and fees awarded against                                                                                                                                                                                                                                                                                                                                                                                                                                  

 Bush Planes are not part of the excessive-penalty analysis.                                                                                                                                                                                                                                                                  



                                                                                                                                                                                                                                                                         -17-                                                                                                                                                                                                                                                              7063
  


----------------------- Page 18-----------------------

                                            The Commission asserts that the fine is constitutional because Bush Planes                                                                                                                                                  



"committed a serious campaign violation with the potential to significantly harm the                                                                                                                                                                                              



electoral process" and argues that comparisons to punitive damages cases are not on                                                                                                                                                                                                 



point.     The   Commission   also   argues   that   it  fairly   considered   Bush   Planes'   assets,  



experience, and filing history and that a substantial fine was appropriate considering that                                                                                                                                                                                      



Bush Planes' principal is a sophisticated participant in Alaska's election process and                                                                                                                                                                                          



Bush   Planes'   actions   caused   two   novice   candidates   to   violate   the   Commission's  



regulations. The Commission contends that its inclusion of the days between the end of                                                                                                                                                                                                



March and when the complaint was filed in July was reasonable because (1) Bush Planes                                                                                                                                                                                   



"knew or should have known it was charging far less than a commercially reasonable                                                                                                                                                                       



rate for the services it offered" and (2) the Commission was still investigating and                                                                                                                                                                                            



seeking documents in April.                                               



                                            1.	                   TheCommissiondidnot                                                                  impose anunconstitutionallyexcessive                                                                   

                                                                  fine.  



                                            We have held that the a penalty is unconstitutionally excessive when it is  

                                                                                                                                                                                                                                                                                        



                                                                                 37  

obviously unreasonable.                                                                                                                                                                                                                                                              

                                                                                           "The penalty cannot be 'so severe and oppressive as to be  

                                                                                                                                                                                                                                              38  The federal  

                                                                                                                                                                                                                                                                      

wholly [disproportionate] to the offense and obviously unreasonable.' " 



case both parties cite, United States v. Bajakajian, similarly holds that a fine "must bear  

                                                                                                                                                                                                                                                                               

some relationship to the gravity of the offense that it is designed to punish."39  

                                                                                                                                                                                                                              



                      37                     VECO   Int'l,   Inc.   v.   Alaska   Pub.   Offices   Comm'n,   753   P.2d   703,   716  



(Alaska 1988). We note that because this is a question of constitutional law "[we] apply                                                                                                                                                                                   

our   independent   judgment."   State,   Dep't   of   Revenue   v.   Andrade,   23  P.3d  58,   65  

(Alaska 2001).   



                      38                     VECO  Int'l,  753  P.2d  at  716  (quoting  St.  Louis  Iron  Mountain  &  

                                                                                                                                                                                                                                                                                     

Southern Ry .Co. v. Williams, 251 U.S. 63, 67 (1919)).  

                                                                                                                                                          



                      39                    524 U.S. 321, 334 (1998).  

                                                                                                          



                                                                                                                                        -18-	                                                                                                                                7063
  


----------------------- Page 19-----------------------

           The prohibition on corporate contributions was part of a broad campaign finance                                           



                                    40  

reform   bill   in   1996.                                                                                                                 

                                           That  reform  had  several  purposes.                            Relevant  here  is  the  



                                                                                                                                               

legislature's  finding  that  "organized  special  interests  are  responsible  for  raising  a  



                                                                                                                                      

significant  portion  of  all  election  campaign  funds  and  may  thereby  gain  an  undue  

                                                           41  The legislature was also concerned that "penalties  

                                                                                                                                 

influence over . . . elected officials." 



for violations of the existing campaign finance laws [were] far too lenient to deter  

                                                                                                                                        

misconduct."42              The legislature intended "to substantially revise Alaska's campaign  

                                                                                                                                 



finance laws in order to restore the public's trust in the electoral process and to foster  

                                                                                                                                        

good government."43                  In so doing, it also increased the per-day statutory penalty from  

                                                                                                                                         

$10 to $50.44  

             



                      Bush  Planes  attacks  the  fine  imposed  as  unconstitutionally  excessive  

                                                                                                                                 



because the amount of its contribution was substantially less than the amount of the fine.  

                                                                                                                                          



Bush Planes also asserts that its violation "was not particularly grave" because it gave  

                                                                                                                        



"only  slightly  more than  double  what  an  individual  could  have  contributed  to  one  

                                                                                                                                           

                   45   Bush Planes notes that candidates who expect to raise or spend less than  

candidate."                                                                                                                               

$5,000 may seek an exemption from reporting contributions to their campaigns,46  

                                                                                                                                      which  



           40         See  ch.  48,  §   1,  SLA   1996.  



           41         Ch.  48,  §   1(a)(3),  SLA   1996.  



           42         Ch.  48,  §   1(a)(6),  SLA   1996.  



           43         Ch.  48,  §   1(b),  SLA   1996.  



           44         Ch.  48,  §  22,  SLA   1996.  



           45         See   AS    15.13.070(b)(1)   (limiting   individual   contributions  to  certain  



individuals  and  organizations  to  $500  per  year).  



           46         AS   15.13.040(g);  see  also  2  AAC  50.286(a).  



                                                                     -19-                                                               7063
  


----------------------- Page 20-----------------------

Bush Planes argues demonstrates that the legislature would not consider its contributions                                                                                                    



to Ravenmoon and Kalmakoff a threat to the democratic process.                                                                                     



                                  But Bush Planes' focus on the amount of the fine compared to the amount                                                                                                  



of   the   improper   contribution   fails   to   account   for   the   problems   the   legislature   was  



attempting to solve. The legislature believed that the public had lost faith in the electoral                                                                                                            



process and that organized special interests, which ostensibly included corporations, had                                                                                                                            



gained undue influence over elected officials by contributing substantial sums of money                                                                                                                      

                       47        And  the  legislature  appears  to  have  decided  to  ban  direct  corporate  

to   them.                                                                                                                                                           



contributions to individual candidates for these reasons.  

                                                                                                                           



                                  In this context Bush Planes did not simply donate approximately $1,200  

                                                                                                                                                                                                            



illegally.                   Bush  Planes'  actions  called  into  question  the  fairness  of  the  Lake  and  

                                                                                                                                                                                                                    



Peninsula Borough's 2010 election and the impartiality of these newly elected assembly  

                                                                                                                                                                                                       



members.  Bush Planes flew the candidates throughout the borough, a borough where  

                                                                                                                                                                                                              



many  communities  can  only  be  accessed  by  plane.                                                                                            And  this  travel  allowed  the  

                                                                                                                                                                                                                     



candidates to promote themselves to individual voters face-to-face.  

                                                                                                                                            



                                  Moreover, the fine both punishes Bush Planes and serves as a deterrent to  

                                                                                                                                                                                                                         



other corporations that might consider flouting the prohibition on direct contribution.  

                                                                                                                                                                                             



Absent  a  substantial  fine,  a  corporation  may  be  tempted  to  provide  illegal  direct  

                                                                                                                                                                                                              



contributions and write off those contributions and any associated fine as a cost of doing  

                                                                                                                                                                                                                



business. A substantial fine sends the signal that the Commission treats these violations  

                                                                                                                                                                                                     



seriously.  Given these concerns, the fine was not obviously unreasonable and thus not  

                                                                                                                                                                                                                      



unconstitutionally excessive.  

                                                



                 47  

                                                                                                                           

                                  Ch. 48, § 1(a)(1), (a)(3), (b), SLA 1996.  



                                                                                                          -20-                                                                                                             7063  


----------------------- Page 21-----------------------

                                          2.	                  Punitive damages case law is either irrelevant or supports the                                                                                                                                      

                                                               fine.  



                                          Bush Planes argues that we should look to punitive damages case law for                                                                                                                                                   



guidance and that the fine imposed here would be impermissible if this were a punitive                                                                                                                                                           



damages case.                                 But our prior discussions of punitive damages case law does not support                                                                                                                                 



Bush Planes' argument.                     



                                          The federal due process analysis that guides the determination of when                                                                                                                                            



punitive damages are unconstitutional flows from the concept that the tortfeasor should                                                                                                                                                                 



                                                                                                                                                                                                                                                    48  

have some "notice of the magnitude of the sanction that a state might employ."                                                                                                                                                                             Here,  



                                                                                                                                                                                                                                                     

Bush Planes had notice of the magnitude of the sanction the State might employ because  



                                                                                                                                                                                                                                               49  

                                                                                                                                                                                                                      

the sanction the Commission employed was the maximum statutory penalty. 



                                                                                                                                                                                                                                                          

                                          And we have never endorsed a particular "fixed ratio, or range of ratios,  

                                                                                                                                                                                                           50      We have approved  

                                                                                                                                                                                                                                                

between punitive and compensatory damages" under Alaska law. 



                     48                   Casciola v. F.S. Air Serv., Inc.                                                             , 120 P.3d 1059, 1067 (Alaska 2005) (citing                                                                       



BMW of North Am., Inc. v. Gore                                                                        , 517 U.S. 559, 574-75 (1996)).                                          



                     49                  Hutton v. Realty Execs., Inc., 14 P.3d 977, 980 (Alaska 2000) ("As a  

                                                                                                                                                                                                                                                                         

general rule, people are presumed to know the law.").  

                                                                                                                                                   



                     50                   Casciola,  120  P.3d  at  1064  (citing Fyffe  v.  Wright,  93  P.3d  444,  457  

                                                                                                                                                                                                                                                                

(Alaska 2004)).  

                          



                                                                                                                                 -21-	                                                                                                                        7063
  


----------------------- Page 22-----------------------

                                                                                                                     51          52                 53  

previous punitivedamagesawards                             with ratiosofapproximately                       26:1,       18:1,   and 50:1.                



                                                                                                                                                

The ratio in this case is approximately 20:1.  Our case law does not indicate that a 20:1  



                                 

ratio is inherently impermissible.  



                                                                                                                                                  

                       Instead of taking a strict mathematical approach, we have considered the  

                                                                     54   These factors involve considerations similar  

                                                                                                                                           

seven factors listed in AS 09.17.020(c). 



to those the Commission discussed in this case, including the likelihood of harm, the  

                                                                                                                                                  



defendant's awareness of the likely harm, the duration of the conduct, the defendant's  

                                                                                                                                   

financial condition, and deterrence.55  

                                           



                       A  review  of  those  factors  supports  the  Commission's  imposition  of  a  

                                                                                                                                                     



significant  fine.              Bush  Planes  is  a  sophisticated  entity  with  substantial  assets  and  

                                                                                                                                    



knowledgeable management. Its actions called into question the fairness of the Lake and  

                                                                                                                                                 



Peninsula  Borough's  2010  election.                                  A  $25,500  fine  sends  a  message  that  the  

                                                                                                                                                 



Commission takes these kinds of violations seriously and helps deter other corporations  

                                                                                                                                  



from engaging in similar misconduct. In sum, the award is not so excessive that it would  

                                                                                                                                             



violate Alaska or federal law regarding punitive damages.  

                                                                                     



            51         Laidlaw Transit, Inc. v. Crouse ex rel Crouse                                      , 53 P.3d 1093, 1096-97     



(Alaska 2002) (affirming an award of $500,000 in punitive damages and $19,259 in                                                                    

compensatory damages).   



            52         IBEW, Local 1547 v. Alaska Util. Constr., Inc., 976 P.2d 852, 853-55  

                                                                                                                                          

(Alaska 1999) (affirming an award of $212,500 in punitive damages and compensatory  

                                                                                                                               

damages of $11,622.05).  

                      



            53         Norcon,  Inc.  v.  Kotowski,  971  P.2d  158,  161,  174-77  (Alaska  1999)  

                                                                                                                                            

(remitting  a  $3,000,000  punitive  damages  award  to  $500,000  on  a  compensatory  

                                                                                                                              

damages award of $10,000).  

                                  



            54         Casciola, 120 P.3d at 1065.  

                                                               



            55         AS 09.17.020(c)(1)-(c)(2), (c)(4), (c)(6)-(c)(7).  

                                                                                    



                                                                        -22-                                                                  7063
  


----------------------- Page 23-----------------------

                    3.	       The Commission's fine bore a reasonable relationship to Bush  

                                            

                              Planes' offense.  



                                                                                                                       

                    Bush Planes also argues that the method the Commission used to calculate  



                                                                                                                               

the fine bears no reasonable relationship to the offense.  Bush Planes contends that the  



                                                                                                                                

fine served a minimal deterrent and remedial function because for at least the first 90  



                                                                                                                               

days after the violations, Bush Planes was unaware, and could not have known, that the  



                                                                                                              

Commission's staff was investigating it. Bush Planes also alleges that the Commission's  



                                                                                                                          

staff purposely waited almost 120 days after they began drafting a complaint in March  



                                                                         

2011 before filing it as a way of increasing the penalty.  



                                                                                                                                     

                    First, we find no support in the record for Bush Planes' latter assertion.  



                                                                                                                                 

While the record  indicates that the Commission's staff may have begun  drafting  a  



                                                                                                                              

complaint  as  early  as  the  end  of  March  2011,  the  evidence  also  indicates  that  the  



                                                                                                                               

Commission's staff was continuing to investigate the allegations.  Moreover, there are  



                                                                                                                    

no allegations of bias against the attorney who was involved in drafting the complaint;  



                                                                                                            

nor has Bush Planes presented any evidence that suggests a deliberate delay.  



                                                                                                                       

                    Second, Bush Planes' contentionthat theCommission improperly included  



                                                                                                                          

days before Bush Planes became aware that the Commission's staff thought Bush Planes  



                                                                                                       

had violated the law in calculating the fine is unpersuasive.  Bush Planes argues that  



                                                                                                                    

imposing a fine before it became aware of the staff's concerns "achieves no reasonable  



                                                                                                                             

deterrent or remedial goal." But there is no requirement that a violator of campaign laws  



                                                                                                                            

must be made aware that it violated the law before a fine can be imposed.  Even if Bush  



                                                                           

Planes were unaware, a fine calculated based on the time Bush Planes was unaware of  



                                                                                                                                     

the violation still serves a punitive function even if it does not serve a remedial function.  



                                                                                                              

And while including the time when Bush Planes was not aware that the Commission's  



                                                                                                                             

staff believed there was a violation may not have a short-term deterrent effect, it may  



                                                                                                                        

have a long-term deterrent effect on Bush Planes and other actors that Bush Planes'  



                                                              -23-	                                                        7063
  


----------------------- Page 24-----------------------

argument does not take into account.                                                     Thus, we hold that the fine bore a reasonable                                     

relationship to the alleged offense.                                          56  



                                                                                                                                                                                   

                C.	            The Superior Court Did Not Abuse Its Discretion When It Denied  

                                                                                                                                                                   

                              Bush Planes' Motion To Supplement The Record And Briefing.  



                                                                                                                                                                                 

                              Finally,  Bush  Planes  argues  that  its  due  process  rights  were  violated  



                                                                                                                                                                                            

because the Commission and its staff were biased against it.  But the evidence of any  



                                                                                                                                                                                        

potential due process violation is not properly before us because the superior court  



                                                                                                                                                                                     

denied Bush Planes' motion to supplement the record with the materials Bush Planes  



                                                                                                                                                                             

alleges shows evidence of bias.  Bush Planes claims that the superior court abused its  



                                                                                                                  57  

                                                                                              

discretion in denying the motion, but we disagree. 



                                                                                                                                                                                             

                              First, the motion was not timely.  Briefing on Bush Planes' appeal to the  



                                                                                                                                                                                   

 superior court ended in early November 2012.  Bush Planes then learned of and appears  



                                                                                                                                                                                               

to have obtained much of the information it sought to add to the superior court record by  



                                                                                                                                                                                    

the end of January 2013.  Despite that, Bush Planes waited approximately three months  



                                                                                                                                       

until it moved to supplement the record shortly before oral argument.  



               56              Our approval of the fine imposed in this case should not be considered                                                                      



blanket approval of the statutory penalty. While we hold the total fine imposed here was                                                                                                    

not excessive, we can envision a case where the application of the $50 per day maximum                                                                                        

 fine would be unconstitutionally excessive.                                                        The determination is fact-intensive and an                                                 

individualized assessment of the penalty is the correct analysis.                                                           



               57             We review the denial of a motion to supplement the record for abuse of  

                                                                                                                                                                                               

discretion.  Southwest Marine, Inc. v. State, Dep't of Transp. & Pub. Facilities, Div. of  

                                                                                                                                                                                                

Alaska Marine Highway Sys. , 941 P.2d 166, 172 (Alaska 1997).  We may affirm the  

                                                                                                                                                                                             

 superior court's denial on any basis supported by the record. Smith v. Stafford, 189 P.3d  

                                                                                                                                                                                          

 1065, 1070 (Alaska 2008).  

                                               



                                                                                              -24-	                                                                                      7063
  


----------------------- Page 25-----------------------

                        Second, it does not appear that the evidence Bush Planes wanted to submit                                              



                                                                                                                58  

would have changed the outcome of the liability determination.                                                                                  

                                                                                                                    Whether Bush Planes  



                                                                                                                                             

violated   Alaska's   campaign   finance   laws   ultimately   depended   on   the   proper  



                                                                                                                                                  

determination of "commercially reasonable rate," and we have reviewed that issue using  



                                                                                                                                                     

a standard that not only granted no deference to the Commission's interpretation but  



                                                                                                                                                   

actually favored Bush Planes.  Thus, any bias that the Commission or its staff may have  



                                                                                                                       

had against Bush Planes would have had no effect on the liability issue.  



                                                                                                                                                

                        Finally, the State persuasively argues that the evidence Bush Planes sought  



                                                                                                                                                      

to introduce was irrelevant given the context and the timing of the case. We note that the  



                                                                                                                                          

majority of the material Bush Planes wanted to introduce alleged that staff members  



                                                                                                                                  

Anderson and Dauphinais - and to a lesser extent Commission Chair Hickerson -  



                                                                                           

were biased against Bush Planes.  The allegations against the other Commissioners -  



                                                                                                                                                 

all of whom concurred in the liability, fine, and costs and fees decisions - were based  



                                                                                                                                              

mainly on an affidavit from a former staff member.  That staff member recalled specific  



                                                                                                                                                  

interactions with Anderson, Dauphinais, and Hickerson that caused him to believe those  



                                                                                                                                           

three were biased against Gillam and his companies.   The staff member's affadavit  



                                                                                                                                           

complained that the Commission had rejected an advisory opinion he drafted "without  



                                                                                                                                            

a legal basis and primarily because of who requested it," but Bush Planes never provided  



any foundation for that allegation.  The same lack of specificity significantly weakens  



                                                                                                                                                 

the staff member's claim that it would be "impossible for [Gillam] . . . to get a fair shake  

                                                                                  59   Overall, there was little, if any, reliable  

                                                                                                                                              

from . . . certain members of the Commission." 



            58          Southwest Marine, Inc.                    , 941 P.2d at 179-80.         



            59          We   recognize   the   parties   continue   to   litigate   issues   of   bias   in   other  



proceedings.  See, e.g.                 ,  RBG Bush Planes LLC, et al. v. Alaska Pub. Offices Comm'n                                                     ,  

Case No. 3AN-14-06497 CI.  Our discussion here should in no way be interpreted as  

                                                                                                                                                       

                                                                                                                                   (continued...)  



                                                                          -25-                                                                    7063
  


----------------------- Page 26-----------------------

evidence that the other members of the Commission were biased individually or even                                                                                                                                                                                                                                                                                   



that   the   alleged   bias   of   Hickenson   or   the   staff   members   affected   the   proceeding.  



Furthermore, Dauphinais's allegedly biased statement was made nine months after the                                                                                                                                                                                                                                                                                                       



administrative decision was issued, suggesting that the allegations have little weight                                                                                                                                                                                                                                                                                  



given the timing of this case.                                                                              



                                                             Therefore, we hold that the superior court did not abuse its discretion when                                                                                                                                                                                                                                       



it denied Bush Planes' motion to supplement the record.                                                                                                                                                                                                             Given the delay in filing the                                                                                         



motion to supplement, the standard of review we applied to the liability determination,                                                                                                                                                                                                                                               



and the lack of specificity regarding the allegations against the Commissioners, the                                                                                                                                                                                                                                                                                                     



superior court's decision was not manifestly unreasonable.                                                                                                                                                 



V.                             CONCLUSION  



                                                             For the reasons stated above, we AFFIRM the superior court's decision to                                                                                                                                                                                                                                                           



affirm  the  Commission's  determination  that  Bush  Planes  made  illegal  corporate  

                                                                                                                                                                                                                                                                                                                                                          



contributions   to   candidates   for   elected   office,   AFFIRM   the   fine   the   Commission  



imposed, and AFFIRMthe superior court's denial of Bush Planes' motion to supplement                                                                                                                                                                                                                                                                 



the record.   



                              59(...continued)  



                                                                                                                                                                                                                                                                                  

expressing an opinion regarding the evidence in those other matters.  



                                                                                                                                                                                            -26-                                                                                                                                                                                   7063  

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