Opinion ID: 1239050
Heading Depth: 3
Heading Rank: 3

Heading: Did the Superior Court Abuse Its Discretion by Establishing the Approval Process?

Text: Weiss also attacks the process under which the settlement was negotiated and approved. Specifically, he objects to (1) the superior court's definition of the class, (2) the conduct of negotiations between the parties, (3) the notice to class members and the court's consideration of class comments, and (4) the schedule established by the court for consideration of the settlement. [28]
The superior court redefined the class in 1994 as all persons who are past, present and future beneficiaries of the mental health lands trust created by Congress in the Alaska Mental Health Enabling Act of 1956. The beneficiaries are residents of the State of Alaska who are mentally ill, mentally defective or retarded, chronically alcoholic suffering from psychoses, senile and as a result of such senility suffer major mental illness, and such other persons needing mental health services as the legislature may determine. The trial court ordered this redefinition on the motion of Weiss and AMHA to make the class co-extensive with the beneficiaries of the trust as determined by the superior court's Beneficiary Decision in 1988. Weiss argues that the superior court's Beneficiary Decision erroneously included the developmentally disabled [29] as beneficiaries of the trust and hence members of the class. The superior court based its Beneficiary Decision on a review of the legislative history of the AMHEA. The court concluded, and Weiss does not dispute, that the version of the bill originally passed by the House included the developmentally disabled as beneficiaries of the trust. Weiss asserts, however, that the Senate disagreed that they should be included. As evidence for this position, he relies on a comment made by the sponsor of the bill in the Senate, Senator Jackson, that [t]here are a lot of people who are mentally retarded that should not be under the provision of this bill. The context of this remark, however, suggests that Senator Jackson was concerned that inclusion of the developmentally disabled under the AMHEA's definition of mentally ill might lead to their imprisonment or stigmatization, not that he felt they should be excluded as beneficiaries. Furthermore, Senator Jackson never came to a conclusion on the matter; after a brief exchange, he merely states, I do not know. My mind is open.... His statement thus provides no evidence of legislative intent to exclude the developmentally disabled as beneficiaries of the trust. Weiss also argues that the Senate's refusal to adopt language suggested by the Department of Health, Education, and Welfare (HEW) demonstrates its intent not to include the developmentally disabled. The proposed language would have replaced the phrase mentally ill in the House version of AMHEA § 202(e) with the phrase the mental health program of Alaska, including (but not by way of limitation) the out-patient and inpatient care and treatment of the mentally ill, and of the mentally defective and mentally retarded, of Alaska. The version of the AMHEA finally passed by the Senate retained the phrase mental health program, but dropped the remainder of HEW's proposed language. The report by the House managers noted the difference between the House version, defining the phrase mentally ill to include the developmentally disabled, and the Senate version, using the phrase mental health program with no definition. The managers stated that they accepted this Senate amendment which broadens the use of the revenues for use of the Alaska mentalhealth program rather than for the hospitalization and care of the mentally ill in Alaska. Because the House version included the developmentally disabled, the superior court reasonably concluded that a version that broadens the program would also include those individuals. Moreover, the relatively vague phrase mental health program does not support an intent by the Senate to exclude potential beneficiary groups. The Senate's decision not to adopt the rest of HEW's proposed amendment shows little more than a desire to avoid cumbersome and unnecessary language. The superior court's conclusion is also supported by other parts of the AMHEA. Along with the land grant, the AMHEA provided for grants to the Territory of Alaska to assist it to carry out plans, submitted by the Governor of the Territory or his designee and approved by the Surgeon General, for an integrated mental health program for the Territory, including outpatient and inpatient care and treatment. AMHEA § 201. This suggests that Congress intended the meaning of the term mental health program to be determined by the Territory and the Surgeon General. The superior court found, and Weiss does not dispute, that the first mental health program enacted by the Territory in 1957 defined mentally ill individual as an individual having a psychiatric or other disease or senile changes which substantially impair his mental health or who is mentally deficient. The superior court also noted that one impetus for passage of the AMHEA was to end the need for placing Alaskans with mental problems in Morningside Hospital in Portland. These Alaskans included the developmentally disabled. Therefore, we hold that the superior court did not err in determining that Congress intended the developmentally disabled to be beneficiaries of the trust and hence members of the plaintiff class in this litigation.
Weiss argues that the HB 201 settlement was the result of collusion between the State and counsel for the H.L. and Bosel Intervenors. [30] Weiss claims that collusion occurred between the State and Proponents because Proponents (1) caused the State to withdraw from the Chapter 66 Settlement Agreement by being willing to support the HB 201 settlement, (2) supported the passage of legislation [HB 201] that provided for the dismantling of the trust if their negotiated settlement is not approved by the courts, (3) negotiated a settlement and a schedule that would not allow judicial determination of whether the [Trust Authority's] key right to spend the Trust's income free of legislative appropriation was constitutional, and (4) assured the mental health community that they would only accept a settlement that contained certain elements to gain their support and then negotiated a settlement that did not contain those elements. The superior court considered these arguments in its decision granting preliminary approval and found no evidence of collusion. Instead, it found that Weiss's points merely demonstrated that the attorneys had legitimate disagreements. A trial court may not approve a proposed settlement if it is the product of fraud or overreaching by, or collusion among, the negotiating parties. In re Pacific Enters. Secs. Litig., 47 F.3d 373, 378 (9th Cir.1995) (quotation omitted). Black's Law Dictionary defines collusion as follows: An agreement between two or more persons to defraud a person of his rights by the forms of law, or to obtain an object forbidden by law. It implies the existence of fraud of some kind, the employment of fraudulent means, or of lawful means for the accomplishment of an unlawful purpose. Black's Law Dictionary 264 (6th ed. 1990). In the absence of evidence to the contrary, courts generally attach `a presumption of correctness ... to a class settlement reached in arms length negotiations between experienced, capable counsel after meaningful discovery.' Herbert B. Newberg & Alba Conte, 2 Newberg on Class Actions § 11.28, at 11-59 (1992) (quoting Manual for Complex Litigation, Second § 30.44 (1985)). Evidence suggesting collusion may include significant differences in the relief received by different groups within the class or the simultaneous negotiation of attorney's fees and class claims. See Manual for Complex Litigation, Third § 30.42 (1995). Given these principles, we conclude that even if Weiss's first three allegations are true, they do not establish collusion. As Proponents point out, Weiss does not allege that secret meetings were held, that Proponents' counsel excluded his counsel from meetings, that settlement proposals were not relayed as they were received, that he was not allowed to comment on the proposals, or that he was not free to negotiate independently with the State. Furthermore, there is no argument that Proponents or Proponents' counsel benefitted from the settlement unfairly. The superior court properly found that these arguments show merely that the attorneys had legitimate disagreements. Weiss's principal evidence supporting the fourth allegation is a letter written by counsel for AMHA purportedly documenting an agreement as to negotiating strategy between counsel. The superior court specifically found that the attorneys had legitimate disagreements over the interpretation of that letter. While Weiss argues that the letter embodied a formal agreement representing absolute bottom line requirements for a settlement, Proponents interpret the letter as evidence of Weiss's counsel's continued support for the basic settlement proposal. Considering the ambiguous language of the letter, the fact that counsel for Proponents never responded to it, and the continued willingness of counsel for Weiss to participate in a settlement even after the alleged agreement had been breached, the superior court did not err in finding that the letter showed no evidence of collusion on the part of counsel for the H.L and Bosel Intervenors.
Notice of the proposed settlement was sent to every household in Alaska and to 1400 providers of mental health and other services. In addition, notice was published in newspapers, announced on radio and television, distributed on audio cassette, published in Braille and large print, and translated into Spanish, Filipino, Inupiaq, and Yupik. The notice allowed for comments by members of the public, including family, guardians and friends of beneficiaries, and provided a form allowing commentors to identify themselves as beneficiary members of the class, guardians or relatives of a class member, or members of the public. The trial court received 1088 comments, about 150 from class members, eighty from advocacy groups or people indicating they work in the mental health field, and about 170 from family members and guardians of class members. The court treated comments from these groups as class comments, but considered all others public comments and gave them little weight. Weiss argues that the superior court abused its discretion in approving the content of the notice and by allowing individuals who were not members of the class to comment. Weiss objects to the content of the notices, asserting that it: (1) was silent on the State's unilateral right to alter the settlement; (2) failed to inform the class of the risk that the power of the Trust Authority to spend trust funds without legislative appropriation might be found unconstitutional; (3) did not mention that more litigation might be required to ensure that land management regulations comply with the AMHEA; (4) did not urge the class to consider the importance of cash to them; (5) did not describe the value of the original Trust and the value of the HB 201 Settlement Trust; (6) stated that the settlement contained 930,000 acres as compared with 1,000,000 acres without any kind of disclosure that only land that no one else wanted is included; (7) incorrectly suggested that the settlement commits the State and Trust Authority to providing an adequate mental health program; and (8) falsely stated that the Trust Authority would oversee management of trust land. According to one authority, [31] [t]he contents of a Rule 23(e) notice are sufficient if they inform the class members of the nature of the pending action, the general terms of the settlement, that complete and detailed information is available from the court files, and that any class member may appear and be heard at the hearing. The notice should be brief and reasonably clear to the minimally sophisticated layperson. However, the terms of the settlement and the course of the litigation should not be oversimplified to increase readability at the expense of accuracy and completeness. Of course, as the length of litigation, the complexity of issues, and the variety of terms of settlement increase, their description in a Rule 23(e) notice will generally be more elaborate.... [W]here some multiple plaintiffs oppose a proposed class settlement, the court in its discretion may insist that notice of the settlement under those circumstances be neutral in tone and should not include either a party's or the court's arguments for or against settlement. 2 Herbert B. Newberg & Alba Conte, Newberg on Class Actions § 8.32 (3d ed. 1992) (footnotes omitted). The notice provided by the superior court meets these criteria. Moreover, adopting Weiss's suggestions would have created a substantial risk of either misleading class members or violating the neutral tone called for by the class's split over the settlement. The trial court successfully struck a difficult balance between providing enough information for the class to evaluate the settlement and making the notice understandable to as many class members as possible. Therefore we conclude that the superior court did not abuse its discretion by approving the content of the notice. In arguing that the superior court abused its discretion by allowing comments by individuals who are not class members, Weiss relies on Gould v. Alleco, Inc., 883 F.2d 281 (4th Cir.1989). This case stands for the unobjectionable proposition that only class members have standing to object to settlement proposals. Id. at 284. The Gould court, however, explicitly stated that its ruling regarding the lack of standing of nonclass members to object to proposed settlements should not be read to restrict the trial court's authority to consider or even solicit the views of non-parties to proposed class settlements. Id. at 284 n. 3. Accepting comments from individuals outside of the class was particularly appropriate in this case because, as the superior court stated, many members of the class may not be able to understand the notice or speak for themselves. Thus, the court properly considered the comments from family members, guardians, advocacy groups, mental health professionals, and others working directly with trust beneficiaries as class comments. Furthermore, the court, by including a space on the notice form for commentors to identify their status with respect to the litigation, provided adequate protection against the risk of improperly considering comments from the general public. Judge Greene adopted an excellent procedure both for disseminating notice of the proposed settlement and for distinguishing class comments from public comments so as to evaluate each appropriately.
Finally, Weiss argues that he was denied due process because the superior court did not grant adequate time to brief, prepare for and conduct the hearings and did not give the time to its deliberations necessary to fulfill [his] right to a fair and impartial decision. We have stated that due process under the state constitution requires notice and opportunity for hearing appropriate to the nature of the case. Carvalho v. Carvalho, 838 P.2d 259, 262 (Alaska 1992) (citations omitted). The United States Supreme Court has further stated that due process under the Federal Constitution requires that every person shall have the protection of [a] day in court, and the benefit of the general law, a law which hears before it condemns, which proceeds not arbitrarily or capriciously, but upon inquiry, and renders judgment only after trial. Truax v. Corrigan, 257 U.S. 312, 332, 42 S.Ct. 124, 129, 66 L.Ed. 254 (1921). Weiss cites a number of cases in support of his position that the superior court failed to give him adequate time to satisfy his due process rights to contest the HB 201 settlement. In these cases, however, the injured party was denied all opportunity for a hearing, not merely constrained by the court's schedule. [32] E.g. Carvalho v. Carvalho, 838 P.2d 259, 263 (Alaska 1992); Frontier Saloon, Inc., v. Alcoholic Beverage Control Bd., 524 P.2d 657, 658 (Alaska 1974). In this case, the trial court established a sevenmonth schedule to consider the settlement and conducted a four-day evidentiary hearing on preliminary approval and a ten-day evidentiary hearing on final approval. Weiss introduced considerable testimony in support of his position, including testimony of twelve expert witnesses at the final approval hearing, and exhaustively briefed his opposition to both preliminary and final approval as well as a number of other related issues. Weiss clearly had ample opportunity to present his case. Furthermore, Weiss fails to identify how any time constraints caused him serious prejudice. We will not disturb a trial court's refusal to grant a continuance unless a party has been seriously prejudiced by that refusal. House v. House, 779 P.2d 1204, 1206 (Alaska 1989). In this case, as in House, the lower court's ruling was based on a review of all the relevant evidence and .. . the complaining party had reasonable opportunity in court to introduce evidence and contest the other side's evidence. Inability to mount a successful case does not mean that due process was violated or that an abuse of discretion occurred. Id. at 1207. Therefore we hold that the superior court did not violate Weiss's due process rights by establishing and adhering to its schedule for final approval. We also reject Weiss's assertion that the superior court failed to give adequate consideration to his claims. Judge Greene's thorough, deliberative, and well-reasoned analysis is documented by her fifty-eight page preliminary approval memorandum, her 137-page final approval memorandum, and her other decisions resolving earlier stages of this litigation. We are satisfied that Judge Greene gave Weiss's position the full benefit of her able consideration.