Court Opinion

ID: 9786103
Source: CourtListenerOpinion
Date Created: 2023-08-30 23:47:27.103245+00
Date Added: 2024-06-11T07:34:39.000358
License: Public Domain

BRYNER, Justice,
dissenting.
I disagree with this opinion and would affirm the superior court’s ruling on fees. I would reach this conclusion under our own civil rules, without deciding the issue of federal preemption.
As I read them, Civil Rules 68 and 82 would not support an award of fees to Catalina. Civil Rule 68 expressly required Catalina’s post-offer fees to be determined by looking to the fees that Catalina would have recovered under Rule 82 if it had prevailed in this action: “[I]f the offeree is the party making the claim, ... the offeree must pay the costs and attorney’s fees incurred after the making of the offer (as would be calculated under Civil Rules 79 and 82 if the offeror were the prevailing party).”1 If Catalina had prevailed against the Pierces, Rule 82 would have precluded it from recovering any prevailing-party fees. Specifically, Rule 82(a) provides: “Except as otherwise provided by law or agreed to by the parties, the prevailing party in a civil case shall be *132awarded attorney’s fees calculated under this rule.”2 Here, the issue of prevailing-party fees is in fact “otherwise provided by law”: the Magnuson-Moss Act does not permit fee awards to prevailing defendants, expressly providing for awards only to a prevailing “consumer.”3 Since Rule 82(a) gives controlling effect to the Magnuson-Moss Act’s fee provision and Rule 68 expressly limits post-offer fees to those that “would be calculated under Civil Rule[ ] ... 82 if the offeror were the prevailing party,” 4 Catalina has no right to recover post-offer fees under Rule 68.
Today’s opinion reaches the contrary conclusion by reading Rule 68(b)(1) as if it referred only to the mechanical process of calculating the amount of fees, as set out in Rule 82(b). But this interpretation is textually implausible. If Rule 68(b)(1) had simply been intended to direct how the amount of the offeror’s award should be determined, then it could easily have pointed specifically to Civil Rule 82(b), which expressly deals with the “Amount of Award[s]” made under that rule.5 Instead Rule 68(b)(1) was phrased broadly to require that fees be calculated under “Rule 82.” This broad reference to Rule 82 in its entirety encompasses subsection 82(a). By referring to fees “calculated” under Rule 82, moreover, Rule 68(b)(1) similarly points beyond Rule 82(b)’s “Amount of Awards” provision, since Rule 82(a) is the only subsection of Rule 82 that uses the word “calculated.”
The opinion’s narrow reading of Rule 68(b)(1) suffers from logical as well as textual problems. By reading Rule 68(b)(1) to be mandatory and interpreting it to completely exclude Rule 82(a)’s “otherwise provided” exception, the opinion necessarily suggests the improbable conclusion that the offer-of-judgment rule “must”6 prevail over all exceptions set out in Rule 82(a) — that it would prevail, for example, even over a freely negotiated contract to waive recovery under the offer-of-judgment rule (an agreement that would otherwise fall within Rule 82(a)’s exception for provisions “otherwise ... agreed to by the parties,” which the opinion finds irrelevant for purposes of applying Rule 68(b)(1)).7
By contrast, interpreting Rule 68(b)(l)’s reference to Rule 82 as one that encompasses all provisions of Rule 82 offers the advantages of being textually faithful to Rule 68’s language and logically sound. By looking to the underlying cause of action to determine whether Rule 68 requires the offeree to pay fees, this interpretation aligns Alaska’s offer-of-judgment provision with the approach adopted by the United States Supreme Court in Marek v. Chesny8 and numerous federal cases interpreting Marek.9 Wright and Miller approvingly describes the prevailing federal approach adopted in Marek as follows:
[T]he Supreme Court was careful to specify in Marek that only “properly awarda-ble” costs were to be awarded to defendants, and the lower courts have properly held that this means that civil-rights defendants can recover their fees as a part of costs under Rule 68 only if they can satisfy the otherwise-applicable standard for recovery by defendants.[10]
Interpreting Rule 68 to embody this approach seems especially appropriate from a historical perspective: Rule 68(b)(l)’s language requiring an offeror’s fees to be awarded “as would be calculated under Civil Rule[ ] ... 82 if the offeror were the prevailing party” was added to Rule 68 in 1987, soon after Marek was decided. The timing of this amendment suggests that it meant to follow Marek’s approach of determining the offeror’s entitlement to attorney’s fees by looking to the statute governing the underly*133ing cause of action. This interpretation similarly comports with our own case law,in analogous situations, which has consistently recognized that specific fee provisions in statutes creating substantive causes of action ordinarily supersede the general provisions of Rule 82.11 Further, as I explain below, this interpretation also advances the Magnu-son-Moss Act’s primary goal of encouraging consumers to pursue small warranty claims, thus avoiding the troubling federal preemption problems caused by the opinion’s narrow reading of Rule 68.
For all these reasons, I would conclude that, because Rule 82(a) would bar Catalina from recovering prevailing-party fees if it prevailed in this action, Rule 68(b)(1) did not entitle Catalina to an award of post-offer fees. While this reading of Rule 68 would make it unnecessary to resolve the question of federal preemption, the opinion’s resolution of that issue requires me to address the point.
Initially, as to the first prong of the federal preemption test, I disagree with the opinion’s premise that the Magnuson-Moss Act’s “failure to award fees to defendants” amounts to “silence” on the issue of a defendant’s right to prevailing-party fees, and so “distinguishes Magnuson-Moss from other federal laws that place limits on the circumstances in which defendants can receive fee awards and that therefore may conflict with state fee provisions.”12 After all, Magnuson-Moss is hardly silent on the issue of prevailing-party fees. Unlike the Civil Rights Act’s language at issue in Marek, the Magnuson-Moss Act’s language expressly allows prevailing-party fees to be awarded only to a “claimant.”13 Since federal law has no general prevailing-party fee rule comparable to Rule 82, Mag-nuson-Moss’s authorization of fees only to claimants effectively precludes fee awards to defendants completely. By comparison, the statutory language considered in Marek only partly precluded fee awards to defendants, expressly allowing fees to be awarded against plaintiffs in frivolous cases. T fail to see how the Magnuson-Moss Act’s express language eliminating all circumstances in which defendants may recover fees can realistically be viewed as creating less conflict with the opinion’s reading of Rule 68 than the Civil Rights Act’s language, which merely eliminates some circumstances.
But even if the first prong of the opinion’s preemption analysis were correct, its second-prong analysis would remain problematic. The opinion concludes that its interpretation of Rule 68 does not obstruct the Magnuson-Moss Act’s purpose. In reaching this conclusion, the opinion leans heavily on Marek, declaring that case to be “closely analogous.” 14
Yet as the opinion itself acknowledges, the issue addressed in Marek is readily distinguishable from the one presented here:
The Marek Court asked whether federal Rule 68, by cutting back on plaintiffs’ fee awards, undermines and conflicts with § 1988, which allows full fees. We ask whether Alaska’s Rule 68, by forcing a prevailing plaintiff to pay a defendant’s post-offer fees, undermines Magnuson-*134Moss, which allows fees only to plaintiffs.15
The opinion nonetheless dismisses this distinction as insignificant, summarily observing that “[fjorcing plaintiffs to bear their own costs, as in Marek, and requiring them to pay the other party’s fees, as in the case before us, have the same general effect— reducing the benefit that the underlying statute would give the plaintiffs.”16 Yet this observation begs the critical question: does this “general” sameness of effect mask specific distinctions that make a practical difference? It seems to me that the answer is yes.
It may be true at some abstract level that requiring Magnuson-Moss claimants to bear their own costs would “have the same general effect” as requiring them to pay defendants’ post-offer fees. There is in fact a vast functional difference between limiting how much a claimant can recover upon winning a judgment against the defendant and exposing the claimant to a new risk of having to pay a judgment in the defendant’s favor — even if the claimant prevails on the merits. The former can accurately be seen as “reducing the benefit.” But surely the latter cannot: it amounts instead to an affirmative detriment, and a substantial one at that, achieving its effect not by reducing something that the claimant would otherwise get but by exposing claimants to a new form of economic hardship and pain. And in the small-damages universe of consumer warranty actions, this threat of a new liability will make worlds of difference.
Although it fleetingly acknowledges the Magnuson-Moss Act’s primary goal of encouraging consumers to pursue small warranty claims that would otherwise be precluded by high litigation costs,17 the opinion ignores the disproportionate impact of imposing new liability on such risk-averse claimants, as well as the consequent danger of discouraging meritorious claims. We recently recognized this danger in Turner v. Alaska Communications Systems Long Distance, Inc., where we described the consequences of holding absent plaintiffs in small consumer class actions responsible for the defendants’ prevailing-party fees, emphasizing the very real risk of deterring legitimate claims:
A rule that permits the imposition of attorney’s fees on absent class members who stand to gain such small monetary compensation will encourage opt-outs and have a chilling effect on this important use of the class action device. As a result, some class members with legitimate claims will be left without a remedy.18
I find it hard to square our recent sighting of this danger in Turner with the court’s perception that its ruling in the present case will cause no damage to the incentives offered by Magnuson-Moss. The court tries to distance today’s opinion from Turner by observing that the fee exemption in Turner only extended to absent class members and did not eliminate fee liability for named parties.19 But this observation misses the point of our ruling in Turner and misperceives its relevance here.
As the court itself recognizes in today’s opinion, Turner stands for the proposition that fee-shifting poses a significant risk of discouraging potential claimants with meritorious small claims and should thus be avoided when it would undercut a policy or law that is “meant to encourage plaintiffs to bring meritorious claims.”20 In Turner, we found a strong public policy encouraging broad participation in class actions; to avoid hampering this policy by frightening potential class members out of pending class actions, we exempted passive class members from potential Rule 82 fees. But this policy of encouraging broad class participation only applies to class actions actually filed; it does not more -broadly strive to encourage the filing of new class-action claims. And its limited goal of broadening participation in existing class actions would hardly be served by a fee exemption covering plaintiffs who are already *135actively participating in the action. Considering the specific policy at issue in Turner, then, refusing to exempt named class representatives from the requirements of Rule 82 made perfect sense.
But here, in contrast to Ttomer, the policy at issue does actively seek to encourage new claims: specifically, the Magnuson-Moss Act is designed to encourage the filing of small consumer warranty actions, and it strives to attain this goal by creating a one-sided fee-shifting provision that favors the claimant. In this setting, then, the proposition we recognized in Turner — that fee-shifting must be avoided when it undercuts a provision meant to encourage new claims — yields the opposite result: applying Rule 68 in cases like this will directly erode Magnuson-Moss’s goal of encouraging otherwise reluctant consumers to bring meritorious warranty claims. Indeed, the chilling effect we sought to avoid in the class-action setting of Turner can only increase in the setting of individual consumer claims, where the added risk of new liability for opposing-party fees cannot be spread to other class members.
As other courts have recognized, studies suggest that individuals who have small claims are unusually vulnerable to this kind of chilling effect, particularly when litigation costs might exceed the size of their claims.21 This point is particularly important in light of the Magnuson-Moss Act’s central purpose: to promote new claims by eliminating the effects of high litigation costs on litigants whose “individual claims are too insignificant to command representation by counsel or to warrant all the other expenses of invoking the judicial process.”22
Today’s opinion threatens to defeat this purpose completely. Although it nominally affects only those Magnuson-Moss claimants who decline reasonable settlement offers, the opinion’s actual effects will extend much farther. As the opinion interprets Rule 68, it will regularly expose prospective Magnuson-Moss claimants to a predictable and substantial risk of sizable new litigation costs for defendants’ post-offer fees. In practical terms, this will send a mixed message to all potential claimants — those with strong and weak claims alike: it will tell them that the Magnuson-Moss Act lets them file their claims freely; but at the same time it will put them on notice that they should be prepared to accept the first offer of judgment advanced, or face new litigation costs that might make their claims far less than worthless. Faced with a near-certain prospect of early and low offers, most consumers with potentially meritorious small-damages-claims will simply give up without bothering to file, concluding that the potentially high costs of securing a reasonable judgment are simply not worth the prohibitive risk.23
In my view, then, the opinion’s reading of Rule 68 conflicts with the Magnuson-Moss Act’s primary goal and so runs aground on federal preemption. The need to avoid this conflict with federal law provides another good reason for interpreting Rule 68(b)(1) as precluding defendants from recovering post-offer fees unless Rule 82(a) would allow them an award as prevailing parties.

. Alaska R. Civ. P. 68(b)(1) (emphasis added).

. Alaska R. Civ. P. 82(a) (emphasis added).

. 15 U.S.C. § 2310(d)(2) (1998).

. Alaska R. Civ. P. 68(b)(1).

. Alaska R. Civ. P, 82(b).

. Alaska R. Civ. P 68(b)(1) (pre-August 7, 1997).

. Alaska R. Civ. P. 82(a).

. 473 U.S. 1, 5, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985).

. See above, Op. at 130, n.27.

. 12 Wright, Miller & Marcus, Federal Practice and Procedure § 3006.2, at 131 (1997) (internal footnotes omitted).

.See, e.g., Enders v. Parker, 66 P.3d 11, 17 (Alaska 2003) (holding that personal representative in will contest barred from claiming fees as prevailing party under Rule 82 because AS 13.16.435 expressly governs fee awards in such cases: "If a specific statutory scheme for attorney’s fees exists, Civil Rule 82 does not apply."); see also Moody-Herrera v. State, 967 P.2d 79, 90 (Alaska 1998) (holding that Rule 82 governed fee award to prevailing defendant in action under Alaska Human Rights Act because Act included no fee provision, but suggesting that Rule 82 would be inapplicable if provision similar to federal civil rights act fee provision had existed); cf. Crittell v. Bingo, 83 P.3d 532, 536 (Alaska 2004) (allowing fee award under Rule 82 in will contest when neither contestant could claim fees as estate representative under AS 13.16.435); Bobich v. Hughes, 965 P.2d 1196, 1200 (Alaska 1998) (stating that statutory attorney's fees provision awarding full fees ordinarily takes precedence over Rule 82 provision awarding partial attorney’s fees); Whaley v. Alaska Workers’ Comp. Bd., 648 P.2d 955, 959 (Alaska 1982) (holding that prevailing employer could not obtain attorney’s fees because granting such fees would undermine purposes of Alaska Workers' Compensation Act and limit claimant's ability to seek appellate relief).

. Op. at 128-129.

. 15 U.S.C. § 2310(d)(2) (1998).

. Op. at 130.

. Op. at 130.

. Op. at 130.

.Op. at 129-130.

. 78 P.3d 264, 268 (Alaska 2003).

. Op. at 131.

. Id.

. See, e.g,, Covenant Mutual Ins. Co. v. Young, 179 Cal.App.3d 318, 326 n. 9, 225 Cal.Rptr. 861 (Cal.App.2d Dist.1986) ("If the costs are large in relation to the stakes they will be a more important factor in the litigants' decision making and whether and how these costs are shifted will influence litigation behavior more dramatically than in high stakes — low cost cases”); see also Rowe, Predicting the Effects of Attorney Fee Shifting, 47 Law and Contemporary Problems 139, 147 (1984) ("For the middle-income litigant, to whom the risk of having to pay costs would be a major deterrent, the difference between American and one-way rules on the one hand, and the two-way approach with its threat of substantial costs on the other, should be quite significant.”).

. Gorman v. Saf-T-Mate, Inc., 513 F.Supp. 1028, 1033 (D.Ind.1981).

. Cf. Covenant Mutual Ins. Co., 179 Cal.App.3d at 326, 225 Cal.Rptr. 861 ("Indeed it is entirely possible bilateral fee-shifting would lead to fewer lawsuits and less effective enforcement than is experienced in the absence of any fee-shifting at all. Injured people contemplating a lawsuit would confront the prospect of having to pay the defendant’s legal fees as well as their own in the event they lost. This would make the bet even less appealing ... where the chances of winning are good but uncertain.”).