Court Opinion

ID: 9797315
Source: CourtListenerOpinion
Date Created: 2023-08-31 04:18:14.510727+00
Date Added: 2024-06-11T08:54:26.572765
License: Public Domain

MATTHEWS, Justice,
dissenting.
Is the law firm retained by the state an "employee of the state" under AS 45.50,.592(e)? I answer "no" because ordinary usage controls the meaning of undefined statutory terms, "employee" in ordinary usage means a natural person employed for a wage or salary, and the firm meets neither of these elements. Further, this conclusion is consistent with cases interpreting a similar federal statute, better protects the intended confidentiality of CID material, and is not inconsistent with other terms of the statute.
Alaska Statute 45.50.592(e) prohibits the disclosure of documentary material produced pursuant to an investigatory demand to "anyone other than an authorized employee of the state" unless the person who produced the documents consents or unless the superi- or court "for good cause shown" permits disclosure.1 In determining what a statute means, "unless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning."2 The ordinary, contemporary, and common meaning of the term "employee of the state" "means a person employed by the state who is paid a wage or salary but does not include a person hired by the state to work as an independent contractor. ..."3 As today's opinion acknowledges, the term "employee" "is typically mutually exclusive of the term "independent contractor.' " 4 "Employee" is synonymous with "servant" and is often used in contradistinetion to "independent contractor." 5 In com*546mon usage, a person who performs services for another is either an employee or an independent contractor, and an important factor in determining one from the other is the right to control retained by the person contracting for the services.6 Further, the word "employee" denotes in ordinary usage a natural person rather than a partnership or a corporation.7 In prohibiting disclosure to "anyone other than an authorized employee of the state" the legislature's usage is in accordance with the meaning of "employee" as a natural person. In this case the particular independent contractor with which we are concerned is a private San Francisco law firm, Hosie, Frost & Large, Attorneys at Law. There is no dispute that "one may not commonly think of outside counsel as an 'employee'...."8 Based on the rule that words should be interpreted in accordance with their ordinary and common meaning, I believe that Hosie, Frost & Large, Attorneys at Law, is not "an employee of the state" under AS 45.50.592(e).
Alaska Statute 45.50.592 was enacted in 1975 as part of a comprehensive act prohibiting monopolies and combinations in restraint of trade.9 Governor Hammond's letter to the Speaker of the House transmitting the bill that became this act makes it clear that the bill is patterned on federal law.10 The Governor noted that what is now section .592 contained a number of procedural protections and limitations:
Section [592] establishes specific guidelines for the contents of the demand and method of serving the demand upon a person, where the material demanded is documentary evidence. It provides that no demand may seek material which is privileged nor may it be unreasonable. Subsection (e) forbids disclosure of the documentary evidence to anyone other than an authorized state employee without the permission of the person who produced the material.11
Concerning these limitations the Governor wrote:
The theory behind Article 3 [dealing with investigatory powers] is to provide the attorney general with the power he needs, but also to provide detailed procedural controls which will prevent unfair and arbitrary action by the attorney general. Seetion [.592] of the bill prescribes the contents of a demand and establishes limits on the breadth and seope of the demand.12
Governor Hammond also noted the similarity between federal law and the proposed bill with respect to the power to compel the production of documents: "Article 3 of the bill grants to the attorney general the power to compel production of documents and testimony prior to filing an action in court. Several states have enacted similar provisions. The federal government also has similar powers to compel production of documents...." 13
Federal law as of 1975 prohibited the disclosure of documentary material produced pursuant to an investigative demand "by any individual other than a duly authorized officer, member, or employee of the Department of Justice." 14 This was changed somewhat in 1976. Section 1818(c) of 15 U.S.C. was *547divided into four subsections. The third subsection prohibited the disclosure of documentary material to "any individual other than a duly authorized official or employee of the Department of Justice."
Both of these versions of section 1813(c) were interpreted by courts as imposing a firm prohibition on the disclosure of produced materials to individuals not employed by the Department of Justice. Thus in ALCOA v. United States Department of Justice, the court observed concerning the 1970 version of section '1818(c); "The statute absolutely prohibited disclosure to third parties ...." "15 In United States v. GAF Corp. the district court similarly interpreted the language of section 1318(c) to preclude an examination of produced material "by anyone outside the Department of Justice.16 "* On appeal in the same case the Second Circuit interpreted 15 U.S.C. § 1818(c)(8) to preclude disclosure of CID materials outside the Department: "That subsection provides that no material obtained by CID may be made available for examination by anyone other than the Department of Justice.17" And in United States v. AT & T the court stated that section 1818(c)(8) "specifically prohibits disclosure of CID material to persons not members of the Justice Department." "18
Thus, courts interpreting "authorized employee" language in the federal statute on which the "authorized employee" language in the state statute is patterned have interpreted that language to refer to employees, not independent contractors. should do likewise." In my view we should do likwise.19
Interpreting "employee of the state" in subsection .592(e) to have its ordinary meaning is consistent with the policy of the act and does not create necessary conflicts with other provisions of the act. In his letter of transmittal Governor Hammond mentions the "detailed procedural controls" imposed on investigatory demands. One such control is inherent in the distinction between employees and independent contractors. By definition of the respective terms, the state has much greater control over the actions of its employees than it does over the actions of independent contractors. Moreover, independent contractors may serve many masters simultaneously, while state employees work only for the state. Independent contractors thus can have collateral uses for investigatorily demanded information and they may be tempted to use such information.20 State employees, by contrast, are less likely to be able to use CID information in the service of others, and they are thus not subject to the same temptations as independent contractors.
Another control is inherent in the fact that an employee is a natural person, whereas independent contractors may be partnerships or corporations having, in turn, many employees. Both legally and practically the state has more ability to control the activities of its actual employees than it does the employees of its independent contractors.
*548Construing "employee of the state" in its ordinary sense would not mean an end to the use by the attorney general of outside counsel. What it would mean is that before material produced may be disclosed to personnel employed by contracting law firms the attorney general must make a showing of good cause under the first sentence of AS 45,50.592(e). The reasons that justify hiring outside counsel might well generally suffice to justify disclosure. But the good cause hearing would give the target company an opportunity to give case-specific reasons to oppose the disclosure, and depending on the cireumstances, the court might impose special conditions and safeguards in connection with the disclosure.
Construing "employee of the state" to have its ordinary meaning also does not conflict with the "designee" language in the last sentence of subsection (e). This sentence authorizes the attorney general to appoint a "des-ignee." But this does not imply that the designee must not also qualify as a person to whom disclosure may lawfully be made. Statutes should be construed so that each term has meaning if this is reasonably possible. Constructions in which one term negates another are to be avoided.21 Thus the power of the attorney general to appoint a designee should not be construed in a way that eliminates the protection built into the statute by the disclosure limitations expressed in the first sentence of subsection (e). This can readily be accomplished by construing subsection (e) as requiring that the attorney general's designee be a person who qualifies for disclosure of CID material. In other words, the designee must either be an authorized employee or a person authorized to receive disclosures by a court order following a showing of good cause. Similarly, the term "representatives" used in subsection (b)(4) should mean, if all the terms of the statute are to be harmonized, either authorized employees or persons authorized by a court to receive disclosures.
The final sentence of subsection (e) provides that the attorney general or his des-ignee "may use copies of the documentary material as he considers necessary in the enforcement of this chapter, including presentation before a court...." There is a tension between this provision and the disclosure-restricting provision of the first sentence of subsection (e) What if the use decided upon by the attorney general involves disclosure to non-state employees? But this tension exists no matter how "employee of the state" is defined. Similar tension existed in the 1976 version of the federal act. Under 15 U.S.C. § 1318(d) an attorney designated to appear in any case or proceeding could use CID material "in connection with any such case ... or proceeding as such attorney determines to be required." This language is not greatly different from the discretionary authority granted in the fourth sentence of subsection (e) ("use ... as the ... designee considers necessary in the enforcement of this chapter"). But the presence of this provision did not prevent the federal courts from giving a literal interpretation to "authorized . employee" in subsection (c)(8).22
It would be presumptuous in this dissent to try to work out all the possible ramifications of the interplay between the provisions of the first and last sentences of subsection 592(e). But I believe that one key to understanding how they interact is found in the fact that the final sentence relates to enforcement. The 1975 act is divided into four articles: "Article 1. Substantive Provisions," "Article 2. Enforcement Provisions," Article 3. "Investigatory Powers," and "Article 4. General Provisions." The final sentence of subsection .592(e) is limited to uses for "enforcement." Thus it may not apply, given the structure of the act, to investigative proceedings conducted under the third article of the act.23 Under this construction there is no necessary conflict between the use clause of the final sentence of subsection (e) and *549interpreting "authorized employee" in the disclosure restricting clause of the first sentence to refer only to actual state employees. Disclosure outside the circle of authorized state employees is authorized under the use clause if a case reaches the enforcement stage, but not until then.
In summary, I believe that "employee of the state" in AS 45.50.592(e) should be construed to communicate the meaning that the term "employee of the state" would convey in ordinary and common usage. As so construed, subsection .592(e) would bar the disclosure without court approval of CID documents to a law firm with a contract with the state. For these reasons I would reverse the decision of the superior court and remand this case for a hearing to determine whether there is good cause to disclose Tesoro's ree-ords to the law firm retained by the state in this case.

. AS 45.50.592 provides in relevant part:
(a) If the attorney general determines that a person is in possession, custody, or control of a documentary evidence, wherever situated, that the attorney general believes to be relevant to an investigation authorized in AS 45.50.590, the attorney general may execute in writing and cause to be served upon that person an investigative demand requiring the person to produce the documentary material and permit inspection and copying.
(b) Each demand must
(4) identify the state employees or representatives to whom the documentary material is to be made available for inspection and copying.
(d) The demand may be served by the attorney general or the designee of the attorney general....
(e) Documentary material produced pursuant to a demand, or copies of it, unless otherwise ordered by a superior court for good cause shown, may not be produced for inspection or copying by, nor may its contents be disclosed to, anyone other than an authorized employee of the state without the consent of the person who produced the material. However, under those reasonable terms and conditions the attorney general prescribes, copies of the documentary material shall be available for inspection and copying by the person who produced the material or an authorized representative of that person. The attorney general, or a designee, may use copies of the documentary material as the attorney general or designee considers necessary in the enforcement of this chapter, including presentation before a court; however, material that contains trade secrets may not be presented except with the approval of the court in which the action is pending after adequate notice to the person furnishing the material.
(h) Nothing in this section impairs the authority of the attorney general or a designee to lay before a grand jury of this state evidence concerning a violation of AS 45.50.562-45.50.596, to invoke the power of a court to compel the production of evidence before a grand jury, or to file a civil complaint or criminal information alleging a violation of AS 45.50.562-45.50.596.

. State v. Niedermeyer, 14 P.3d 264, 272 n. 38 Alaska 2000).

. This definition is contained in the state personnel act, AS 39.25.990(4).

. Slip Op. at 537. An example of the customary exclusivity of the terms "employee" and "independent contractor" is found in the contract entered into by state in this case with Hosie, Frost & Large, Attorneys at Law. Article 8 of the contract provides: 'Independent Contractor. The contractor [Hosie, Frost & Large] and any agents and employees of the contractor act in an independent capacity and are not officers or employees or agents of the State in the performance of this contract."

. Black's Law Dictionary "Employee" (Rev, 4th ed.).

. See Bobich v. Stewart, 843 P.2d 1232, 1235 (Alaska 1992); Sievers v. McClure, 746 P.2d 885, 888 (Alaska 1987) ("[In determining whether a person is an employee or an independent contractor, the most important factor is the right to control the manner and means by which the work is to be performed.").

. Webster's Third New International Dictionary 743 (1966) employee: "1: one employed by another usually in a position below the executive level and usually for wages 2: in labor relations: any worker who is under wages or salary to an employer and who is not excluded by agreement from consideration as such a worker."

. Slip Op. at 539.

. See ch. 53, SLA 1975.

. 'The substantive provisions of this bill follow closely the language of the corresponding federal law. The advantage to using language closely paralleling the federal anti-trust laws is that a large body of case law interpreting this language is already in existence." 1975 House Journal 156.

. 1975 House Journal 158 (emphasis added).

. Id. at 160.

. Id.

. 15 U.S.C. § 1313(c) (1970).

. 444 F.Supp. 1342, 1344 (D.D.C.1978) (emphasis added).

. 449 F.Supp. 351, 353 (S.D.N.Y.1978).

. United States v. GAF Corp., 596 F.2d 10, 12 (2d Cir.1979) (emphasis added), reversing on other grounds the district court opinion.

. 86 FRD. 603, 647 (D.D.C.1979) (emphasis added).

. Congress amended section 1313 for a third time in 1980. In the 1980 amendments the permitted class of those who may view CID material is expanded to include "duly authorized ... agent{s] of the Department of Justice" as well as officials and employees of the department. See 15 U.S.C. § 1313(c)(3) (1980). "Agent" in turn was defined in terms broad enough to include independent contractor attorneys retained by the Department of Justice. See 15 U.S.C. § 1311() ("Agent" "includes any person retained by the Department of Justice in connection with the enforcement of the anti-trust laws."). In the 1980 amendment Congress also made an "agent" subject to criminal penalties for disclosure of confidential information. See 18 U.S.C. § 1905.

. Concern about collateral uses that independent contractors may have for CID materials is more than theoretical in this case. Tesoro argued before the superior court that Spencer Ho-sie, one of the partners of Hosie, Frost & Large, is acting as the attorney for the State of Hawaii in an anti-trust suit brought against Tesoro. Counsel suggested that Hosie will obtain, under the Alaska CID, material that was denied him by a court in the Hawaii litigation.

. See In re Estate of Hutchinson, 577 P.2d 1074, 1075-76 (Alaska 1978).

. See cases cited supra, p. 547.

. Such a construction is also supported by the language "including presentation before a court" in the final sentence of subsection (3). This language independently suggests that the broader uses that are permitted must be related to enforcement proceedings.