CATALINA YACHTS, Appellant, v. Jim and Karen PIERCE, Appellees.
No. S-10720.
Supreme Court of Alaska.
Jan. 14, 2005.
105 P.3d 125
Silvan provides little argument for her position that the award of $500 per month was insufficient, merely asserting that it was “astonishing in its harshness,” and that she was “treated with a complete lack of dignity and respect both by her husband and by the court.” She makes no specific showing, beyond her bare assertions, that this award was inadequate in her case. While there may be merit in Silvan‘s argument that the award was inadequate for Silvan to find housing and transportation, she points to no trial testimony concerning those expenses to suggest that the award was an abuse of discretion. By contrast, in Davila v. Davila, the appellant spouse presented a detailed budget showing the cost of her plan for education and employment.30 Silvan offers no comparable argument or evidence suggesting that the superior court abused its discretion. She has not pointed to evidence concerning housing and transportation costs or expenses related to her maintenance and re-entry into the job market. Because of Silvan‘s utter failure of proof on this issue, we cannot conclude that the trial court abused its discretion.
Silvan also appears to question the superior court‘s finding that she was voluntarily and unreasonably unemployed. Silvan notes that “she had been out of the job market for ten years, had no home or transportation, and still had the duty of caring for the children four days and nights a week.” While the trial court recognized her limited experience, it also recognized that she had a college degree and bilingual abilities that would enable her to surpass Alcina‘s income, as noted above. Moreover, it found that it would be reasonable for her to work part-time on the days Alcina had the children and to seek employment in Anchorage, rather than looking solely in Wasilla. Silvan has not demonstrated that the superior court‘s findings in this regard are clearly erroneous.
V. CONCLUSION
Because the superior court properly applied all of the necessary factors in determining custody, and because the court‘s property division and interim support awards are not clearly erroneous, the superior court‘s decision is AFFIRMED in its entirety.
Eric A. Kueffner, Faulkner Banfield, P.C., Juneau, for Appellant.
No appearance by Appellees.
Before: FABE, Chief Justice, MATTHEWS, EASTAUGH, and BRYNER, Justices.
FABE, Chief Justice.
I. INTRODUCTION
Jim and Karen Pierce rejected an offer of judgment made by Catalina Yachts under Alaska Civil Rule 68 in a breach of warranty case. The superior court denied Catalina‘s later motion for attorney‘s fees and costs under Alaska Civil Rule 68, holding that the rule did not apply and was preempted by the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act. Because we conclude that Alaska Civil Rule 68 applies, we reverse and remand.
II. FACTS AND PROCEEDINGS
The underlying facts of this case are set out in Pierce v. Catalina Yachts, a breach of contract and warranty case that came before us in 2000.1 In summary, Jim and Karen Pierce purchased a new fiberglass sailboat from Catalina Yachts in 1992. Under the warranty, Catalina was responsible for re-
Before trial, in January 1996, the Pierces rejected a $38,000 offer of judgment from Catalina, made under
Catalina moved for attorney‘s fees and costs under
If a consumer finally prevails in any action brought under this subsection, he may be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of cost and expenses (including attorneys’ fees based on actual time expended) determined by the court to have been reasonably incurred by the plaintiff for or in connection with the commencement and prosecution of such action....10
The court determined that Catalina, as a manufacturer and not a “consumer,” was not entitled to attorney‘s fees and costs. The court also declared that the underlying policy goals of Magnuson-Moss do not support allowing defendants to recover attorney‘s fees because allowing a fee award to a manufacturer “would run counter” to the Act‘s purpose of encouraging consumers to pursue legal action to protect their rights under a warranty. The court therefore refused to award Catalina post-offer fees.
The court awarded the Pierces fees and costs of $20,000. When added to interest ($10,460.76) and the jury‘s original award ($12,445), this resulted in a total judgment of $42,905.76.11
Catalina filed a motion for reconsideration, arguing that it was seeking fees not under Magnuson-Moss but under
Catalina appeals the superior court‘s decision.
III. DISCUSSION
A. Standard of Review
Whether Rule 68 applies in a given case is a question of law.12 Whether a federal statute preempts a state court rule is also a question of law.13 We review questions of law de novo, “adopting the rule of law most persuasive in light of precedent, reason, and policy.”14
B. Rule 68 Applies in This Case.
Catalina moved for attorney‘s fees and costs under
If the judgment finally rendered by the court is not more favorable to the offeree than the offer, the prejudgment interest accrued up to the date judgment is entered shall be adjusted as follows: (1) if the offeree is the party making the claim, the interest rate will be reduced by the amount specified in
AS 09.30.065 and the offeree must pay the costs and attorney‘s fees incurred after the making of the offer (as would be calculated underCivil Rules 79 and82 if the offeror were the prevailing party). The offeree may not be awarded costs or attorney‘s fees incurred after the making of the offer.
Catalina would not be eligible for fees under
The superior court found that the attorney‘s fee provisions of Magnuson-Moss conflict with Rule 68. Under the court‘s reasoning, the Supremacy Clause of the federal constitution16 thus required that Magnuson-Moss preempt Rule 68, leaving the court with authority to award fees only to the Pierces, not to Catalina. “Federal law preempts [a] state [court rule] if Congress expressly or implicitly declares the state [rule] preempted or if the state [rule] conflicts with the federal law to the extent that (a) it is impossible to comply simultaneously with both or (b) the state [rule] obstructs the execution of the purpose of the federal [law].”17 Magnuson-Moss contains no express preemption of state court rules governing attorney‘s fee awards.18 We therefore turn to the question whether it conflicts with Alaska Civil Rule 68.
1. There is no direct conflict between Rule 68 and Magnuson-Moss.
Magnuson-Moss authorizes awards of attorney‘s fees only to prevailing “consum-
A state court rule is presumed valid in the face of a potentially conflicting federal law.22 In light of this principle, we do not read Magnuson-Moss‘s silence as a bar on awards to defendants. Therefore, it is possible to follow both the state rule and the federal act without violating either. A court could, as the superior court did after the first trial, award the prevailing plaintiff full fees and costs, then offset that award against the defendant‘s post-offer fees and costs while also giving the defendant the other benefit of Rule 68, a reduced pre-judgment interest rate. There is no direct conflict between Magnuson-Moss and Rule 68.
2. Rule 68 does not obstruct achievement of the purpose of Magnuson-Moss.
The harder question is whether following Rule 68 would obstruct the execution of the federal policy embodied in the Magnuson-Moss attorney‘s fee provisions. The federal policy is to encourage consumers with meritorious claims to bring them, even when a plaintiff‘s recovery would not cover the attorney‘s fees incurred.23 Under Rule 68, those plaintiffs may end up obliged to pay part of their adversaries’ fees if they turn down an offer of judgment. If this possibility is sufficient to discourage plaintiffs from bringing suits, then following Rule 68 would obstruct achievement of the purposes of Magnuson-Moss.
The United States Supreme Court‘s decision in Marek v. Chesny24 makes clear that this conflict does not exist. When a plaintiff rejects an offer of judgment larger than her eventual trial recovery, the federal version of Rule 68 allows post-offer costs to the defendant and bars the plaintiff from recovering
The Supreme Court then faced the question whether its reading of the rule to include attorney‘s fees in some circumstances would “frustrate Congress’ [s] objective ... of ensuring that civil rights plaintiffs obtain effective access to the judicial process” through § 1988, which allows attorney‘s fees to prevailing civil rights plaintiffs.28 The question in Marek is closely analogous to the question at the heart of our preemption analysis in the present case. 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-Moss, which allows fees only to plaintiffs.
The Supreme Court in Marek concluded that there is no conflict between federal Rule 68 and § 1988: “[W]e are not persuaded that shifting the postoffer costs to [the plaintiff] in these circumstances would in any sense thwart its intent under § 1988. Section 1988 encourages plaintiffs to bring meritorious civil rights suits; Rule 68 simply encourages settlements. There is nothing incompatible in these two objectives.”29
Following the Supreme Court‘s reasoning, we hold that there is no conflict between
This response seems unlikely, however. Marek holds that leaving plaintiffs responsible for their own costs does not reduce their incentive to bring suit to the extent that it defeats the fee provision‘s purpose and creates a conflict. And there is no suggestion that requiring prevailing plaintiffs to pay the
Our decision in Turner v. Alaska Communications Systems Long Distance, Inc.30 is not to the contrary. In Turner, we held that absent class members with relatively small claims who remain passive throughout the litigation are not liable for their adversary‘s attorney‘s fees under
Rule 68 therefore applies in this case. The superior court calculated the amount of the Pierces’ judgment following the first trial, first for the purpose of comparing it to Catalina‘s offer and then under Rule 68 in order to determine the final amount they were owed. At the second trial, the jury awarded no new damages, so its basic award was not increased. And because the Pierces were thus not prevailing parties, they can get no further fees or costs under Magnuson-Moss. Assuming that the superior court‘s calculations were correct at the outset, Catalina‘s offer is still larger than the Pierces’ award and the superior court‘s calculation of the value of the Pierces’ award under the Rule 68 formula remains accurate. The superior court must still determine the fees and costs incurred by Catalina since the original calculation following the first trial and then recalculate the offset between the parties’ awards.
IV. CONCLUSION
For the foregoing reasons, we REVERSE the superior court‘s decision not to apply
CARPENETI, Justice, not participating.
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,
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
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)(1)‘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 awardable” 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)(1)‘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-
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, Magnuson-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. I 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-
Moss, which allows fees only to plaintiffs.15
The opinion nonetheless dismisses this distinction as insignificant, summarily observing that “[f]orcing 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
But here, in contrast to Turner, 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.