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State Appeals $82 million Judgment in Carlson on Non-Resident Fishing Fees

March 24, 2010 - ANCHORAGE, Alaska - In a long-running class-action case concerning commercial fishing fees the state charged non-residents, a Superior Court judge has awarded the plaintiffs a judgment against the State of Alaska of nearly $75 million, with an additional $7.5 million assessed against the state for plaintiffs' attorney's fees.

The so-called Carlson case, which began in 1984 and has spanned over a quarter of a century, has been reviewed four times by the Alaska Supreme Court.  In it, roughly 12,000 plaintiffs challenged state laws charging non-resident commercial fishermen three times more than residents.  They also sought refunds of any overpayment of fees.  The state prevailed against roughly 2/3rds of the plaintiffs.     

In the latest superior court ruling issued Monday, Judge Peter Michalski determined the remaining fishermen were entitled to refunds totaling $12 million.  The remainder of the $75 million judgment is the result of a decision in 2003 by the Alaska Supreme Court to apply a statute with an unusually high interest rate to the refund amount, with interest accruing from the beginning of the case.

"For years, the Department of Law has worked closely with legislators on this matter, and we are providing them details on this latest decision," said Attorney General Dan Sullivan. "We have also filed an appeal to the Alaska Supreme Court challenging the interest rate applied in the judgment and the attorney's fees award against the state."

Judge Michalski's ruling establishes the particulars of the judgment against the state, based on previous decisions by the Alaska Supreme Court.  The ruling sets out the final judgment as follows:

·         $12,443,959.18 in refunds;

·         $62,356,738.10 in pre-judgment interest on those refunds, based on an interest rate of 11 percent, compounded quarterly, for most of the period December 13, 1984 through January 31, 2010;

·         $7,482,569.73 awarded against the state for plaintiffs' attorney's fees; and

·         $7,028.93 in plaintiffs' other litigation costs.

The total judgment is $82,290,295.94. 

As large as this judgment is, recent rulings have significantly reduced the state's liability.  For example, in 2008, in response to arguments by the state, the Supreme Court ruled that the allowable differential between resident and non-resident fees based on the monetary value of contributions to state fisheries management made by residents need not be exact and that the additional charge to non-residents would still be constitutional if no more than 50 percent above the calculated resident contribution. Those and other rulings substantially reduced the state's exposure.

The bulk of today's judgment is due to the Alaska Supreme Court's unexpected decision in 2003 to apply an interest statute for tax delinquencies and tax refunds to the refund of commercial fishing fees.  The statute provides for an unusually high interest rate of 11 percent, compounded quarterly.  The appeal filed today by the Department of Law focuses on the interest issue and on the award of attorney's fees against the state.

The appeal brief can be found here:

http://www.law.alaska.gov/pdf/press/032410-CarlsonBrief.pdf

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