MEA appeals Waterman decision

PALMER -- Matanuska Electric Association released a letter Thursday to its board members notifying them that an appeal had been filed in Alaska Supreme Court challenging the Sept. 10 final decision of Palmer Superior Court Judge Beverly Cutler in the Waterman vs. MEA lawsuit.

Cutler had found in September that Waterman met the requirements to be a public interest litigant and, subsequently ordered MEA to pay $100,000 in attorney fees to Waterman's attorney, Ingaldson Maassen.

The lawsuit stems from MEA's 2001 board of directors election, in which Michael Janecek won a seat on the MEA board. At the board's April 30, 2001, meeting, board members decided 5-2 not to seat Janecek, claiming his campaign disclosures were inaccurate and did not demonstrate a good faith effort to comply with MEA bylaws. Shortly after the decision, Scott Waterman, a member-owner of MEA and would-be constituent of Janecek's, filed a complaint and subsequent request for a restraining order and injunctive relief against the decision.

Cutler, in a Feb. 22 ruling from the bench, found in February that Janecek should have been seated and ordered MEA to do so. He was seated at MEA's March 11 meeting.

In the letter to board members, MEA's general manager Wayne Carmony said he instructed Patton Boggs to file an appeal based on what he believed were several errors in Cutler's ruling that, "if left unchallenged, could have significant adverse consequences for MEA and its membership."

Carmony wrote that a failure to appeal Cutler's decision would "lead to disarray in 2003 board elections." He said his concern stems from Cutler's interpretation of MEA bylaws to read that a candidate can correct any campaign disclosure violations, no matter how significant.

"It remains the association's position that this is an unreasonable interpretation of the bylaws," Carmony wrote. "The salient purpose of having a campaign disclosure requirement is to provide the members with information about expenditures and parties that are trying to influence the outcome of an election."

MEA spokesman Mike Pauley said Friday that, although the MEA board had recently appointed a Bylaws Committee to review the association's bylaws and clarify its campaign disclosure rules, those changes will not be in place prior to the next election.

"Certainly, the larger issue is next year's election and making sure there's some level of integrity about the election next year," Pauley said. "That is a huge issue."

Pauley said the time lapse between Cutler's ruling and the bylaw changes would allow candidates in the upcoming race to disregard campaign disclosure rules with no apparent ramification. He said although it was not likely the appeal would be settled by the time the next election rolled around, if the appeal resulted in Cutler's decision being overturned, people in the upcoming election who violate campaign disclosure requirements could face future ramifications.

"They can choose to comply with the bylaws or they can choose not to comply," Pauley said. "If they choose to not to comply and Cutler's ruling is overturned, they're putting themselves at risk."

MEA is also appealing Cutler's decision that Waterman is a public-interest litigant. In her September judgment, she stated that the case was brought to challenge public policy that would benefit a large number of people -- everyone who had voted for Janecek in the 2001 election race -- and Waterman did not have any economic incentive to bring the suit forward.

Carmony, in his letter to board members, challenged Cutler's decision not to grant MEA's motion for discovery -- a motion MEA would have used to see whether Chugach Electric and the International Brotherhood of Electrical Workers had any economic interest in the outcome of the case.

"Perhaps the IBEW said to Mr. Waterman, 'We'll pay your fees,'" Pauley said. He speculated that it could be in IBEW's or Chugach's best interest to put a member on the board whom they were assured would vote the way they wanted and, potentially, could approve higher contracts or better working situations for IBEW employees.

"Let's not call people public interest litigants if they have a financial motive at stake," Pauley said.

Carmony's letter further explained Pauley's point.

"Judge Cutler should have allowed MEA to conduct discovery to determine whether parties with an economic interest in the outcome of the election, e.g. Chugach Electric and the IBEW, may have financed Mr. Janecek's campaign and the prosecution of the Waterman lawsuit," Carmony wrote.

Mary Pinkel, an attorney with Ingaldson Maassen who has been working on the case since it was launched, said she had read the letter and was shocked at what she called an insinuation that she was less than truthful when she signed an affidavit stating that Ingaldson Maassen had received no money for its work on the Waterman suit.

"We signed an affidavit -- and they didn't challenge that affidavit," Pinkel said. "We're not getting any money from [IBEW] and we told them that. They're trying to undermine the court's authority."

Janecek took umbrage with the allegations made in Carmony's letter, and that, by correcting what he called an oversight that happened during the election, he said he has been targeted in the letter with defamatory statements.

Carmony's letter states that Janecek didn't disclose the receipt of two key cash contributions until his year-end report, although the contributions were received in April 2001, prior to the April 30 board meeting.

"Both contributors were employees of Chugach Electric Association, MEA's wholesale power supplier," Carmony wrote in his letter. "Both individuals are also members of the IBEW Local 1547, and one was actually the treasurer of the IBEW."

Janecek said he had not noticed the inaccuracy with his campaign disclosure at the time of the meeting.

"The individuals had donated to my campaign at two different fundraisers," Janecek said. They were listed separately on the individuals contributing under $100 list for the two separate fundraisers, he said, but their two contributions had placed them over the under-$100 limit.

"We filed a correction report with the report that was delivered at the end of the year, when the report was due," Janecek said. "It was handled according to their bylaws exactly. I have friends, acquaintances, colleagues that are members of many labor unions. There is no complicated plot here, these are people that I have known for years."

Carmony's letter also stated that MEA, in filing the suit, was challenging Cutler's ruling that MEA had not correctly interpreted its own bylaws.

"A third concern for MEA that justifies an appeal is Judge Cutler's refusal to give any deference to the board's interpretation of the association's bylaws and her refusal to read into the bylaws any real authority on the part of the board to enforce timely compliance …" Carmony's letter states.

Although MEA is in the process of changing those bylaws, Pauley said letting Cutler's decision could be taken as an affirmation that MEA's board could not enforce or uphold its bylaws.

"We're saying that we do not agree with her interpretation of the bylaws," Pauley said. "That's what our judicial system is all about -- if you disagree with the lower court's ruling, you have the option to appeal."

MEA's final concern mentioned by Carmony in the letter is that, Waterman, at the time of Cutler's decision, was no longer a member of MEA. By not being a member, Carmony wrote, Waterman had no relevant claim to be injured as a result of the MEA board's decision not to seat Janecek.

Janecek said although he is trying to distance himself from the lawsuit and concentrate on matters pertaining to the association, he is disappointed that MEA is spending more money on the suit. He calculated that, since MEA had set aside $125,000 in an interest-bearing account for Ingaldon Maassen, to cover public-interest litigant fees in the event the appeal is lost, that Patton-Boggs had spent at least the same amount on MEA's portion of the case. At $250,000 before an appeal is begun, Janecek said, the end cost could be considerably higher.

"We're getting up there in the neighborhood of half a million dollars," Janecek said. "And the bottom line is, they couldn't abide by their own bylaws."

But Carmony said the challenge was geared to protect the interests of MEA members.

"Today's decision to file this appeal is done with the interest of the membership foremost in mind," Carmony wrote.