Home Statewide Politics Alaska Supreme Court Reaffirms Candidate Disclosure Rules in Haines Assembly Race

Alaska Supreme Court Reaffirms Candidate Disclosure Rules in Haines Assembly Race

Photo by Joe Gratz, Creative Commons Licensing.

The Alaska Supreme Court upheld Friday the penalty of a Haines Borough Assembly candidate who refused to supply the information of his real estate clients on his public office disclosure forms.

In the wake of the VECO scandal, Gov. Sarah Palin proposed, and the legislature passed, a bill in 2007 making the State’s disclosure requirements for public officials much more stringent.

Among the bill’s many provisions was a section lowering the income threshold of disclosure from $5,000 to $1,000. Public officials and those running for public office must now list the source of any income greater than $1,000.

Shortly after the new rules went into effect, Kenai City Council members complained that the rules are an invasion of privacy that might have kept them from running for office, according to the Peninsula Clarion.

The Fairbanks Daily Newsminer similarly reported in 2011 that then-North Pole Mayor Doug Isaacson blamed the “punitive” disclosure forms for vacancies on the City Council.

However, the rules are in keeping with the Mission of the Alaska Public Offices Commission (APOC): “To encourage the public’s confidence in their elected and appointed officials by administering Alaska’s disclosure statutes and publishing financial information regarding the activities of election campaigns, public officials, lobbyists and lobbyist employers.”

James Studley, a real estate broker, ran for Haines Borough Assembly in 2012. He did not list any specific clients on his disclosure form, instead listing $20,000-$50,000 income from unspecified real estate sales.

When APOC questioned Studley about the missing information, he told them that Alaska real estate statutes do not allow real estate licensees to disclose the confidential information of a client without written consent.

Client Disclosure Keeps Some Off the Ballot

The complaint about client disclosure is a common one.

Attorney Hal Gazaway withdrew from a 2012 state House race because he worried he would be forced to disclose clients’ confidential information, Alaska Public Media reported.

Then two candidates withdrew from 2016 Anchorage Assembly races after telling Alaska Dispatch News that they didn’t want to disclose their clients.

Shirley Nelson, a retired teacher who has a private tutoring business, said disclosing the names, addresses, and payment amounts of parents was “just way too intrusive.”

Photographer David Jensen said that disclosing clients who hired him prior to his announcement that he was running for Assembly posed “an ethical dilemma” that resulted in his withdrawal.

There are a variety of income sources that do not need to be disclosed, including those seeking mental health services from a provider, spouses seeking legal advice without the knowledge of the other spouse, and minors seeking medical or legal help without the knowledge of a guardian.

In addition, APOC allows all candidates to file a report exemption request stating the reasons they cannot disclose specific information.

“The person requesting any exemption has the burden of proving each fact necessary to show that an exemption… is applicable,” the Alaska Administrative Code (AAC) reads. The “candidate [must] demonstrate[] that the right to privacy of the information outweighs the compelling state interest in disclosing the information.”

Studley eventually filed an exemption request, telling APOC, “’I receive my money from my various owned companies and I have listed both of my companies that pay me my income.’ He explained that: ‘all of my clients are with contracts to my companies and not to me personally’; ‘Alaska real estate law requires a court order or subpoena before I (a Broker) can release confidential information’; and ‘the legal system seems to weigh towards protecting the personal rights of all Alaskans[’] financial data.’”

He did not give specific reasons why the individual clients should be protected, but rather relied on hypotheticals.

APOC denied Studley’s request, telling him, “the value of real estate transactions is a public process and your involvement and [c]ommissions from this public process [are] ascertainable already from other sources… [T]he public’s right to know the sources of your income outweigh[s] any reason you may have to keep these matters private.”

In addition to losing the race for Assembly, Studley was fined $175 by APOC, a reduced amount because he was an “inexperienced filer.”

Studley appealed the fine to superior court, but Judge Philip Pallenberg ruled that
“Studley did not demonstrate… that release of information about his clients would violate any of his clients’ privacy rights [or that] his rights under any of the[ ] [asserted] constitutional provisions were violated.”

Right to Privacy Not Absolute, Waived When “Entering the Public Arena”

During his appeal to the Alaska Supreme Court, Studley again relied on hypothetical scenarios to explain why his clients should remain confidential. One example he offered was “a seller who anticipates a divorce or dissolution.”

“Hypothetical scenarios do not qualify as ‘fact[s] necessary to show that an exemption… is applicable,'” the Court ruled, citing the AAC in its decision Friday.

Studley relied on Falcon v Alaska Public Offices Commission, the 1977 case that shaped many of the current disclosure exemptions.

In that case, a physician, Dr. Spencer Falcon, became a member of the Kodiak Island School Board. He argued that disclosing his patients’ information would violate their privacy.

The Supreme Court ruled that APOC could not require physicians to disclose their patients until the State created exemptions for certain classes of patients, like women receiving abortions or other care under their reproductive rights. The Court also said APOC “may well wish to promulgate regulations which apply to relationships other than that of physician-patient.”

The Court did not follow suit Friday or carve out real estate brokers and their clients as another exempt relationship.

“Studley’s case is distinguishable from Falcon; that case was decided before an exemption process existed, and real estate transactions have fewer privacy considerations than healthcare,” the Court explained. “Because Studley offered no facts showing an applicable exemption with respect to any of his claims, he failed to meet his burden.”

Addressing the question of clients’ privacy, the Court noted that Alaska statute defines confidential real estate information as information: “(A) the licensee acquired during the course of the licensee’s relationship as a licensee with the person; (B) the person reasonably expects to be kept confidential; (C) the person has not disclosed or authorized to be disclosed to a third party; (D) would, if disclosed, operate to the detriment of the person; and (E) the person is not obligated to disclose to the other party in a real estate transaction.” (emphasis added)

“The legislature’s conjunctive use of the word ‘and’ indicates that all five conditions must be satisfied to meet the ‘confidential information’ definition,” the Court wrote.

The Court quoted Employment Security Commission v Wilson in a footnote: “'[W]e may assume that the legislature knew and understood the rules of grammar,’ and are ‘justified in relying on such rules in the interpretation of [Alaska] laws.’”

In the defining paragraph of Friday’s decision, the Court wrote:

We do not suggest there can never be a transaction where a client’s identity or the amount of the broker’s commission is intended to be confidential. But we will not assume that all real estate broker’s commissions and clients’ identities must be and are always confidential. And because Studley has not shown that any of his clients’ names or his derived income were previously undisclosed to third parties, we affirm the superior court’s decision that he was not “prohibited by law… from reporting” this information to the Commission.

Studley told APOC that Alaska law leans toward the protection of privacy.

Yet the Falcon Court noted, “Neither the state nor the federal right to privacy is absolute, but it is part of the judicial function to ensure that governmental infringements of this right are supported by sufficient justification… Under the Alaska Constitution, the required level of justification turns on the precise nature of the privacy interest involved.”

“[U]nlike Falcon where ‘[e]ven visits to a general practitioner may cause particular embarrassment or opprobrium,’ we do not conclude that the disclosure of buyers and sellers of real estate will be similarly detrimental,” the Court ruled Friday.

As for Studley’s complaint that the disclosures violated his own right to privacy, the Court quoted from Falcon that, “with respect to potential conflicts of interest,” Studley “waived his right to privacy by ‘voluntarily entering the public arena.’”

Studley must now pay his $175 fine, delayed by almost five years.