0001 1 IN THE SUPERIOR COURT FOR THE STATE OF ALASKA 2 THIRD JUDICIAL DISTRICT 3 KATSUMI KENASTON, 4 Plaintiff, 5 v. Case No. 3AN-04-03485 CI 6 STATE OF ALASKA, 7 Defendant. ______________________________/ 8 9 TRANSCRIPT OF ORAL ARGUMENT 10 BEFORE THE HONORABLE JOHN REESE 11 Anchorage, Alaska 12 June 21, 2004 13 14 APPEARANCES: 15 FOR THE PLAINTIFF: 16 James B. Gottstein 17 406 G Street, Suite 206 Anchorage, Alaska 99501 18 FOR THE DEFENDANT: 19 Stacie Kraly 20 Attorney General's Office Box 110300 21 Juneau, Alaska 99811-0300 22 23 24 25 1 0002 1 P R O C E E D I N G S 2 3AN-5404-89 3 02:28:42 4 THE COURT: The file I have, and I hope the case 5 you guys came for, Kenaston versus State of Alaska, No. 6 3AN-04-3485. Okay? And we have actually -- what -- 7 three motions pending. The State started it, so the 8 State has to go first. Motion to dismiss. 9 MS. KRALY: Thank you, Your Honor. For the 10 record, my name is Stacie Kraly, and I'm with the 11 Attorney General's Office in Juneau. And you are 12 correct in the fact that we, upon receiving the 13 complaint in this case, we did file a motion to dismiss 14 and there were subsequent pleadings in this matter which 15 are -- which I would say the State would characterize as 16 subsuming within our cross-motion for summary judgment 17 are the basic premises in the motion to dismiss. 18 Factually, I think there are a few things I'd 19 like to point out for the court with respect to the 20 history of this case, which I think, from the pleadings, 21 you'll have gleaned is a lot longer than that six or 22 seven months that this has been going on. 23 Specifically, in the late '50's the United States 24 Congress passed this Mental Health Enabling Act, which 25 required the State to develop an integrated mental 0003 1 health program. The State, the Legislature in the late 2 '70's redesignated these trust lands into general grant 3 lands and shortly thereafter, a rather complex class 4 action lawsuit was filed in 1982. And that was the 5 initial -- the initial case, which is delineated in both 6 of our briefings as Weiss I and II. From 1985 through 7 1984, the parties, class members and a number of 8 intervening parties attempted to settle these matters, 9 initially to not much success. And finally in 1994, 10 through legislative actions through two special 11 sessions, the crux of what is know as the Mental Health 12 Trust Settlement, was codified and signed off on by some 13 of the parties, not all of the parties, and the 14 Legislature. 15 Within the constructs of that settlement, it is 16 important to note that the Superior Court in Fairbanks, 17 Judge Green, dealt with both the preliminary approval, 18 the final approval and then signed off on the process. 19 And that case was appealed to the Supreme Court. And 20 that's delineated in our briefings as Weiss II. 21 The settlement had a number of rather critical 22 components to it that I think are relevant to the 23 pleadings at hand, and I'll talk about two of them, in 24 particular. The settlement created the four beneficiary 25 groups, or the four boards that are talked about in the 0004 1 pleadings: the Governor's Council on Disabilities, the 2 Advisory Council on Drug and Alcohol Abuse, the Mental 3 Health Board, and the Alaska Commission on Aging, which 4 are the four relevant groups or boards to this 5 litigation. 6 Within the construct of that board organization, 7 there is also an overreaching or over-arching board that 8 was created, which is a little -- which we believe is a 9 more critical component to the settlement than the four 10 boards in and of itself, and that's the Alaska Mental 11 Health Trust Authority. And the Trust Authority has 12 specific legislative authority to develop and outline a 13 comprehensive -- integrated mental health program for 14 the State of Alaska. And within that construct they 15 have two -- well, they have a number of authorities and 16 powers. But specifically what they have that are 17 relevant to the issues presented here, are they take 18 recommendations from the four boards that were created, 19 the four that I just mentioned, who make recommendations 20 to the Mental Health Trust Authority, and the Mental 21 Health Trust Authority creates, as part of their 22 authority or powers, a comprehensive budget, which they 23 submit to the Legislature and the Governor, outlining 24 what they believe are budgetary needs for the overall 25 program and implementation of the integrated mental 0005 1 health programs in the State of Alaska. The boards in 2 and of themselves don't make recommendations to the 3 Legislature. They go to the Trust Authority, and the 4 Trust Authority deliberates those recommendations from 5 all of the boards and beneficiary groups and makes 6 determinations on what would be an appropriate budget 7 for purposes of -- of the beneficiary groups. 8 The second component of the settlement is exactly 9 what I just explained to you, which is the -- the 10 benefit of this budget process. The settlement 11 envisioned not only that the Mental Health Trust 12 Authority would create or develop a budget each fiscal 13 year that would outline what they believed were the 14 appropriate expenditures for those settlement monies or 15 for -- for mental health monies, but they also were 16 required to create -- to develop recommendations to the 17 Legislature and to the Governor. The governor also 18 creates a budget under the same rubric, and the 19 Legislature similarly creates a budget under the same 20 rubric. And all three of those budgets are not 21 necessarily reconciled, but are part of a comprehensive 22 mental health budget. It's a separate budgeting process 23 in the Legislative session, separate bill dealing with 24 mental health issues and budget issues. And the 25 Governor, to the extent, makes changes to the 0006 1 recommendations to the Trust Authority, has to submit a 2 report outlining those changes, and similarly the 3 Legislature does the same thing. 4 And those two components, I think, are very 5 critical -- or those two components of the settlement 6 are critical to the issues that were raised in the 7 complaint seeking a declaratory judgment that adequate 8 funding and an opportunity to perform are implied 9 material terms of the settlement. 10 The basic premise upon which we argue that the -- 11 that this is not appropriate for declaratory judgment is 12 the fact that in order to be eligible for declaratory 13 judgment, the pleadings must allege, on their face, an 14 actual case or controversy. And the State submits that 15 that has not happened in this case. The question that 16 is being asked is advisory in nature, hypothetical and 17 not fully developed factually to the point where if the 18 judge were -- the judge, Your Honor, this court was to 19 create or enter a judgment declaring that the boards are 20 -- that there's a requirement that the boards be fully 21 funded and given an opportunity before him, that if you 22 made such a declaration, that such declaration would be, 23 to be frank, not very useful. Because there would be -- 24 such a declaration, if that were handed to the 25 plaintiffs, and they were then able to take that into 0007 1 the political arena for budgetary purposes, both through 2 their process on the Mental Health Board to the Mental 3 Health Trust Authority, or even further, on through the 4 Legislative process in arguing or submitting positions 5 with respect to the Legislative creation of the Mental 6 Health Budget, there would be no useful information 7 within that -- within that declaration as to what 8 constitutes adequate funding, or for that matter, what 9 constitutes an opportunity to perform. And without more 10 further factual development, and an actual determination 11 of what constitutes those two terms, such declaration 12 creates more confusion than solves -- answers any 13 questions. 14 Secondly, it's important to note that when you 15 look at the settlement within the construct of the 16 concrete question, is that the settlement that the 17 plaintiff is seeking to have determined, implied 18 material terms of, has nothing in it that requires a 19 mandated level of funding, with respect to the boards, 20 or even, for that matter, the Trust Authority in any of 21 the programs that the settlement envisioned be developed 22 as a result of the settlement. And I think that's an 23 important distinction for the court to determine in 24 analyzing this case, because if you were to take the 25 question to its logical conclusion, then if adequate 0008 1 funding is a mechanism by which -- or is a requirement 2 or an implied term of the settlement, then every 3 legislative session there would be a question as to 4 whether or not -- what one beneficiary group or one 5 class of beneficiary groups believes is adequate for 6 their particular board is sufficient to the detriment of 7 another beneficiary class. You'd create the same 8 repetitive circumstance, where there would be constant 9 influx of discussion as to what constitutes this sort of 10 information, or this sort of determination. And that 11 certainly wasn't the desired effect of entering into 12 this settlement, you know, some 12 years ago. 13 In addition, I think, as I mentioned earlier, and 14 I think it's important to reiterate, that the budget 15 process that was a critical component of the settlement 16 is key to the analysis in this circumstance, too, in 17 that the beneficiaries -- the underlying premise of the 18 settlement was to create a system which would provide 19 services to beneficiaries. Within the construct of that 20 settlement, the boards were created, the Mental Health 21 Trust Authority was created, and the system was 22 envisioned to allow beneficiaries to have not only a 23 voice, but advocacy groups to provide information and 24 recommendations to not only the Department of Health and 25 Social Services, but to the Legislature and so on and so 0009 1 forth. 2 But if the issue is -- if the issue goes to 3 whether or not the underlying premise of the settlement 4 is to provide mental health services within the State of 5 Alaska, you have to look at the issue of the role of the 6 Mental Health Trust Authority in determining what that 7 budgetary process is, and what funding is used for. And 8 I think it's important to note that if you take a, you 9 know, a critical look at this, you've got to -- you've 10 got to analyze the circumstance that if you increase 11 fundings or you mandate funding for the boards, you 12 necessarily decrease funding for the beneficiary class, 13 which would be incongruent with the basis -- the 14 underlying premises of the settlement agreement, which 15 was to provide these services to the beneficiary 16 classes. If you take -- if you go to that point -- 17 THE COURT: There should be no fundings for the 18 boards? 19 MS. KRALY: No, no, I'm not saying that, Your 20 Honor. But what I am saying is that you have to -- the 21 Mental Health Trust Authority has to take a critical 22 look at balancing the limited resources that are 23 available to ensure that the board has enough funding 24 and to perform their functions. And they have this -- 25 they have the ability, through the settlement process, 0010 1 to establish or to appropriate funds themselves. And so 2 they can make adjustments appropriate to the overall -- 3 to the overall process. I mean, the boards are a part 4 of the settlement and they function and they have a 5 function and an important function. What I'm saying is 6 that if the board -- or the Trust Authority determines 7 that the boards are not being funded or are under- 8 funded, or there needs to be an adjustment within the 9 construct of the services -- the integrated services 10 that the settlement envisioned, then that's the 11 appropriate mechanism to determine whether or not 12 funding is appropriate or under-funded or they're 13 getting more money, or there's less money for services 14 and less money for -- say, for the boards. 15 I think -- I mean, the position of the State in 16 all of its pleadings, I think, are pretty straight- 17 forward, and don't provide -- are straight-forward and 18 simple is that there is no case or controversy under the 19 declaratory judgment action -- act of the State of 20 Alaska. There is no case or controversy in this case 21 whereby there is a ripe decision that requires judicial 22 intervention, because if a decision is provided at this 23 point, all it does is create more questions than it 24 solves answers that are being presented. 25 I think also, within the construct of the 0011 1 settlement and the political process that was envisioned 2 through that settlement, there are proper mechanisms by 3 which the beneficiary class can vet their issues and 4 concerns, and those decisions can be appropriately 5 addressed by the Mental Health Trust Authority, and 6 recommendations can be made within that construct that 7 adequately protect the issues that are being raised 8 here. And provide not only services on the board level, 9 but also services for the beneficiary, which is the 10 underlying premise of the settlement. 11 And I'd be happy to answer any questions you 12 might have, or reserve the rest of my time. 13 THE COURT: Does the State agree that there is 14 any definition of a level of funding that would be 15 appropriate? 16 MS. KRALY: I don't -- 17 THE COURT: An adjective? 18 MS. KRALY: I don't think go -- I -- no -- 19 THE COURT: Well, fully-funded certainly is going 20 to start a lot of fights. Reasonable funded -- 21 reasonably funded, adequately funded? I mean, if 22 there-- 23 MS. KRALY: I think you run into the same issues 24 using any of those adjectives, Your Honor, but I think 25 that the premise of the settlement indicates that they 0012 1 are funded to the point that they are able to perform 2 the functions that are mandated by statute. And to the 3 extent that they are unable to perform those functions, 4 which has not been alleged in this lawsuit or the motion 5 for summary judgment, the opposition to the motion to 6 dismiss. But the general premise is that they are 7 funded to the point where they are able to perform the 8 functions and that provides a wide range of options, but 9 I think you run into the same problems with any of those 10 adjectives that you do by saying fully-funded as opposed 11 to reasonably-funded. The issue is too hypothetical to 12 provide any sort of usefulness to somebody using that 13 declaratory judgment in the future legislative session 14 or in a deliberative process through the Mental Health 15 Trust Authority. 16 THE COURT: How about funded at a level 17 sufficient to perform the functions mandated? Those are 18 your words. You don't -- you don't really want that to 19 be the Rueben (phonetic) though, right? 20 A No, I don't, Your Honor, and you're right. But I 21 think that that's -- I think that that language or that 22 position that I just took is -- is -- is outlined within 23 the process, the settlement itself. I mean, I think 24 it's self-evident, if you will. There's no need to 25 restate the obvious. That the funding -- that the 0013 1 Legislature, by enacting House Bill 201 back in the 2 early '90's or '94, indicated that these boards would be 3 constituted and they would be allowed to function. And 4 so I think it's just self-evidence within the construct 5 that they're -- they're Legislatively required and 6 mandated through the settlement. 7 THE COURT: So, what do you think the controversy 8 really is? Why did the plaintiffs file suit? What did 9 the State do that made them think that they have to file 10 a lawsuit? 11 MS. KRALY: It's my belief through -- that the -- 12 the Department of Health and Social Services underwent a 13 massive reorganization last year. And Executive Order 14 108 explains the parameters of that reorganization. And 15 within the construct of that reorganization, what was 16 previously known as the Division of Mental Health and 17 Developmental Disabilities, and the Division of Senior 18 Services, and the Division of Drug and Alcohol Abuse, 19 were merged in various different forms. 20 The State has taken a conscious, deliberate 21 choice to realign and to reorganize the delivery of its 22 services through its Department, whereby the Division of 23 -- the Drug and Alcohol programs and the mental health 24 programs were consolidated into one program, and that's 25 now called the Division of Behavioral Health. And so, 0014 1 there's a move afoot, if you will, within the 2 Department, and I think that they based that decision on 3 nationwide movements to provide integrated mental health 4 and drug and alcohol programs. And when that happened, 5 there were discussions about how to more properly serve 6 the division, within the constructs of the boards. And 7 the boards, being separate, made sense under the -- 8 prior to the reorganization, and now there was a 9 discussion afoot whether or not there were ways to more 10 efficiently and effectively provide services the board 11 functions, whether that be through consolidation or some 12 sort of changes. 13 And those are purely discussions that were raised 14 on a variety of levels, not only from the Department of 15 Health and Social Services, but also as evidenced by one 16 of the exhibits we submitted in our motion to dismiss by 17 the Mental Health Trust Authority. And so, I think what 18 happened was that there was a concern that these boards 19 would consolidate, and that is not according to -- I 20 think, my belief is that the plaintiff is not -- does 21 not believe that's in the best interest, and believes 22 that in so doing, it's a breach of the Mental Health 23 Trust Settlement. And I'm not sure whether or not I 24 would agree with that premise, but there -- I think 25 that's why we're here, is that there was -- 0015 1 THE COURT: Presumably the post-reorganization 2 boards would still have the same functions they would 3 with the Trust Authority? 4 MS. KRALY: They would. 5 THE COURT: They would still need to be funded, 6 at..... 7 MS. KRALY: They would still need to be funded. 8 THE COURT: .....whatever this mystical level is. 9 MS. KRALY: Right. That's correct. But there 10 would be -- under the theoretical approach, one of the 11 ideas would be is that they would be combined. That 12 there would be a consolidation of that -- of those 13 boards in some function, whether it be administrative 14 staff with two boards, or one board with one staff, 15 whatever the case may be. But they would have -- they 16 would integrate both those -- the substance abuse and 17 then the mental health substance, and I think that is 18 where -- I think that's where the rub comes in, here, is 19 that the beneficiary classes of the settlement, and 20 historically, if you look through the pleadings, as well 21 as the two Supreme Court cases that formalize the Mental 22 Health Trust Settlement, the beneficiary classes -- it 23 was a contentious process. It was very litigious and it 24 was very adversarial, and I think there are some 25 residual issues with respect to those classes believing 0016 1 that they can -- they want to -- not wanting to give up, 2 at least in this circumstance, not wanting to give up 3 the authorities that were given to them, and 4 consolidating them with another function that may or may 5 not have the same interests at heart that those classes 6 had when the settlement was entered into. But again, as 7 I said, all of this is purely theoretical and none of 8 this has taken place. And none of it is on the table 9 with respect to -- well, I mean, the Legislative session 10 is over and nothing happened in this session. And 11 anything that would happen in the future is being 12 properly vetted through the Mental Health Trust 13 Authority, which is the appropriate entity to determine 14 whether that's happened. 15 And then you look to the settlement, and to the 16 terms of that settlement to determine how you go about 17 implementing that change. And if you do implement it, 18 is it a violation of the settlement, which it may or may 19 not be. 20 THE COURT: Okay, thank you. 21 MS. KRALY: Thank you. 22 THE COURT: Mr. Gottstein. 23 MR. GOTTSTEIN: Thank you, Judge Reese. I'm Jim 24 Gottstein. I represent plaintiff Katsumi Kenaston, who 25 is a beneficiary of the Alaska Mental Health Lands 0017 1 Trust. 2 I think that there are a couple of things that 3 are important to bear in mind in this, and one is the -- 4 two really important things, I think. The context of 5 the settlement, and that it's really a contract between 6 the State and the beneficiaries. And then, kind of 7 within that, the consequences of a breach of a material 8 term of the settlement. I think that will answer Your 9 Honor's question about why this case was brought. 10 Of course, the original Mental Health Trust Lands 11 litigation lasted for 15 years, and third-party titles 12 were tied up, and it was a pretty, I think, difficult 13 time for the State, at least with respect to that. And 14 this settlement brought to closure that period of time, 15 and essentially bought peace. One of the ways that the 16 settlement addressed, well, enforcement, was what I term 17 as in terrorem clause. That if the Legislature changed 18 any material terms of the Settlement, then the 19 plaintiffs would get a Rule 60(b)(6) relief from 20 judgment order and restart the litigation. Now, that's 21 kind of a -- at the -- really, a statement at the 22 culmination of the case with Weiss II. But clearly, the 23 Alaska Supreme Court, in addressing skepticism about the 24 use of Rule 60(b)(6) in this way, held this rule, 25 however, does not contradict the well-established 0018 1 practice of using Rule 60(b)(6) to return the parties to 2 the status quo after one party fails to comply with the 3 settlement agreement. So, it's not just restricted to a 4 material -- a change in a material term by the 5 Legislature. It's really any material breach. 6 THE COURT: So, what's the breach? 7 MR. GOTTSTEIN: We're not alleging a breach. 8 What we're doing is, under the Alaska Declaratory 9 Judgment Act, we are seeking a determination of the 10 respective rights of the parties. This is specifically 11 within the -- the provisions of the Alaska Declaratory 12 Judgment Act, AS 22.10.020(g), which states the court 13 may declare the rights and legal relations of an 14 interested party seeking the declaration whether or not 15 further relief is or could be sought. And that's 16 exactly what we're doing. And the State is basically 17 trying to inject into this case issues that are -- have 18 not been raised by the plaintiffs. And all the 19 plaintiffs are asking is a declaratory judgment that 20 being -- that adequate funding and opportunity to 21 perform its Settlement-mandated duties is an implied 22 term of the Settlement. And there doesn't really seem 23 to be any real dispute over that. The State seems to 24 say it's self-evident -- 25 THE COURT: Then why do you need to sue them? 0019 1 MR. GOTTSTEIN: Hmm? 2 THE COURT: If there's not a dispute about it, 3 why do you need to sue? 4 MR. GOTTSTEIN: Well, the reason is that we think 5 it's important that if the State is going to breach the 6 Trust, that it really ought to know that it's doing it 7 on purpose. That's the point, frankly, is that -- 8 THE COURT: Well, yeah, but what if they pass 9 their bill and the boards secretly think it takes two 10 million dollars to operate, and the Legislature funds 11 them four million dollars? 12 MR. GOTTSTEIN: Secretly think? 13 THE COURT: Well, whatever. Whatever they think 14 it-- 15 MR. GOTTSTEIN: Well, I mean, it's not -- these 16 are-- 17 THE COURT: You don't know what the Legislature 18 is going to do about funding, so you can't say they're 19 going to do it wrong, so there is no case in 20 controversy. See, that's the reason you have to have a 21 case in controversy. If they funded it at 50 cents, you 22 would be able to put on evidence at a certain level, and 23 you'd bring in certain witnesses, and what it would take 24 to show that they were really screwing up would be at 25 this level. And if they funded it at 150%, the evidence 0020 1 would be completely different. We can't have a trial on 2 this case until we know what it is that's in 3 controversy. And we don't know what it is in 4 controversy, so how can we have a trial? 5 MR. GOTTSTEIN: Well, I think that it's -- the 6 question is, is adequate funding an opportunity to 7 perform their settlement-mandated duties an implied term 8 of the settlement? We're just asking for a declaratory 9 judgment on that. And everybody seems to agree that it 10 is -- 11 THE COURT: Then you don't need a declaratory 12 judgment, do you? 13 MR. GOTTSTEIN: Well, why shouldn't we get one? 14 THE COURT: Because I've got better things to do. 15 I mean, that's the short answer. Why are you here? 16 What number do you want me to put in my order? You 17 don't have a number, do you? 18 MR. GOTTSTEIN: No, Your Honor, I don't. 19 THE COURT: Okay. What act of the State brings 20 you here that convinces you they're going to jerk your 21 chain? I mean, is there something? 22 MR. GOTTSTEIN: Well, sure there is, Your Honor. 23 The -- 24 THE COURT: Does it rise to the level of a 25 breach? 0021 1 MR. GOTTSTEIN: I don't know, Your Honor. It -- 2 what happened was the -- there was a severe ratcheting 3 down of the -- in the Governor's budget of the budget 4 for the boards, and the Trust ended up coming in and 5 filling the breach with its -- filling that gap with its 6 own money. So, I would say no, that there's not. But 7 there was a real, live set of events that was going on. 8 THE COURT: Go ahead. Anything further? 9 MR. GOTTSTEIN: I guess the only other thing that 10 I really want to state is that the -- I think the State 11 fails to recognize when it talks about, you know, the 12 Trust Authority doing this, and it's a political 13 process, and all that, is that the settlement agreement 14 is a contract between the State and the beneficiaries of 15 the Trust. And the fact that -- I mean, the Trust 16 Authority is not a party to the settlement agreement. 17 It's the beneficiaries who have the rights under the 18 settlement agreement. And there can be all kinds of 19 reasons why the Trust Authority might not pursue rights 20 that the beneficiaries think should be pursued. And 21 that it's very clear that the four boards and them 22 performing these planning and budget recommendation 23 functions was a negotiated term that consideration was 24 granted to get that. 25 And so, I think that the State tends to really 0022 1 lose sight of that -- that fact when it's talking about 2 political process. And there's no question that the 3 State has the power to breach the settlement. The 4 question is, you know, whether failing to adequately 5 fund is a breach. 6 And really, if the court feels it's a waste of 7 its time to decide -- may -- perhaps has indicated it 8 feels it's a waste of its time to address this issue, 9 but I would suggest that preventing the State -- you 10 know, giving the State clear indication that it's 11 treading on thin water here and preventing the reopening 12 of the whole case is a very useful thing to do. And I 13 think if the court disagrees, it can disagree with that. 14 But I certainly think that it is a very useful thing for 15 the court to do, and will potentially avoid huge 16 problems and huge court resources down the road. Thank 17 you, Your Honor. 18 THE COURT: Thank you. Anything else, Ms. Kraly? 19 MS. KRALY: Just a few points, Your Honor. The 20 settlement, in and of itself, is a complicated process, 21 and I think we have all, as we've looked through 22 everything and researched and written these motions and 23 you have looked at things can appreciate that. I think 24 it's important to really understand that that -- that 25 the remedy that Mr. Gottstein relies upon is a very 0023 1 limited process, by which the court -- I mean, if the 2 court goes to the position that the plaintiff and Mr. 3 Gottstein want you to go to, which is to say that this 4 is an implied material term, the reopening of the 5 litigation, this 60(b) process, is limited to a very 6 precise and narrow circumstance of facts. And I think 7 that's clearly outlined in the Weiss II litigation, 8 which is that the Legislature has to materially alter a 9 legislative component of that settlement. And, you 10 know, as I have mentioned earlier, there is nothing in 11 the legislation, both codified and uncodified, that 12 mandates a specific level of funding. So, still in 13 order to invoke that -- that provision, he's going -- 14 they would have to show that -- that there was a 15 material alteration of the terms of the settlement. And 16 I just don't think they can get there under any 17 scenario. 18 And finally, I think that -- the final point I 19 would like to make is that -- well, I have two -- one 20 quick point which would be is that although the -- the 21 point being made about the Mental Health Trust 22 Authority, I think kind of begs the question of the 23 importance and the integral nature of the Mental Health 24 Trust Authority in the overall settlement theme. I 25 mean, if you look at the settlement documents and the 0024 1 approval documentation from Judge Green, the Trust 2 Authority was the lynchpin, one of the primary focuses 3 and factors why she felt that this settlement was 4 appropriate and in the beneficiary classes' best 5 interests. The boards were barely mentioned. And so I 6 think although the boards are statutorily -- I think you 7 have to look at the fact that even though the political 8 point that Mr. Gottstein made is that the Trust 9 Authority is not a party here, but nothing happens 10 within this process without the Trust Authority's input 11 and participation. I mean, they are an integral part of 12 this system. And if we got to the next phase in this 13 circumstance where -- I mean, the Trust Authority would 14 have to be at the table, as would all of the other 15 beneficiary classes. If you look at -- you make one 16 decision for one set of -- one set of the beneficiary 17 class, you do so possibly to the detriment of another -- 18 of another class. I mean, Mr. Gottstein and the 19 plaintiff argue that the boards are an integral part and 20 they need to be fully-funded, whereas another 21 beneficiary class might say well, the boards aren't 22 really that important, but we want more programs in, you 23 know, in Bethel. We want, you know, bricks and mortar 24 where I can go and see somebody and get day-to-day 25 services. 0025 1 And finally, I would just point out and reiterate 2 that the case in controversy issue, I think, is critical 3 to this -- to this analysis. There is no case or 4 controversy here. There is no breach, there is no 5 proposed breach, there is no purported breach, there is 6 -- it's all out there waiting for -- what they're asking 7 for is the answer to a hypothetical and advisory 8 question which provides no useful information to be used 9 in any process, political or otherwise, for any of the 10 parties, classes, beneficiaries to the Mental Health 11 Settlement, and the court should grant the State's 12 motion to dismiss or, in the alternative, it's motion 13 for summary judgment. Thank you. 14 THE COURT: Thank you. The striking thing about 15 this case is that, for all the briefing, we can't figure 16 out what the breach is, what the controversy is, what 17 the big fight is about. Probably the easiest way to 18 understand it is to -- that you have to assume the State 19 is going to act in bad faith and, of course, I'm not 20 going to assume that. Everybody agrees that there was a 21 settlement, everybody has a copy of it, they know what 22 the terms are. The boards are in there, they have a 23 function, an advisory function, but a real function, 24 representing distinct interest groups. And to do that, 25 they need some sort of funding, and there's funding 0026 1 language in there. So, everything is really agreed, so 2 we can't really isolate the dispute. Now, it may very 3 well be that the Governor and the Legislature come up 4 with some number that's -- that the boards think is 5 inadequate. But even if that happens, it's not up to 6 the board to decide the level of funding. It's up to 7 the Legislature and the Governor. And if the price of 8 oil is 60 bucks a barrel, the level of funding that's 9 going to be available and politically feasible, as 10 determined by all the things that go into political 11 decisions in Juneau, may be really high. If the price 12 of oil is $1.25 a barrel, an adequate funding allocation 13 for this governmental purpose, in context with all the 14 other decisions that the government has to make with 15 revenues coming from $1.25 a barrel is going to be 16 substantially less. 17 What we get from our government is not always 18 predetermined, and probably never is predetermined. As 19 close as we can get to predetermining things is by 20 reading the Constitution, and I don't think there's 21 anything in the Constitution that says the Mental Health 22 boards are going to be funded as a certain level, any 23 more than the Constitution says rural schools are going 24 to be funded at a certain level. It sets out 25 principles. Just like anything in government, it is 0027 1 governed by principles, and the practical decisions, 2 when we get to it, are based on the practical facts that 3 exit at the time the decision is made. Highways may be 4 more important, in the eyes of the Legislature and the 5 Governor next year, or a gas line permit, or who knows 6 what, than funding of Mental Health boards. Or maybe 7 Mental Health boards is going be the hot issue and 8 everything else is going to go down the toilet and 9 Mental Health boards are going to be funded at a high 10 level. It takes a pretty extreme level of arbitrary 11 conduct in Juneau before the court can step in. Now, 12 I've done that once before on the rural school stuff, 13 but I certainly didn't say any numbers, and I couldn't. 14 We're not dealing with that kind of an issue here. I 15 mean, we certainly had a controversy in that case, but 16 nobody has screwed up yet. And if and when a decision 17 is made -- I'm sure they will make a decision, and if, 18 at that point, the boards or one of the boards thinks 19 that it is -- the political decision-making that goes 20 into that decision is sufficiently arbitrary or 21 sufficiently out to lunch, or destroys the function of 22 the settlement, then you can come back down to court. 23 But as it stands now, I think the complaint needs to be 24 dismissed for lack of a case in controversy. 25 Any questions, Mr. Gottstein? 0028 1 MR. GOTTSTEIN: Are you going to follow that up 2 with a written order, or is this -- 3 THE COURT: Yeah, final orders are always written 4 orders. Yeah. 5 MS. KRALY: No, Your Honor. 6 THE COURT: Well, you're going to be writing that 7 order. 8 MS. KRALY: Okay. 9 THE COURT: All right? Okay. You can be 10 excused. Thank you. 11 OFF RECORD 12 03:08:12 13 14 15 16 17 18 19 20 21 22 23 24 25 0029 1 TRANSCRIBER'S CERTIFICATE 2 I, Joanne Kearse, hereby certify that the 3 foregoing pages numbered 1 through 28 are a true, 4 accurate, and complete transcript of the oral argument 5 that took place on June 21, 2004, in the case of Katsumi 6 Kenaston v. State of Alaska, Case No. 3AN-04-03485 CI, 7 transcribed by me from a copy of the electronic sound 8 recording to the best of my knowledge and ability. 9 Dated this 5th day of December, 2004. 10 11 JOANNE KEARSE 12 13 14 15 16 17 18 19 20 21 22 23 24 25