The Alaska Supreme Court on Friday dismissed a lower court's sanction against an Anchorage attorney who sought a whistleblower payment for saving the state millions of dollars though a lawsuit.
Though no state law provides for such a payment, the Supreme Court ruled that attorney Jim Gottstein's claim against the state amounted to "creative advocacy" and was not "frivolous."
The 4-1 ruling, written by Justice Peter Maassen, stems from a lawsuit filed in 2015 by Gottstein challenging a no-bid lease extension by the Alaska Legislature for its downtown Anchorage office space on West Fourth Avenue.
Gottstein said he was entitled to a whistleblower award of 10 percent of the money saved by the Legislature, much like a successful party can win though the federal False Claims Act. But McKay rejected his request, and sided with legislative attorneys in deeming it "frivolous."
Maassen, in Friday's decision, acknowledged that Gottstein's argument for whistleblower damages "stood little likelihood of success" because there was no direct support for it in precedent or Alaska law. But, Maassen added, it wasn't frivolous, because it didn't appear to be an abuse of the judicial process as there was no evidence Gottstein intended to "delay, harass, or increase the costs of litigation."
Gottstein owns a downtown Anchorage building adjoining another that once housed state lawmakers. The lawmakers had signed a no-bid lease extension with their developer that provided for expensive renovations and a steep price increase.
Gottstein's suit challenged the extension, saying that it should have been competitively bid as a new lease.
Gottstein appealed on the fee issue, saying in an interview Friday that he was "offended" that his argument was deemed frivolous.
The Supreme Court sided with Gottstein, saying that while his claim appeared to face long odds, it didn't appear to be made for an "improper purpose" — both of which are normal criteria for sanctions, Maassen wrote.
In fact, Gottstein's argument — that awarding a percentage of savings can help address government misconduct — was indirectly supported by the lower court's decision in the case, which said that allowing the no-bid lease would "eviscerate the competitive principles of the state procurement code," Maassen said.
Justice Joel Bolger was the lone dissenting justice.
In its ruling, the Supreme Court used sweeping language to support the idea that a citizen should be allowed to halt improper government practices. In acknowledging the "value of public interest litigation," the decision took note of Gottstein's claims that Alaskans should have a similar economic incentive to challenge "illegal" claims to payments like that provided in the federal False Claims Act.