State v. O'Neill Investigations, Inc.

DIMOND, Senior Justice,

with whom Chief Justice RABINOWITZ joins, concurring.

I concur in the result reached by Justice Connor in his opinion in this case. However, the authorities on which he relies 1 suggest that a statute should not be considered penal so long as the legislature labels the penalties for its violation “civil,” and so long as the provision so labeled is not of the class of “ ‘traditionally criminal provisions.’ ” See United States v. J. B. Williams, 498 F.2d 414, 421 (2d Cir. 1974) (quoted in Justice Connor’s opinion). To the extent that Justice Connor’s opinion carries that implication, I disagree.

Complete deference to the legislature’s labeling of a statute or sanction as civil is inconsistent with prior decisions by this court. In Baker v. City of Fairbanks, 471 P.2d 386, 390 (Alaska 1970), we noted that it is “ ‘the nature of the offense, and the amount of punishment prescribed, rather than its place in the statutes, [which] determine whether it is to be classed among serious or petty offenses’ ” (quoting Schick v. United States, 195 U.S. 65, 68 , 24 S.Ct. 826, 827 , 49 L.Ed. 99, 101 (1904)). By the same token, it is the nature of the act penalized and the amount of the penalty prescribed which should determine whether the sanction involved in this case is civil or penal. As this court indicated in Gwynn v. Gwynn, 530 P.2d 1311 , 1312 n.6 (Alaska 1975), the possibility of a punitive sanction may give rise to the need for procedural safeguards such as the right to a jury trial, even though the sanction may be designated civil in nature. I agree with the commentator who said that complete deference to the legislative label

is a gross abdication of the judicial role. . [I]t avoids the substantive question of whether [the legislature] has exceeded its constitutional authority. . When constitutional safeguards are involved, it is the function of the courts ultimately to decide whether and under what circumstances these protections apply-

Charney, The Need for Constitutional Protections for Defendants in Civil Penalty Cases, 59 Cornell L.Rev. 478, 494 (1974).

Furthermore, this court has held that it will not be bound by tradition in determining whether a statute is criminal or civil. “[Contemporary social values, rather than historical categorizations, should determine whether a prosecution is criminal . . .” State v. Browder, 486 P.2d 925, 936 (Alaska 1971) (citing Baker, 471 P.2d at 396 ).

Thus, I believe that neither, the legislative label nor the fact that the unlawful act is not traditionally criminal is sufficient reason for the conclusion that the statute involved in this case is remedial rather than punitive. A more reasoned analysis is available.

In Baker we excluded from the category of criminal prosecutions “legal measures which can be considered regulatory rather than criminal in their thrust, so long as incarceration is not one of the possible mod *538 es of punishment.” 2 471 P.2d at 402 . The statutory prohibition of unfair or deceptive trade practices is regulatory rather than criminal in its thrust.

In Alaska Public Defender Agency v. Superior Court, 584 P.2d 1106 (Alaska 1978), we used a three-part test to determine whether a proceeding was a criminal prosecution. The inquiry for one part was whether a statutory violation “ ‘connote[s] criminal conduct in the traditional sense of the term.’ ” Id. at 1110 (quoting Baker, 471 P.2d at 402 ). This part of the test is not favorable to O’Neill’s argument that the statute involved here is penal in nature because, like the petitioner in Alaska Public Defender Agency , O’Neill has not shown that unfair trade practices are traditional offenses “in the sense that social condemnation of such behavior has been long established as part of the common law proscribing criminal conduct.” 584 P.2d at 1110 .

The other two parts of the test as set forth in Alaska Public Defender Agency relate (1) to whether the unlawful act so offends contemporary social values as to be considered criminal and (2) to whether the monetary penalty is so heavy that it indicates a community judgment of criminality. 3 Id.

Contemporary social values may be severely offended by unfair or deceptive trade practices, particularly those alleged in this case. Furthermore, the argument that a penalty of $5,000 per violation indicates criminality deserves consideration. However, the reason that the court has used contemporary social values and heaviness of the authorized penalty as measures of criminality is that they are a gauge of the community’s ethical and social judgment of persons who commit the unlawful act. In turn, the reason for determining the community’s judgment of such persons is that the extent and nature of that judgment helps one predict the severity of collateral consequences which may be suffered by the defendant. Baker, 471 P.2d at 395 . In discussing potential collateral consequences of a conviction under the ordinance in Baker , we noted that “one convicted under this ordinance might suffer severe disabilities in obtaining future employment or in having heaped upon him a certain amount of social opprobrium.” Id.

The collateral consequences of a finding that a debt collection agency or other business has committed “unfair or deceptive acts or practices in the conduct of trade or commerce” 4 are not of this nature. In O’Neill’s case, the unlawful acts alleged harmed debtors but not O’Neill’s customers, for whom debts were collected. Therefore, a finding of unfair practices by O’Neill with respect to debtors is unlikely to have severe collateral consequences for O’Neill’s business.

For these reasons, I agree that AS 45.50.-471-561 is not a penal statute.

. In particular I refer to United States v. J. B. Williams, 498 F.2d 414, 421 (2d Cir. 1974). See also Frank Irey, Inc. v. Occupational Safety and Health Review Commission, 519 F.2d 1200, 1204 (3d Cir. 1975); Atlas Roofing Co. v. Occupational Safety and Health Review Commission, 518 F.2d 990, 1011 (5th Cir. 1975).

.At the time of O’Neill’s trial, incarceration was an authorized form of punishment under AS 45.50.551(c). However, AS 45.50.471(d) provided that the criminal provisions were applicable only if the defendant “acted knowingly and with intent,” which the state did not allege in this case. And as noted by Justice Connor, repeal of these provisions became effective January 1, 1980. Act of July 17, 1978, ch. 166, § 21, SLA 1978.

. “A heavy enough fine might also indicate criminality because it can be taken as a gauge of the ethical and social judgments of the community.” Baker, 471 P.2d at 402 n. 29, quoted in Alaska Public Defender Agency, 584 P.2d at 1110 .

. AS 45.50.471(a).