N.M. State Inv. Council v. Weinstein

1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 Opinion Number: ___________
3 Filing Date: March 24, 2016
4 NOS. 33,787, 34,042 & 34,077 (Consolidated)
5 NEW MEXICO STATE INVESTMENT
6 COUNCIL, as Trustee, Administrator, and
7 Custodian of the LAND GRANT PERMANENT
8 FUND and the SEVERANCE TAX PERMANENT
9 FUND,
10 Plaintiff-Appellee,
11 and
12 STATE OF NEW MEXICO ex rel. FRANK
13 FOY, SUZANNE FOY, and JOHN CASEY,
14 Plaintiffs-Intervenors-Appellants,
15 v.
16 DANIEL WEINSTEIN, VICKY L. SCHIFF,
17 WILLIAM HOWELL, and MARVIN ROSEN,
18 Defendants-Appellees.
19 and
20 GARY BLAND, et al.,
21 Defendants.
1 (Consolidated with)
2 NEW MEXICO STATE INVESTMENT
3 COUNCIL, as Trustee, Administrator, and
4 Custodian of the LAND GRANT PERMANENT
5 FUND and the SEVERANCE TAX PERMANENT
6 FUND,
7 Plaintiff-Appellee,
8 and
9 STATE OF NEW MEXICO ex rel. FRANK
10 FOY, SUZANNE FOY, and JOHN CASEY,
11 Plaintiffs-Intervenors-Appellants,
12 v.
13 SAUL MEYER and RENAISSANCE PRIVATE
14 EQUITY PARTNERS, LP, d/b/a ALDUS EQUITY
15 PARTNERS, LP,
16 Defendants-Appellees,
17 and
18 GARY BLAND, et al.,
19 Defendants.
1 (Consolidated with)
2 NEW MEXICO STATE INVESTMENT
3 COUNCIL as Trustee, Administrator, and
4 Custodian of the LAND GRANT PERMANENT
5 FUND and the SEVERANCE TAX PERMANENT
6 FUND,
7 Plaintiff-Appellee,
8 and
9 STATE OF NEW MEXICO ex rel. FRANK
10 FOY, SUZANNE FOY, and JOHN CASEY,
11 Plaintiffs-Intervenors-Appellants,
12 v.
13 ELLIOT BROIDY,
14 Defendant-Appellee,
15 and
16 GARY BLAND, et al.,
17 Defendants.
18 APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
19 Sarah M. Singleton, District Judge
20 New Mexico State Investment Council
21 Bruce A. Brown, Special Assistant Attorney General
22 Santa Fe, NM
1 Day Pitney LLP
2 Kenneth W. Ritt, Special Assistant Attorney General
3 Stamford, CT
4 for Plaintiff-Appellee
5 Victor R. Marshall & Associates, P.C.
6 Victor R. Marshall
7 Albuquerque, NM
8 for Appellants
9 Scheuer Yost & Patterson
10 Mel E. Yost
11 Santa Fe, NM
12 White & Case LLP
13 Owen C. Pell
14 Joshua D. Weedman
15 New York, NY
16 for Defendant-Appellee Rosen
17 Butt Thornton & Baehr PC
18 Rodney L. Schlagel
19 Emily A. Franke
20 Albuquerque, NM
21 for Defendant-Appellee Howell
22 Sommer, Udall, Sutin, Hardwick & Hyatt, PA
23 Eric M. Sommer
24 Santa Fe, NM
25 for Defendants-Appellees Weinstein and Schiff
1 Daniel Yohalem
2 Santa Fe, NM
3 for Amici Curiae New Mexico Foundation for
4 Open Government and New Mexico Press Association
1 OPINION
2 BUSTAMANTE, Judge.
3 {1} Intervenors Frank Foy, Suzanne Foy, and John Casey (Appellants) appeal the
4 district court’s approval of settlements between the New Mexico State Investment
5 Council (NMSIC) and three sets of defendants. Having consolidated the three
6 appeals, we consider whether the district court’s approval of the settlements was
7 consistent with the Fraud Against Taxpayers Act and whether NMSIC’s Litigation
8 Committee complied with the Open Meetings Act, among other arguments. We affirm
9 the district court’s approval of the settlements.
10 BACKGROUND
11 {2} Most of the following facts are derived from the district court’s findings of fact.
12 Appellants do not specifically challenge any of these findings. “An unchallenged
13 finding of the trial court is binding on appeal.” Seipert v. Johnson, 2003-NMCA-119,
14 ¶ 26, 134 N.M. 394, 77 P.3d 298; see Rule 12-213(A)(4) NMRA (“The argument
15 shall set forth a specific attack on any finding, or such finding shall be deemed
16 conclusive.”).
17 A. The Parties
18 {3} Appellants are qui tam plaintiffs in two actions filed in 2008 and 2009 under
19 the New Mexico Fraud Against Taxpayers Act (FATA), NMSA 1978, §§ 44-9-1 to -
1 14 (2007, as amended through 2015). State ex rel. Frank C. Foy v. Vanderbilt Capital
2 Advisors, LLC, No. D-101-CV-2008-1895 (Vanderbilt); State ex rel. Frank C. Foy
3 v. Austin Capital Mgmt. Ltd., No. D-101-CV-2009-1189 (Austin). Foy is the former
4 chief investment officer at New Mexico’s Educational Retirement Board (ERB).
5 {4} NMSIC is a state agency that serves as trustee of, and is responsible for
6 investing, among other funds, the Land Grant Permanent Fund and the Severance Tax
7 Permanent Fund, which are established under the New Mexico Constitution for the
8 benefit of citizens of New Mexico. N.M. Const. art VIII, § 10, art. XII, §§ 2, 7;
9 NMSA 1978, §§ 6-8-2 to -7 (1957, as amended through 2015); NMSA 1978, § 7-27-
10 3.1 (1983).
11 {5} The defendants in the present suit are three groups of individuals and entities
12 alleged to have engaged in misconduct related to NMSIC’s management of the funds.
13 Each of the three groups is named and discussed in more detail below. For ease of
14 reference we refer to the defendants collectively as Defendants.
15 B. The Qui Tam Actions
16 {6} We begin with a discussion of the Appellants’ qui tam actions under FATA
17 because they form the backdrop against which we consider the three cases now before
18 us. Section 44-9-5(A) of FATA permits the filing of a “qui tam action,” which is “an
19 action . . . that allows a private person to sue for a penalty, part of which the
2
1 government will receive.” State ex rel. Foy v. Austin Capital Mgmt., Ltd. (Austin II),
2 2015-NMSC-025, ¶ 3, 355 P.3d 1 (alterations, internal quotation marks, and citation
3 omitted). A qui tam plaintiff is required to serve the complaint and a disclosure of
4 supporting evidence under seal to the attorney general, who “may intervene and
5 proceed with the action within sixty days after receiving the complaint and the
6 material evidence and information.” Section 44-9-5(C). If the attorney general
7 declines to intervene in the action, the qui tam plaintiff may proceed with the action.
8 Section 44-9-5(D). “Notwithstanding [these] provisions . . . , the attorney general or
9 political subdivision may elect to pursue the state’s or political subdivision’s claim
10 through any alternate remedy available” and “[a] finding of fact or conclusion of law
11 made in the other proceeding that has become final shall be conclusive on all parties
12 to an action under [FATA].” Section 44-9-6(H). If the attorney general initiates an
13 alternate proceeding, “the qui tam plaintiff shall have the same rights in such a
14 proceeding as the qui tam plaintiff would have had if the action had continued
15 pursuant to [FATA].” Id. As to the qui tam action, the state or political subdivision
16 may choose to settle the action “notwithstanding any objection by the qui tam
17 plaintiff if the court determines, after a hearing providing the qui tam plaintiff an
18 opportunity to present evidence, that the proposed settlement is fair, adequate[,] and
19 reasonable under all of the circumstances.” Section 44-9-6(C).
3
1 {7} In their qui tam actions, Appellants alleged that Vanderbilt Capital Advisors,
2 LLC and Austin Capital Management, Ltd., as well as other defendants, made false
3 claims to the ERB and to NMSIC about the risks associated with, and performance
4 of, certain financial instruments and hedge funds. They also alleged that there was
5 “pay-to-play”1 at the ERB and NMSIC.
6 {8} Vanderbilt and Austin were heard by two different judges. Judge Pfeffer,
7 presiding over Vanderbilt, dismissed some of the Appellants’ claims on the ground
8 that retroactive application of FATA to conduct occurring before its effective date
9 would violate the ex post facto clauses in both the United States and New Mexico
10 Constitutions. U.S. Const. art. 1, § 10; N.M. Const. art. II, § 19. Judge Pope entered
11 a similar order in Austin. This Court declined to hear an interlocutory appeal in
12 Vanderbilt, but later allowed an interlocutory appeal of this issue in Austin and
13 affirmed. See State ex rel. Foy v. Austin Capital Mgmt., Ltd. (Austin I), 2013-NMCA-
14 043, ¶¶ 1, 3, 297 P.3d 357.
1
15 In an announcement of 2010 rules addressing the practices, the Securities and
16 Exchange Commission (SEC) stated that “pay-to-play” practices involve “[e]lected
17 officials who allow political contributions to play a role in the management of [public
18 pension plan] assets and who use these assets to reward contributors” and “investment
19 advisers that seek to influence government officials’ awards of advisory contracts by
20 making or soliciting political contributions to those officials.” See Release No. IA-
21 3043, Political Contributions by Certain Investment Advisers p. 6 (July 1, 2010)
22 https://www.sec.gov/rules/final/2010/ia-3043.pdf; see 17 CFR 275.206(4)-5 (2012).
4
1 {9} At the time the district court approved the settlements in the cases now before
2 us, the Supreme Court had granted certiorari but had not yet decided the question. In
3 June 2015 the Supreme Court reversed, holding that the treble damages available
4 under FATA “are predominantly compensatory [and] do not violate the ex post facto
5 clause[s] and may be awarded for conduct occurring prior to the effective date of
6 FATA.” Austin II, 2015-NMSC-025, ¶ 44. It also held that, as to the civil penalties
7 available under FATA, “[i]t is . . . conceivable that the amount awarded in civil
8 penalties could be punitive in effect, particularly if the trial judge awards the
9 maximum [of] $10,000 per violation” and that, consequently, “[i]t is not practical to
10 make that determination without knowing the actual amount assessed with full
11 briefing on appeal addressed to a specific dollar figure.” Id. ¶ 49. Hence, the Supreme
12 Court declined to decide “whether the civil penalties awarded under FATA are
13 punitive and violate ex post facto principles until there is a definitive amount
14 awarded.” Id.
15 C. NMSIC’s Plan and the Present Suit
16 {10} While the Appellants’ qui tam actions were proceeding as just described,
17 NMSIC developed its own plan to recover from those involved in pay-to-play
18 schemes, including some of the defendants in Vanderbilt and Austin. NMSIC is
19 pursuing recovery using theories of liability other than FATA, focusing first on
5
1 individuals involved in the schemes. Using information gleaned from these
2 individuals, NMSIC plans to pursue the entities involved. NMSIC anticipates greater
3 recoveries from the entities than from individual defendants.
4 {11} Consistent with this plan, NMSIC took several actions. First, it declined to
5 intervene in Appellants’ qui tam suits and moved to dismiss the pay-to-play claims
6 involving NMSIC—but only those claims—from Vanderbilt and Austin. See § 44-9-
7 6(B) (“The state or political subdivision may seek to dismiss the action for good
8 cause notwithstanding the objections of the qui tam plaintiff if the qui tam plaintiff
9 has been notified of the filing of the motion and the court has provided the qui tam
10 plaintiff with an opportunity to oppose the motion and to present evidence at a
11 hearing.”). The motions to dismiss did not address Appellants’ claims regarding
12 nondisclosure of investment risks in Vanderbilt and Austin, nor did they address the
13 claims of pay-to-play at the ERB. NMSIC’s motion to dismiss the pay-to-play claims
14 from Vanderbilt were granted. It appears that as of June 2015 the district court had
15 not yet ruled on the motion to dismiss these claims from Austin.
16 {12} Second, because it wanted to pursue recovery for pay-to-play in NMSIC’s
17 investment process through non-FATA claims, NMSIC initiated the present suit,
18 alleging breach of fiduciary duty, aiding and abetting breach of fiduciary duty, breach
19 of contract, and unjust enrichment. Although the present suit involves different claims
6
1 than those in Austin, fifteen of the seventeen named defendants in this suit are also
2 named in Austin. The district court granted Appellants’ motion to intervene. See Rule
3 1-024 NMRA.
4 {13} The parties agree that the present suit is an “alternate remedy” under FATA and
5 that, therefore, Appellants are entitled to the same rights in this suit as they enjoy in
6 Austin, including the right to a hearing on the fairness, adequacy, and reasonableness
7 of settlements. See § 44-9-6(C).
8 {14} Third, NMSIC adopted a Recovery Litigation Settlement Policy (Settlement
9 Policy). The Settlement Policy, which is discussed in more detail below, also created
10 a Litigation Committee with the power to “actively participate in settlement
11 negotiations, as appropriate, with the authority of [NMSIC] for settlement resolution
12 and related decisions.” Over objection by Appellants, the district court adopted a
13 discovery plan meant to facilitate settlement discussions. Under this plan, only
14 discovery essential for settlement discussions was permitted.
15 {15} Pursuant to the Settlement Policy and the district court’s discovery plan, Day
16 Pitney LLP, a firm engaged by NMSIC, initiated settlement negotiations with some
17 of the defendants, all of whom are represented by experienced attorneys. It also began
18 an investigation of the possible recoveries against individuals and entities. As part of
19 this investigation, Day Pitney reviewed (1) over 2.5 million pages of documents from
7
1 the SEC, (2) 130,000 pages of documents from third parties, (3) desktop or laptop
2 data from twenty-two NMSIC employees, (4) 70,000 paper documents from NMSIC,
3 (5) complete images of NMSIC file and email servers, (6) sixty-eight server backup
4 tapes, (7) complete copies of server folders used by NMSIC employees to store
5 investment-related documents through December 2010, (8) updated email files for
6 NMSIC employees through December 2010, (9) server home directories for twenty-
7 two NMSIC employees, (10) email files for email addresses used by NMSIC
8 investment groups, and (11) audio recordings of NMSIC and subcommittee meetings.
9 Its document review was facilitated by e-discovery techniques of predictive coding,
10 concept grouping, near-duplication detection, and email threading. Day Pitney also
11 conducted interviews with twenty-three individuals, including over a dozen NMSIC
12 employees. Discovery was obtained from NMSIC, the SEC, and third parties, as well
13 as from some of the defendants.
14 D. The Path to the Present Appeals
15 {16} Each of the three cases now on appeal took similar but slightly different routes
16 through the district court. We begin with the district court’s review of the settlements
17 with the Weinstein Defendants because (1) of the settlements now on appeal, they
18 were the first approved, and (2) the procedures adopted by the district court for
19 considering these settlements set the stage for its consideration of the subsequent
8
1 settlements. The cases on appeal are also discussed in the order in which the district
2 court considered the settlement agreements.
3 1. The Weinstein Defendants
4 {17} In April 2013 NMSIC reached settlement agreements with Daniel Weinstein,
5 Vicky L. Schiff, Marvin Rosen, and William Howell (the Weinstein Defendants). In
6 these agreements, the Weinstein Defendants agreed to provide information and
7 answer questions about pay-to-play practices at NMSIC, make themselves available
8 to do so, execute affidavits truthfully setting forth their knowledge of such practices,
9 appear without subpoena to provide testimony at depositions or at other civil actions
10 NMSIC may initiate, and appear without subpoena at trial. The Weinstein Defendants
11 agreed to payments to NMSIC ranging from $100,000 to $300,000. In return, NMSIC
12 agreed to release these Defendants from any claim “arising out of or relating to the
13 investments by NMSIC.” Importantly, the district court found that NMSIC’s release
14 “does not cover claims relating to [the] ERB.” The settlement agreements were
15 executed by a member of NMSIC’s Litigation Committee.
16 {18} On April 18, 2013, NMSIC moved for the district court’s approval of the
17 settlements and dismissal of the Weinstein Defendants. See § 44-9-6(C) (“The state
18 . . . may settle the action with the defendant notwithstanding any objection by the qui
19 tam plaintiff if the court determines, after a hearing providing the qui tam plaintiff an
9
1 opportunity to present evidence, that the proposed settlement is fair, adequate[,] and
2 reasonable under all of the circumstances.”). Appellants filed an objection to the
3 settlements, but did not argue that the settlements were unfair, inadequate, or
4 unreasonable, and did not request an evidentiary hearing. At a hearing on July 15,
5 2013, Appellants first challenged the fairness, adequacy, and reasonableness of the
6 settlements and requested an evidentiary hearing, claiming that they had “enough of
7 the things that [they] put together independently that” a hearing was appropriate. The
8 district court ordered Appellants to submit a memorandum within two weeks stating
9 the grounds for their objections and identifying supporting evidence. It also ordered
10 NMSIC to prepare an order memorializing its oral orders. But Appellants did not file
11 a memorandum as directed by the district court. Instead, Appellants filed objections
12 to the proposed order prepared by NMSIC and requested a stay in the proceedings
13 pending the Supreme Court’s decision in Austin II. The district court denied the
14 motion to stay the proceedings and Appellants’ objections to the proposed order.
15 {19} In August 2013 the district court scheduled an evidentiary hearing for
16 November 25 and 26, 2013, on Appellants’ objections to the settlements. On
17 September 1, 2013, the district court entered an order defining the procedures for
18 briefing and other issues related to Appellants’ objections to the settlements. We refer
19 to this order as the Settlement Process Order. Appellants were required to file “a
10
1 memorandum that sets forth the basis for their position that the proposed settlements
2 . . . are not fair, adequate[,] and reasonable under all [of] the circumstances and
3 identifies the evidence upon which they will rely at the hearing.” The order noted that
4 Appellants must overcome a presumption that the settlements are fair, adequate, and
5 reasonable. It also set out factors under which the fairness and adequacy of the
6 settlements would be assessed. Finally, the order mandated that a similar
7 memorandum would be required for all future motions for dismissal based on
8 settlement with other defendants.
9 {20} When Appellants failed to file the required memorandum by the date set by the
10 district court, NMSIC moved to dismiss the Weinstein Defendants without a hearing.
11 The district court denied NMSIC’s motion and extended the deadline for Appellants’
12 memorandum by approximately two weeks. Although Appellants filed a
13 memorandum by this later deadline, it did not address the specific points listed by the
14 district court’s order.
15 {21} On November 1, 2013, Appellants represented at a motion hearing that they
16 had evidence to support their opposition to the settlements but argued that they
17 needed information about gains and losses on particular investments that NMSIC had
18 withheld from them for years. Appellants argued that they needed to see the figures
19 for “cash out, cash in.” Counsel for Appellants stated that they “want[ed] to ask
11
1 somebody from [NMSIC], . . . , what was the gain or loss on this particular
2 investment.” Approximately two weeks later, NMSIC served a response to the
3 Appellants’ oral discovery request that provided gain and loss information on all
4 thirteen of the investments associated with the Weinstein Defendants, together with
5 a chart showing “cash in, cash out,” and, where applicable, residual values.2
6 {22} At the November 25-26, 2013, evidentiary hearing, NMSIC presented the
7 testimony of six witnesses by affidavit and direct testimony. These witnesses included
8 a member of the Litigation Committee and a Day Pitney attorney, as well as the four
9 Weinstein Defendants. After the witnesses attested that their affidavits were an
10 accurate representation of their testimony and provided the foundation for exhibits,
11 Appellants were afforded an opportunity to cross-examine them. Appellants did not
12 testify, nor did they present evidence related to the investment loss information they
13 had requested.
2
14 Although Appellants maintain on appeal that they never received this
15 information, the district court found that “NMSIC served a response to [Appellants’]
16 oral discovery request that provided current . . . gain and loss information on all
17 [thirteen] of the investments associated with the [Weinstein] Defendants, together
18 with a chart showing cash in, cash out, and, where applicable, residual values.” We
19 defer to this finding because it is supported by the record. See Phelps Dodge Corp.
20 v. N.M. Emp’t Sec. Dep’t, 1983-NMSC-068, ¶ 8, 100 N.M. 246, 669 P.2d 255 (“If .
21 . . substantial evidence [to support a finding] appears in the record, the district court’s
22 findings will not be disturbed.”).
12
1 {23} After the hearing, the district court entered seventy-three findings of fact and
2 forty-nine conclusions of law. In a subsequent order, it granted NMSIC’s motion to
3 dismiss the Weinstein Defendants. The findings of fact and conclusions of law are
4 discussed more fully in the context of Appellants’ arguments on appeal.
5 2. The Meyer Defendants
6 {24} A few months after reaching agreement with the Weinstein Defendants,
7 NMSIC reached a settlement agreement with Saul Meyer and Renaissance Private
8 Equity Partners, LP, d/b/a Aldus Equity Partners, LP (the Meyer Defendants) in July
9 2013. The provisions of this settlement agreement substantially mirrored those with
10 the Weinstein Defendants. This settlement agreement also was signed by a member
11 of the Litigation Committee.
12 {25} NMSIC moved for approval of the settlement with the Meyer Defendants on
13 January 10, 2014. The motion included the settlement agreement and sworn financial
14 statements from the Meyer Defendants. Appellants filed a response to the motion
15 objecting to the settlement and requesting an evidentiary hearing. The district court
16 held a two-hour hearing on June 19, 2014, on NMSIC’s motion to dismiss and
17 Appellants’ motion for an evidentiary hearing, and ruled that Appellants had failed
18 to file a memorandum consistent with the Settlement Process Order. No evidence was
19 presented at this hearing.
13
1 {26} Roughly a month later, the district court granted the motion to dismiss the
2 Meyer Defendants noting that “[Appellants] were given the opportunity to identify
3 the evidence they would present in opposition to the settlement[s but] indicated at the
4 . . . hearing that they had no evidence to present in opposition to the settlement.” It
5 therefore concluded that an evidentiary hearing was unnecessary and denied
6 Appellants’ motion. The district court acknowledged Appellants’ argument that
7 further discovery was necessary to obtain evidence to support their position but
8 concluded that Appellants were not entitled to full discovery because “[t]he extent of
9 discovery appropriate in connection with a settlement approval hearing is limited to
10 whether the settlement is fair, adequate, and reasonable.” It concluded, “[the Meyer]
11 Defendants have admitted liability, have agreed to cooperate with [NMSIC], and have
12 demonstrated that they have limited financial means[,]” and found that the settlements
13 were fair, adequate, and reasonable. The Meyer Defendants were dismissed.
14 3. The Broidy Defendants
15 {27} Elliott Broidy (Broidy) was the founder and chairman of Markstone Capital
16 Group, LLC (Markstone) (collectively, the Broidy Defendants). NMSIC alleged that
17 Broidy secured an investment from NMSIC in Markstone’s private equity fund by
18 making undisclosed and illegal quid pro quo payments to another defendant, thereby
19 aiding other defendants in breaching their fiduciary duties to NMSIC. In June 2014
14
1 NMSIC and Markstone reached a settlement agreement. In exchange for a payment
2 of $1,000,000 by Markstone, NMSIC released Markstone and Broidy from “any and
3 all claims . . . arising out of, [or] in connection with, or relating to any activities
4 by . . . Markstone [and Broidy] . . . with respect to . . . NMSIC . . . , including
5 NMSIC’s investments in the Markstone Fund.” The agreement with the Broidy
6 Defendants did not require Broidy or Markstone to cooperate in NMSIC’s civil
7 actions against other defendants. This agreement was signed by Governor Susana
8 Martinez as Chair of NMSIC. See § 6-8-2(B) (stating that the chair of NMSIC shall
9 be the Governor).
10 {28} Shortly thereafter, NMSIC filed a motion to dismiss the Broidy Defendants
11 asserting that Appellants had no standing to object to the dismissal because they had
12 not named Broidy or Markstone in their qui tam actions. Nevertheless, Appellants
13 filed a response to the motion to dismiss stating their objections to the settlement. The
14 district court decided that no hearing was necessary because the cases on which
15 Appellants relied to establish standing to challenge the Broidy Defendants’ dismissal
16 were all distinguishable, and because Appellants’ objections to the settlement had
17 been previously rejected and Appellants presented no new reasons to change the
18 district court’s decision. NMSIC’s motion to dismiss Broidy was granted.
15
1 {29} Appellants now appeal the district court’s approval of the settlements and
2 dismissal of the Weinstein Defendants, the Meyer Defendants, and Defendant Broidy
3 from NMSIC’s suit.
4 DISCUSSION
5 A. Preliminary Matters3
6 1. Finality
7 {30} To the extent that Appellants argue that the district court’s orders dismissing
8 the Defendants were not final appealable orders, we disagree. See Rule 1-054(B)(2)
9 NMRA. Appellants argue that the orders are not final because they “do[] not
10 adjudicate all issues relating to these . . . [D]efendants, because [they] do[] not
11 adjudicate the [twenty-five] to [thirty percent] share of the settlement [that] goes to
12 [Appellants], or the amount of attorney fees [that will be] paid by these
13 [D]efendants.” Appellants’ argument is based on NMSA 1978, Section 44-9-7 (2015),
14 which sets out how a qui tam plaintiff may be compensated when the state prevails
15 in a FATA action. Section 44-9-7(A)-(C) guides how much a qui tam plaintiff may
16 recover. Section 44-9-7(D) provides that “[a]ny award to a qui tam plaintiff shall be
3
17 Appellants argue before this Court that Day Pitney “has disqualifying conflicts
18 of interest.” We decline to address this issue because it was never considered in the
19 first instance by the district court. Appellants’ motions to supplement the record on
20 appeal related to this argument are denied.
16
1 paid out of the proceeds of the action or settlement, if any. The qui tam plaintiff shall
2 also receive an amount for reasonable expenses incurred in the action plus reasonable
3 attorney fees that shall be paid by the defendant.”
4 {31} Here, Appellants never filed a motion for the statutory award and attorney fees,
5 and the district court did not hold a hearing on these issues. The orders dismissing
6 Defendants do not address the statutory award or attorney fees. We disagree with
7 Appellants that the pendency of these issues renders the dismissal orders non-final
8 for two reasons.
9 {32} First, the language of FATA itself contemplates resolution of the merits of the
10 action before determination of the qui tam plaintiff’s award and attorney fees. Section
11 44-9-7 provides for such awards when the state “prevails in the action” and when
12 there are “proceeds of the action or settlement.” This language indicates that
13 calculation of the qui tam plaintiff’s award is subsequent to and supplementary to
14 adjudication of the merits of the action or resolution by settlement. See Valley
15 Improvement Ass’n v. Hartford Accident & Indem. Co., 1993-NMSC-061, ¶ 11, 116
16 N.M. 426, 863 P.2d 1047 (distinguishing between attorney fees that are an integral
17 part of compensatory damages and attorney fees that are “analogous to costs” and
18 thus “supplementary to relief on the merits”).
17
1 {33} Second, our Supreme Court has held that “[w]here a postjudgment request,
2 such as one for attorney[] fees, raises issues ‘collateral to’ and ‘separate from’ the
3 decision on the merits, such a request will not destroy the finality of the decision[.]”
4 Kelly Inn No. 102, Inc. v. Kapnison, 1992-NMSC-005, ¶ 21, 113 N.M. 231, 824 P.2d
5 1033. Here, by approving the settlements and dismissing Defendants, the district
6 court’s orders “declare[d] the rights and liabilities of the parties to the underlying
7 controversy,” i.e., the settlement amounts and terms. Id. Any determination as to the
8 Appellants’ proper share of the settlement amount and attorney fees “will not alter[,]
9 . . . moot or revise” the district court’s approval of the rights and liabilities set out in
10 the settlement agreements. Id. Hence, the proceedings to determine Appellants’ share
11 of the settlements are “collateral to” and “separate from” the approval of the
12 settlements. Id.13 2. Jurisdictional Limits
14 {34} Appellants also argue briefly that the district court acted beyond its jurisdiction
15 in approving the settlements (1) because the settlements released Defendants from the
16 FATA claims in Austin, which was presided over by another judge, and (2) because
17 those claims could not be released while the Austin case was stayed pending appeal.
18 For the most part, Appellants provide no authority for these contentions or to support
19 their argument that the district court’s jurisdiction here is limited by proceedings in
18
1 an entirely separate case. Generally, this Court will not consider propositions that are
2 unsupported by citation to authority. ITT Educ. Servs., Inc. v. Taxation & Revenue
3 Dep’t, 1998-NMCA-078, ¶ 10, 125 N.M. 244, 959 P.2d 969.
4 {35} In any case, we are unpersuaded that the district court exceeded its jurisdiction.
5 There is no dispute that the district court had jurisdiction over this case. The fact that
6 a decision in this case may have an impact on another pending proceeding does not
7 diminish its jurisdiction here. Indeed, Section 44-9-6(H) states that “[a] finding of fact
8 or conclusion of law made in the other proceeding that has become final shall be
9 conclusive on all parties to an action under [FATA].” Thus, this provision appears to
10 contemplate the disposal of claims in a qui tam action by decisions rendered in an
11 alternate remedy proceeding. See In re Pharm. Indus. Average Wholesale Price Litig.,
12 892 F. Supp. 2d 341, 343-45 (D. Mass. 2012) (recognizing that a settlement
13 agreement in a separate qui tam action may extinguish a qui tam plaintiff’s claims and
14 holding that such a settlement was an “alternate remedy” under Section 3730(c)(5)
15 of the False Claims Act (FCA), 31 U.S.C. §§ 3729–3733 (2012)).
16 3. Violation of Stay
17 {36} Appellants also argue that the stay was violated because the district court
18 released the FATA claims before the Supreme Court had a chance to rule on the
19 constitutional/retroactivity issue in Austin II and that, consequently, the Supreme
19
1 Court’s authority was “usurp[ed].” But the district court assumed that FATA was
2 constitutional, an assumption that favored Appellants’ position because, generally
3 speaking, the longer the period of alleged misconduct, the weaker the settlements
4 appear. Conversely, if the Supreme Court had decided that the retroactivity provision
5 of FATA was unconstitutional, then the period encompassing the alleged misconduct
6 would have been shorter, which would have weighed in favor of the adequacy of the
7 settlements and against Appellants’ position. We conclude that the district court
8 properly assessed the settlements in light of the pending appeals in Austin and did not
9 usurp the Supreme Court’s authority.
10 B. Appellants Do Not Have Standing to Challenge the Dismissal of Defendant
11 Broidy
12 {37} The district court held that Appellants did not have standing to challenge the
13 settlement with the Broidy Defendants because they were not named as defendants
14 in Appellants’ qui tam actions. The district court reasoned that, because Appellants’
15 rights in the present action stem solely from their rights in their qui tam actions,
16 Appellants’ failure to name the Broidy Defendants there means that they had no rights
17 as to them here.
18 {38} Although Appellants appealed the district court’s decision and dismissal of the
19 Broidy Defendants, they did not address the legal principles of standing in their brief
20 in chief nor specifically argue that the district court’s ruling was incorrect. Nor did
20
1 they address this issue in their reply brief even after NMSIC raised it in its answer
2 brief. “In this circumstance, such a failure to respond constitutes a concession on the
3 matter.” Delta Automatic Sys., Inc. v. Bingham, 1999-NMCA-029, ¶ 31, 126 N.M.
4 717, 974 P.2d 1174. “This Court has no duty to search the record or research the law
5 to ‘defend’ in a civil case a party that fails to defend itself on an issue.” Id. This issue
6 having been waived, we turn to Appellants’ substantive arguments as to the district
7 court’s approval of the settlements with the Weinstein and Meyer Defendants.
8 C. Appellants’ Substantive Arguments as to the Weinstein and Meyer
9 Defendants
10 {39} In these two appeals, Appellants raise the same four arguments. First, they
11 maintain that the district court erred in limiting discovery before approving the
12 settlements. Second, they argue that the district court’s rulings violate FATA. Third,
13 they argue that NMSIC violated the Open Meetings Act (OMA), NMSA 1978, §§ 10-
14 15-1 to -4 (1974, as amended through 2013),4 the Inspection of Public Records Act
15 (IPRA), NMSA 1978, §§ 14-2-1 to -12 (1947, as amended through 2013), and the
16 statute governing NMSIC, Section 6-8-2. Finally, Appellants contend that the district
17 court erred in ruling that they lacked standing to raise issues related to alleged
4
18 The 2013 amendments to the OMA were effective June 14, 2013, after some
19 of the settlements were signed by the Litigation Committee. The 2013 amendments
20 do not alter our analysis.
21
1 conflicts of interest of the former attorney general, Gary King, and his staff. We
2 address the first two arguments together, then the third and fourth in turn.
3 1. The District Court Did Not Abuse its Discretion as to Discovery nor
4 Violate FATA
5 {40} Appellants argue that the district court erred when it “refused to allow
6 discovery” and “refused to allow the [Appellants] to take any depositions . . . [o]r to
7 propound any interrogatories . . . [o]r to serve any requests for production.” In
8 essence, they maintain that they were denied the opportunity to present evidence that
9 the settlements were unfair and unreasonable—an opportunity to which they are
10 entitled by statute—because they were unduly limited in their ability to propound
11 discovery. See § 44-9-6(C). “Although the rules favor the allowance of liberal pretrial
12 discovery, the trial court is vested with discretion in determining whether to limit
13 discovery.” DeTevis v. Aragon, 1986-NMCA-105, ¶ 10, 104 N.M. 793, 727 P.2d 55814 (citation omitted). Hence, “[a] trial court’s ruling limiting discovery is subject to
15 reversal only upon a showing of an abuse of discretion.” Id.16 {41} We begin by addressing Appellants’ argument that, because of the differences
17 between FATA and the FCA, it is inappropriate to rely on federal cases construing
18 the FCA in construing FATA. They point to San Juan Agricultural Water Users
19 Ass’n v. KNME-TV, in which the Supreme Court stated that “[t]he differences in
20 substantive text and legislative purposes [between a federal statute and a New Mexico
22
1 statute] make the application of federal . . . law inappropriate when construing [that
2 New Mexico statute].” 2011-NMSC-011, ¶ 38, 150 N.M. 64, 257 P.3d 884. We
3 therefore consider whether differences between the FCA and FATA make federal
4 case law inapposite.
5 {42} Our courts have recognized that “FATA closely tracks the longstanding federal
6 [FCA]” and that “cases construing FATA’s federal analogue, the [FCA], [are] helpful
7 in understanding the context and purpose of FATA.” Austin II, 2015-NMSC-025,
8 ¶¶ 16, 25; see State ex rel. Peterson v. Aramark Corr. Servs., LLC, 2014-NMCA-036,
9 ¶ 4, 321 P.3d 128 (recognizing that FATA is similar to the FCA). Appellants argue
10 that this principle is inapplicable because the differences between FATA and the FCA
11 indicate that the New Mexico Legislature intended to afford qui tam plaintiffs broader
12 protections than those provided under the FCA. They derive this idea from the fact
13 that, whereas the FCA permits settlement “after a hearing,” FATA permits settlement
14 “after a hearing providing the qui tam plaintiff an opportunity to present evidence.”
15 Compare 31 U.S.C. § 3730(c)(2)(B), with § 44-9-6(C) (emphasis added).
16 {43} Under the FCA, a qui tam plaintiff may request an evidentiary hearing, which
17 “should be granted only upon a showing by the [qui tam plaintiff] of ‘substantial and
18 particularized need.’ ” Claire M. Sylvia, The False Claims Act: Fraud Against the
19 Government § 11:127 (2d ed. 2015); see Ridenour v. Kaiser-Hill Co., 397 F.3d 925,
23
1 935 (10th Cir. 2005); Nasuti ex rel. United States v. Savage Farms, Inc., No. 12-
2 30121-GAO, 2014 WL 1327015, at *13 (D. Mass. Mar. 27, 2014) (order), aff’d, No.
3 14-1362, 2015 WL 9598315 (Mar. 12, 2015). Thus, the opportunity to present
4 evidence at a hearing is permissible under the FCA upon a sufficient showing, but
5 required under FATA. Federal case law addressing when an evidentiary hearing
6 should be granted is therefore likely inapposite to Section 44-9-6(C) of FATA. Once
7 granted, however, we see no reason why federal case law addressing the conduct of
8 the evidentiary hearing itself is inapplicable to evidentiary hearings under FATA.5
9 {44} In addition to federal case law addressing the FCA, the law governing review
10 of class action settlements is also instructive here. In United States ex rel. Schweizer
11 v. Océ North America Inc., the court held that case law addressing the fairness,
12 adequacy, and reasonableness of class action settlements is analogous to the same
13 analysis under the FCA. 956 F. Supp. 2d 1, 10-11 (D.D.C. 2013); see Fed. R. Civ. P.
14 23(e)(2) (stating that class action settlements may be approved “only after a hearing
15 and on finding that it is fair, reasonable, and adequate”). This approach has been
16 adopted by other federal courts. See, e.g., United States ex rel. Nudelman v. Int’l
17 Rehab. Assocs., Inc., No. CIV A 00-1837, 2004 WL 1091032, at *1 n.1 (E.D. Pa. May
5
18 We note that Appellants relied on FCA cases in other contexts in the district
19 court and thus appear to recognize that FCA cases are useful to construe FATA when
20 the specific provisions at issue in the two statutes are similar.
24
1 14, 2004) (order); United States ex rel. Resnick v. Weill Med. Coll. of Cornell Univ.,
2 No. 04 CIV 3088(WHP), 2009 WL 637137, at *2 (S.D.N.Y. Mar. 5, 2009).
3 {45} Similarly, in New Mexico, class action settlements are evaluated by the district
4 court for their fairness, adequacy, and reasonableness. See Rivera-Platte v. First
5 Colony Life Ins. Co., 2007-NMCA-158, ¶ 43, 143 N.M. 158, 173 P.3d 765 (stating
6 that the settlement proponents bear the burden of demonstrating that the settlement
7 is fair, adequate, and reasonable). Given the similarity between the standards for
8 approval of settlement of false claims actions and class actions, we look to class
9 action law for guidance on FATA settlement hearings.
10 {46} Having concluded that federal case law governing objections to settlements
11 under the FCA and case law on class action settlements is applicable, we next
12 examine that law. In Schweizer, the court considered whether a qui tam plaintiff “who
13 objects to a proposed [FCA] settlement reached between the government and the
14 defendant [is] entitled to full-blown discovery on her claims in order to prove that the
15 settlement [is] inadequate[.]” 956 F. Supp. 2d at 11. The court concluded that the
16 hearing required by statute “serves a . . . limited purpose of forcing the government
17 to provide some reasoning behind its decision to settle the case and giving the
18 plaintiff-relators an opportunity to direct the court’s attention to facts or allegations
19 that would suggest the settlement was not ‘fair, adequate[,] and reasonable under all
25
1 the circumstances[.]’ ” Id. Based on this limited purpose, it further concluded that
2 “allowing full-blown discovery as of right would risk transforming the [FCA
3 settlement] hearing into a trial on the merits of [the qui tam] plaintiff’s claims and the
4 government’s estimations of the litigation risks. It would put the cart before the horse,
5 in essence making trial a precondition of settlement.” Id. Although it held that there
6 was no right to full discovery, the court noted that limited discovery would be
7 appropriate when “the government has not adequately explained its reasoning behind
8 the settlement.” Id.; see United States ex rel. McCoy v. Cal. Med. Review, Inc., 133
9 F.R.D. 143, 149 (N.D. Cal. 1990) (stating that although a qui tam plaintiff is entitled
10 “to discovery on the fairness of the proposed settlement, the discovery must be
11 limited to effectuate the goal of allowing plaintiffs meaningful participation in the
12 fairness hearing without unduly burdening the United States or the defendants or
13 causing unnecessary delay”); 5B Fed. Proc., L. Ed. § 10:73 (2004) (“The qui tam
14 plaintiffs may be allowed limited discovery to enable them to play an active role in
15 hearings on a proposed settlement agreement.”); cf. 32B Am. Jur. 2d Federal Courts
16 § 1870 (2016) (stating that “formal discovery is not a prerequisite to the approval of
17 a [class action] settlement as long as the plaintiffs’ negotiators had access to sufficient
18 information regarding the facts of the case, and if the terms of the settlement are fair,
26
1 the court may reasonably conclude that counsel performed adequately in obtaining
2 a working knowledge of the case”).
3 {47} The Schweizer holding is paralleled in Rivera-Platte,6 in which this Court
4 considered whether “the settlement process was unfair because [the objectors’] . . .
5 requests for discovery were denied.” 2007-NMCA-158, ¶ 52. We rejected the
6 objectors’ argument that “informal” discovery was inadequate to permit the court to
7 evaluate the settlement, id. ¶ 49, and that they had “an absolute right to discovery.”
8 Id. ¶ 94 (internal quotation marks and citation omitted). Instead, we stated that
9 informal discovery is appropriate so long as it is sufficient “to fairly evaluate the
10 merits of [the d]efendants’ positions during settlement negotiations.” Id. ¶ 49. We
11 also noted that “[o]ne of the major reasons courts encourage settlement is to reduce
12 the cost of litigation” and that because settlement is “an extra judicial process,
13 informality in the discovery of information is desired.” Id. ¶ 51 (internal quotation
6
14 Appellants argue that Rivera-Platte cannot be relied upon because the
15 Supreme Court deemed it of no “force or effect” after all the parties “[sought] to
16 implement the district court’s [f]inal [o]rder in the interest of achieving a class-wide
17 settlement.” Platte v. First Colony Life Ins. Co., 2008-NMSC-058, ¶¶ 6, 8, 145 N.M.
18 77, 194 P.3d 108. Although this Court’s order was deemed of no force or effect as to
19 the parties, the legal propositions set out in the Opinion remain precedential and have
20 been cited in other cases, including by our Supreme Court. See, e.g., Davis v. Devon
21 Energy Corp., 2009-NMSC-048, ¶ 38, 147 N.M. 157, 218 P.3d 75; Atherton v. Gopin,
22 2012-NMCA-023, ¶ 7, 272 P.3d 700; State v. Pacheco, 2008-NMCA-131, ¶ 34, 145
23 N.M. 40, 193 P.3d 587.
27
1 marks and citation omitted). Although in Rivera-Platte we reversed the district
2 court’s denial of discovery, we held that “the district court would not have abused its
3 discretion in denying discovery if it had sufficient information before it to determine
4 whether to approve the settlement.” Id. ¶ 95; accord Hershey v. ExxonMobil Oil
5 Corp., No. 07-1300-JTM, 2012 WL 4758040, at *2 (D. Kan. Oct. 5, 2012) (stating
6 that “[t]he fundamental question is whether the district [court] has sufficient facts
7 before [it] to intelligently approve or disapprove the settlement” (internal quotation
8 marks and citation omitted)).
9 {48} Consistent with these principles, the district court here properly concluded that
10 “[Appellants] are not entitled to conduct or complete full-blown discovery prior to
11 proposed settlement approval.” Hence, we reject Appellants’ contention that the
12 district court violated FATA by limiting discovery before settlement.
13 {49} We turn next to Appellants’ arguments that the way the district court limited
14 discovery unduly hindered their ability to challenge the settlements contrary to
15 FATA. Appellants argue that they were improperly denied any discovery. They also
16 argue that the district court improperly ruled that damages calculations were not
17 important for evaluation of the settlements and therefore denied their request for
18 discovery as to damages. Neither of these contentions is supported by the record.
28
1 {50} Contrary to their statement that they were denied all discovery, we note that
2 Appellants were provided with all of the discovery obtained by NMSIC from
3 Defendants, as well as the “cash out, cash in” data they requested from NMSIC
4 (discussed further below). In addition, Appellants conceded in the district court that
5 they had received all of the discovery they requested from NMSIC, and the district
6 court entered an order stating that Appellants were entitled to receive any further
7 materials that were produced to NMSIC counsel by Defendants. In addition, the
8 district court ordered that “basic documents relating to the transactions at issue in this
9 case” must be produced by Defendants to both NMSIC and Appellants. The district
10 court also ordered that personal financial information for Defendants should be
11 produced to Appellants. Finally, the district court ordered that “each [D]efendant
12 shall provide to [Appellants] . . . a copy of any insurance agreement under which an
13 insurance business may be liable to satisfy all or part of a possible judgment in this
14 suit or to indemnify or reimburse any defendant for payments made to satisfy any
15 judgment in this suit.”
16 {51} Given the production of the above described discovery, we understand
17 Appellants’ argument to be that their other specific requests for discovery were
18 improperly denied. Appellants requested “the name and . . . address . . . of each
19 individual likely to have discoverable information” about the case; copies of “all
29
1 documents, electronically stored information, and tangible things that the disclosing
2 party” might “use to support its claims or defenses”; “a computation of each category
3 of damages claimed by the disclosing party”; and a “copy of any insurance agreement
4 under which an insurance business may be liable to satisfy all or part of a possible
5 judgment.” They argued below and on appeal that these four requests “track[] the list
6 in Rule 1-026(B)(3) [NMRA]” and in its federal counterpart, Fed. R. Civ. P.
7 26(a)(1)(A), and that this information is “part of the minimal due diligence and
8 competence that is required in every case.” In addition, they asked Defendants to
9 “describe all communications between you and any of the other parties to this
10 lawsuit,” “[p]rovide a copy of all documents, electronically stored information, and
11 tangible things that record or reflect any [such] communications,” and “[p]rovide a
12 copy of all documents, electronically stored information, and tangible things relating
13 to the transactions giving rise to this lawsuit.”
14 {52} Defendants objected to these requests and some sought protective orders. The
15 district court issued an order preventing Appellants from promulgating the requested
16 discovery on Defendants, with the exception of the materials discussed in paragraph
17 50. In its oral remarks, the district court stated that “[it did] not believe that due
18 diligence requires answers to the mandatory . . . disclosures” in Rule 1-026(B)(3) and
30
1 that the answers to those requests were not necessary for it to evaluate the
2 settlements.
3 {53} We conclude that the district court did not abuse its discretion in limiting
4 Appellants’ discovery as it did. In the Settlement Process Order, the district court
5 notified Appellants that they must demonstrate that
6 (1) there is a low risk of . . . failing to establish liability against [the]
7 [s]ettling [d]efendants under FATA,
8 (2) there is a low risk of . . . failing to establish damages against [the
9 settling defendants] under FATA,
10 (3) the settlement amounts are not within the range of reasonableness in
11 light of the best possible recovery[,] and
12 (4) the settlement amounts are not within the range of reasonableness in
13 light of all . . . the attendant risks of litigation.
14 {54} Appellants did not demonstrate to the district court, and do not demonstrate on
15 appeal, how their broad discovery requests were related to the factors the district
16 court considered to assess the settlements. As discussed above, in the months leading
17 up to the evidentiary hearing on the settlements with the Weinstein Defendants,
18 Appellants were given multiple opportunities to present the evidence they claimed
19 they already had and to state why the settlements were not fair, adequate, or
20 reasonable. In addition, when they identified “cash out, cash in” data as critical to
21 their objections, that information was provided. Considering the stage of the
31
1 proceedings, the amount of discovery produced to Appellants, Appellants’ multiple
2 opportunities to present evidence they claimed to have, and Appellants’ opportunity
3 to cross-examine the witnesses presented by NMSIC, it was within the district court’s
4 discretion to curb Appellants’ discovery.
5 {55} Appellants next argue that the district court erred by ruling that calculation of
6 damages was not important to evaluation of the settlements. They glean this argument
7 from an exchange at a motion hearing after Appellants stated that they wanted “all
8 documents relating to the various investments” in order “to do a real calculation with
9 admissible evidence as to what the loss or gain . . . might be on a particular
10 investment.” They stated that “the best way of doing that is cash out, cash in.”
11 Counsel for Appellants: So there is complexity there. And without
12 simply having had discovery, we don’t have
13 that information.
14 Court: Mr. Marshall, to me, the issue at this hearing is not whether
15 you had the ability to make that calculation now, but . . .
16 whether somebody who is making the decision to settle
17 considered those facts.
18 Counsel for Appellants: I want the facts, Your Honor.
19 Court: I understand you want the facts, but that’s not important for
20 settlement purposes.
21 ....
22 Counsel for Appellants: I want to ask somebody from the
23 [NMSIC], . . . what was the gain or loss on
32
1 this particular investment. We don’t know
2 that information.
3 Court: I don’t think you need to know that at this stage.
4 {56} Appellants misinterpret the district court’s ruling. The district court did not
5 decide that calculation of damages was irrelevant to the fairness, adequacy, and
6 reasonableness of the settlements: it ruled that it was not critical to evaluation of the
7 settlements that Appellants have the information on which NMSIC’s damages
8 calculations were based, so long as NMSIC could demonstrate to the district court
9 that it adequately considered the potential damages. See Hershey, 2012 WL 4758040,
10 at *2 (stating that “[t]he fundamental question is whether the district [court] has
11 sufficient facts before [it] to intelligently approve or disapprove the settlement.”
12 (internal quotation marks and citation omitted)).
13 {57} Furthermore, Appellants’ contention that the district court did not consider the
14 potential damages is contradicted by the record. The district court made several
15 findings of fact related to potential damages. Additionally, in its conclusions of law,
16 the district court noted that assessment of the settlement included examination of “the
17 range of reasonableness of the settlement fund in light of the best possible recovery.”
18 It further concluded that NMSIC had conducted sufficient discovery to “fairly
19 evaluate the . . . range of [best] possible recovery.” In other conclusions, the district
20 court considered the “complexity of establishing damages,” recognized that
33
1 Appellants estimated damages to be in excess of $300,000,000 based on investment
2 losses, and contemplated the possible types of damages available under FATA. These
3 findings and conclusions indicate that the district court properly considered damages
4 in its assessment of the settlements.
5 {58} Appellants also argue that the district court deprived them of their rights under
6 FATA, specifically the “right to [Appellants’] reward and attorney fees, the right to
7 intervene and participate as a party in the alternate action, and the right to present
8 evidence in the alternate action.” But Appellants were permitted to intervene as
9 parties and, as already discussed, were permitted to present evidence at the fairness
10 hearing. Because the propriety of the settlements is on appeal, Appellants’ right to a
11 reward and attorney fees has yet to be litigated. Thus, Appellants have not been
12 deprived of these rights.
13 {59} Appellants’ general arguments that the district court violated FATA by
14 “rubber-stamping” the settlements are unpersuasive. As discussed above, the district
15 court requested memoranda on Appellants’ opposition to the settlements multiple
16 times, held several hearings, and conducted a two-day evidentiary hearing. It issued
17 seventy-three detailed findings of fact. In its evaluation, the district court indulged
18 several presumptions in Appellants’ favor. For example, although the issue of the
19 constitutionality of FATA’s retroactivity provision was on appeal to the Supreme
34
1 Court, the district court assumed that it was constitutional. In spite of its reservations
2 about whether Appellants had a right to object to settlements with defendants on
3 whom process was not served in their qui tam actions, it also presumed that
4 Appellants had a right to object to those settlements. Moreover, although Appellants
5 “ha[d] not articulated a viable FATA claim against any of the [Weinstein]
6 Defendants,” the district court nevertheless assumed that Appellants might yet do so
7 and therefore assumed they had a right to object to settlements with those defendants.
8 The district court did not “rubber-stamp” the settlement agreements.
9 {60} Finally, Appellants argue that the district court violated NMSA 1978, Section
10 6-8-24 (2011). This statute provides that “[n]othing in this 2011 act shall prejudice
11 or impair the rights of a qui tam plaintiff pursuant to [FATA].” Since we have
12 determined that Appellants’ rights under FATA were not infringed, we further
13 conclude that no violation of Section 6-8-24 occurred. Appellants also make several
14 statements that because of the inadequate discovery “the proposed settlement amounts
15 are grossly inadequate.” Other than these statements, however, Appellants do not
16 challenge the district court’s factual findings or conclusions as to adequacy, fairness,
17 or reasonableness, which involved a number of findings and conclusions on the
18 settling defendants’ resources, the likelihood of success at trial, and the role of the
19 settlements in the State’s litigation plan, among others. In the absence of
35
1 particularized challenges to these findings and conclusions, we do not address
2 Appellants’ general assertions that the settlements are inadequate. See Rule 12-
3 213(A)(4) (stating that “[t]he argument shall set forth a specific attack on any finding,
4 or such finding shall be deemed conclusive”).
5 {61} We conclude that the district court did not abuse its discretion in limiting
6 discovery, nor did it fail to adequately assess the settlements. In addition, we discern
7 no violation of FATA by the district court.
8 2. The Settlement Agreements are Valid as of May 2015
9 {62} Appellants, together with Amici New Mexico Foundation for Open
10 Government (NMFOG) and New Mexico Press Association, argue that the
11 settlements are void for three reasons. First, NMSIC did not have the power to
12 delegate authority to settle with Defendants to the Litigation Committee. Second,
13 even if settlement authority was properly delegated, the Litigation Committee was a
14 public body subject to the requirements of the OMA and failed to comply with those
15 requirements. Section 10-5-1. Third, the Litigation Committee was improperly
16 constituted because it did not conform with NMSIC’s settlement policy or Section 6-
17 8-2(B), which states that “[a]ll actions of the [NMSIC] shall be by majority vote, and
18 a majority of the members shall constitute a quorum.”
36
1 {63} Appellants made these arguments in the district court as well. The district court
2 disagreed and held that NMSIC properly delegated settlement authority to the
3 Litigation Committee and that the OMA does not require litigation decisions,
4 including settlement decisions, to be made in a public meeting. See § 10-15-1(H)(7)
5 (excluding “meetings subject to the attorney-client privilege pertaining to threatened
6 or pending litigation in which the public body is or may become a participant” from
7 the scope of the OMA). In reaching this conclusion, the district court relied in part on
8 the fact that NMSIC delegated authority to the Litigation Committee in its Settlement
9 Policy, which was voted on and approved by NMSIC at a public meeting.
10 {64} NMSIC’s position on appeal is multifaceted. First, NMSIC argues that
11 Appellants “implicitly conceded” that delegation of settlement authority to the
12 Litigation Committee was proper, and thus the issue is not preserved for appeal. Next,
13 it argues that “the actions of the Litigation Committee are the very type of attorney-
14 client privileged litigation decision-making exempted by [the] OMA.” In addition, it
15 argues that “[e]ven if the Litigation Committee were subject to the OMA, the
16 processes followed here satisfied [the] OMA’s purposes and therefore did not violate
17 [the] OMA.” Finally, it maintains that any violation of the OMA was cured by
18 NMSIC’s ratification of the settlements in a properly-noticed public meeting held in
37
1 May 2015, approximately thirty months after the Litigation Committee approved the
2 first settlements, and that, therefore, this issue is moot.
3 {65} We begin by addressing NMSIC’s preservation and mootness arguments. The
4 district court’s conclusion that the issue of whether settlement authority was properly
5 delegated was “implicitly conceded” is based on a pleading in which Appellants
6 argued that there were no records of such a delegation and requested that any records
7 of delegation be produced. But Appellants also stated in that pleading that “a blanket
8 delegation [of settlement authority] to the [state investment officer] . . . would be in
9 derogation of the statutory and fiduciary obligations of [NMSIC] members
10 themselves” and that decisions about “settlement of actual or potential litigation . . .
11 must be made by the . . . [NMSIC] itself, by vote.” By making these arguments,
12 Appellants sufficiently apprised the district court of their contention that the authority
13 to settle litigation rests solely with NMSIC. Thus, this argument was sufficiently
14 preserved for appeal.
15 {66} As to NMSIC’s argument that this Court need not address Appellants’
16 arguments as to the OMA because the May 2015 meeting cured any OMA violations,
17 we disagree. Even if an issue is moot as between the parties, we may address it if it
18 is an issue “of substantial public interest, and capable of repetition, yet evading
19 review.” Howell v. Heim, 1994-NMSC-103, ¶ 7, 118 N.M. 500, 882 P.2d 54138
1 (internal quotation marks and citation omitted). The present matter satisfies both of
2 these criteria. In promulgating the OMA, the New Mexico Legislature has evinced
3 a strong interest in transparency in government and agency compliance with the OMA
4 is an issue of substantial public interest. Furthermore, the problems in NMSIC’s
5 processes here are capable of repetition by it and other agencies. See Paragon Found.,
6 Inc. v. State Livestock Bd., 2006-NMCA-004, ¶ 10, 138 N.M. 761, 126 P.3d 5777 (stating that “the implication of the OMA is an important policy issue that is likely
8 to occur again if the issue is not directly addressed” and examining the OMA issues
9 even though the matter was moot).
10 {67} We move on to the parties’ substantive arguments, which present a series of
11 questions. First, are the actions of the Litigation Committee void, because either (1)
12 NMSIC improperly delegated authority to settle with Defendants, or (2) the Litigation
13 Committee failed to comply with the OMA? Second, did the May 2015 meeting cure
14 any improper delegation or violation of the OMA such that the settlements are now
15 valid?
16 a. Actions of the Litigation Committee Were Void
17 {68} As to the first question, we agree with Appellants and Amici that the Litigation
18 Committee’s actions were void because the Committee did not have the authority to
19 settle with Defendants. In addition, even if settlement authority was properly
39
1 delegated, the Litigation Committee’s meetings did not comply with the OMA and
2 hence were invalid. We address the delegation issue first.
3 {69} In pertinent part, the Settlement Policy states that the Litigation Committee
4 “may actively participate in settlement negotiations, as appropriate, with the authority
5 of the [NMSIC] for settlement resolution and related decisions.” It also states that
6 “the authority to settle legal matters rests not with the [State Investment Officer] but
7 with [NMSIC’s L]itigation [C]ommittee.” The Settlement Policy specifies that the
8 Litigation Committee “shall be comprised of at least three [NMSIC] members” and
9 permits the Governor’s general counsel to serve on the committee. Pursuant to the
10 Settlement Policy, a Litigation Committee consisting of two NMSIC members and
11 the Governor’s general counsel met “seven or eight” times to discuss the settlement
12 negotiations with Defendants. The Litigation Committee approved the settlement
13 agreements with Defendants without obtaining a vote on the final decision by
14 NMSIC. These settlement agreements were signed on behalf of NMSIC by Litigation
15 Committee members.
16 {70} As a creature of statute, NMSIC functions solely within the powers granted by
17 the Legislature. Chalamidas v. Envtl. Improvement Div., 1984-NMCA-109, ¶ 13, 102
18 N.M. 63, 691 P.2d 64. NMSIC’s powers are limited by Section 6-8-2(B) and Section
19 6-8-7(A) and (E). Under Section 6-8-2(B), “[a]ll actions of the council shall be by
40
1 majority vote, and a majority of the members shall constitute a quorum.” (Emphasis
2 added). The only mention of NMSIC’s ability to delegate its responsibilities states
3 that “[t]he [NMSIC] may delegate administrative and investment-related functions
4 to the state investment officer.” Section 6-8-7(A). Section 6-8-7(E) provides that
5 NMSIC may “form and use committees,” but only to “study and make
6 recommendations to [NMSIC].” Notwithstanding the Settlement Policy, these
7 provisions do not permit NMSIC to delegate authority to settle litigation to a
8 committee. Indeed, read together, they prohibit such delegation. Cf. Kerr-McGee
9 Nuclear Corp. v. N.M. Envtl. Improvement Bd., 1981-NMCA-044, ¶ 52, 97 N.M. 88,
10 637 P.2d 38 (stating that “[a]dministrative bodies and officers cannot delegate power,
11 authority and functions which under the law may be exercised only by them, which
12 are quasi-judicial in character, or which require[] the exercise of judgment”). Because
13 the Litigation Committee did not have the authority to do so, its approval of the
14 settlements in 2013 and 2014 was without any binding effect.7
15 b. Litigation Committee Was Subject to the OMA
16 {71} Even if NMSIC’s delegation of settlement authority to the Litigation
17 Committee had been proper, the Litigation Committee violated the OMA’s
7
18 Since we conclude that the Litigation Committee did not have the authority
19 to act on the settlements, we need not address whether it was properly constituted.
41
1 requirements for closed meetings. Hence, its actions are void for that reason as well.
2 We explain.8
3 {72} The OMA embodies the Legislature’s declaration that “[the] public policy of
4 this state [is] that all persons are entitled to the greatest possible information
5 regarding the affairs of government and the official acts of those officers and
6 employees who represent them.” Section 10-15-1(A). In keeping with this policy, we
7 construe the OMA’s provisions broadly and their exceptions narrowly. Cf. State ex
8 rel. Toomey v. City of Truth or Consequences, 2012-NMCA-104, ¶ 22, 287 P.3d 3649 (“We emphasize, however, that [the] IPRA should be construed broadly to effectuate
10 its purposes, and courts should avoid narrow definitions that would defeat the intent
11 of the Legislature.”); see also NMSA 1978, § 14-2-5 (1993) (stating that, under the
12 IPRA, “it is declared to be the public policy of this state, that all persons are entitled
13 to the greatest possible information regarding the affairs of government and the
14 official acts of public officers and employees[,]” which is nearly identical to the
15 policy declaration in the OMA).
16 {73} The OMA provides that
8
17 Given our resolution of the delegation issue we could perhaps avoid
18 discussion of the OMA issues. We have determined to give the OMA issues full
19 consideration because they are squarely presented and because it is important to fill
20 out our OMA law as it applies to policy-making subcommittees of public entities.
42
1 All meetings of a quorum of members of any board, commission,
2 administrative adjudicatory body or other policy[-]making body of any
3 state agency . . . , held for the purpose of formulating public policy, . . .
4 discussing public business or taking any action within the authority of
5 or the delegated authority of any board, commission or other
6 policy[]making body are declared to be public meetings open to the
7 public at all times, except as otherwise provided in the constitution of
8 New Mexico or the [OMA].
9 Section 10-15-1(B) (emphasis added).
10 {74} We conclude that this provision applied to the Litigation Committee because
11 the Litigation Committee was intended to be a “policy[-]making body” and its
12 meetings were for the purpose of taking an action within the authority of NMSIC.9
9
13 We note that there is nothing in the statutes governing NMSIC explicitly
14 indicating that it has the authority to settle litigation either. Compare NMSA 1978,
15 §§ 6-8-1 to -24 (1957, as amended through 2015), with NMSA 1978, § 58-24-5(A)
16 (1983) (stating that the Industrial and Agricultural Finance Authority “shall have all
17 the powers necessary or convenient to carry out and effectuate the purposes and
18 provisions of the Industrial and Agricultural Finance Authority Act, including, . . . the
19 power . . . to sue and be sued”), and NMSA 1978, § 72-14-21 (1955) (stating that the
20 Interstate Stream Commission “shall have power to institute in any of the courts of
21 this state, or in any other state, or in any of the federal courts of this state or any other
22 state, any actions, suits and special proceedings necessary to enable it to acquire, own
23 and hold title to lands for dam sites,” and other sites), and NMSA 1978, § 36-1-19(B)
24 (1985) (stating that “a board of county commissioners may contract with private
25 counsel for legal assistance to or representation of the county” and that “[s]uch
26 private counsel shall have the same powers of compromise, satisfaction or release in
27 civil proceedings as are held by district attorneys”). NMSIC states in its brief that the
28 power to settle litigation is vested in the Attorney General and that the Attorney
29 General delegated such power to NMSIC or to NMSIC’s counsel, but conceded at
30 oral argument that the record does not reflect such delegation. See § 36-1-19 and
31 NMSA 1978, § 36-1-22 (1875-1876) (stating that the Attorney General represents the
32 state and that the Attorney General has the authority to settle matters involving the
43
1 NMSIC, which is unquestionably subject to the OMA, attempted to delegate its
2 authority to take action on the settlements to the Committee. It is patently contrary to
3 the OMA’s purpose to permit a public body to avoid the OMA’s requirements simply
4 by delegating its responsibilities to a smaller body. Indeed, Section 10-15-1(B) states
5 that “[n]o public meeting once convened that is otherwise required to be open
6 pursuant to the [OMA] shall be closed or dissolved into small groups or committees
7 for the purpose of permitting the closing of the meeting.” We agree with a 1990
8 Advisory Opinion by the then-Attorney General that “it is the nature of the act
9 performed by the committee, not its makeup or proximity to the final decision, which
10 determines whether an advisory committee is subject to open meetings statutes.”
11 N.M. Att’y Gen. Op. 90-27 (1990). The current Attorney General’s Open Meetings
12 Act Compliance Guide echoes this thinking, stating,
13 even a non-statutory committee appointed by a public body may
14 constitute a “policy[-]making body” subject to the [OMA] if it makes
15 state). Moreover, the settlement agreements were signed by members of the Litigation
16 Committee or the Governor, not the New Mexico Attorney General’s Office or
17 NMSIC counsel. Other than this brief statement, both parties predicate their
18 arguments on the assumption that NMSIC has settlement authority. We therefore do
19 not address this issue further and assume for the purposes of this opinion that NMSIC
20 had authority to settle with the defendants. In re Doe, 1982-NMSC-099, ¶ 3, 98 N.M.
21 540, 650 P.2d 824 (stating that “courts risk overlooking important facts or legal
22 considerations when they take it upon themselves to raise, argue, and decide legal
23 questions overlooked by the lawyers who tailor the case to fit within their legal
24 theories.” (alteration, internal quotation marks, and citation omitted)).
44
1 any decisions on behalf of, formulates recommendations that are binding
2 in any legal or practical way on, or otherwise establishes policy for the
3 public body. A public body may not evade its obligations under the
4 [OMA] by delegating its responsibilities for making decisions and
5 taking final action to a committee.
6 p. 9 (8th ed. 2015) http://www.nmag.gov/oma-and-ipra-nm-sunshine-laws.aspx.
7 {75} In Paragon Foundation, Inc., this Court considered whether the acts of an
8 individual on behalf of a public agency were subject to the OMA. 2006-NMCA-004,
9 ¶¶ 2-3. After a federal district court ordered the plaintiffs to remove their livestock
10 from United States Forest Services land, the Forest Service and the executive director
11 of the New Mexico Livestock Board (Board) entered into a memorandum of
12 understanding (MOU) governing how the livestock would be removed. Id. The
13 plaintiffs filed suit, alleging that the MOU violated the OMA because “no public
14 meeting of the Board was held and a majority of the Board did not approve or
15 authorize the MOU before the MOU was executed by” the executive director. Id. ¶ 4.
16 The Board moved for summary judgment on the ground that the MOU was not voted
17 on or executed by a quorum of the Board and that, because the Board did not so act,
18 the OMA did not apply. Id. ¶ 5. The district court granted the motion for summary
19 judgment. Id. ¶ 7.
20 {76} On appeal, we affirmed. Relying on Section 10-15-1(B), quoted above, we held
21 that “[u]nder the law, if a quorum of the Board members did not act on the MOU, the
45
1 OMA was inapplicable, there was no OMA violation, and summary judgment was
2 proper.” Paragon Found., Inc., 2006-NMCA-004, ¶¶ 12, 13. We also noted that the
3 executive director’s “largely unilateral action [in signing the MOU was] non-binding
4 and meaningless, as he can only act pursuant to those powers delineated in the Code.”
5 Id. ¶ 24.
6 {77} Importantly, we noted that the executive director “did not have the authority
7 or approval of the Board to enter into the MOU” and that the “MOU was not
8 approved or authorized by a quorum of the Board in public or private meetings.” Id.
9 ¶¶ 15, 16. We repeatedly reiterated the fact that members of the Board had limited or
10 no knowledge of the MOU before it was signed, and that some members were
11 “surprised” when presented with it after its execution. Id. ¶¶ 17-22. These facts
12 clearly distinguish Paragon Foundation, Inc. from the present matter. Unlike in that
13 case, here, NMSIC unanimously approved the Settlement Policy, purportedly giving
14 the Litigation Committee authority to act on its behalf. See Signed Minutes, pg. 5-7,
15 N M S I C Meeting June 26, 2012, available at
16 http://www.sic.state.nm.us/uploads/FileLinks/39153cc7c39a496c823e7a6fdba7da
17 d6/6_26_12_SIC_SIGNED_MINUTES.pdf. It is clear that NMSIC fully endorsed the
18 actions of the Litigation Committee and intended it to take action that would be
19 subject to the OMA if acted on by the full NMSIC.
46
1 c. Litigation Committee Actions Were Subject to the OMA
2 {78} Having determined that the Litigation Committee was a body subject to the
3 OMA, we turn to whether the Litigation Committee’s actions were subject to the
4 OMA. NMSIC relies on Board of County Commissioners v. Ogden to argue that the
5 Litigation Committee’s approval of the settlements falls within an exception to the
6 OMA. 1994-NMCA-010, 117 N.M. 181, 870 P.2d 143. The focus of the Ogden
7 opinion is on construction of Section 10-15-1(H)(7) (the litigation exception),10 which
8 states that “meetings subject to the attorney-client privilege pertaining to threatened
9 or pending litigation in which the public body is or may become a participant” are not
10 subject to the OMA. Ogden, 1994-NMCA-010, ¶ 13. There, the issue was whether
11 the “threatened or pending litigation” exception included the Board of
12 Commissioners’ decision to sue the defendants. Id. The Court concluded “that
13 ‘pending’ or ‘threatened’ litigation can include litigation that the public body may
14 initiate and legal disputes that have not yet reached the courts” and that “under [this
15 exception], [the Board of Commissioners] could properly discuss and decide to file
16 suit against [the d]efendants in a closed session.” Id. ¶¶ 15-16.
10
17 At the time of the Ogden decision, the litigation exception was Section 10-15-
18 1(E)(5).
47
1 {79} More pertinent to our purposes is the Court’s rejection of the argument that
2 “even if [the Board of Commissioners was] allowed to obtain legal advice in closed
3 session, [it] was required to make its decision to sue [the d]efendants in an open
4 meeting.” Id. ¶ 17. We reasoned that, unlike some of the other exceptions, the
5 litigation exception “does not require that a decision regarding litigation be made in
6 an open meeting.” Id.; see, e.g., § 10-15-1(H)(6) (actual approval of certain purchases
7 must be made in open meeting).
8 {80} Amici argue that the holding in Ogden has been overruled by the Board of
9 Commissioners of Doña Ana County v. Las Cruces Sun-News, in which this Court
10 stated that “settlement agreements entered into between parties are outside the
11 privilege” addressed by the litigation exception. 2003-NMCA-102, ¶ 25, 134 N.M.
12 283, 76 P.3d 36, overruled on other grounds by Republican Party of N.M. v. N.M.
13 Taxation & Revenue Dep’t, 2012-NMSC-026, ¶ 16, 283 P.3d 853. But the focus of
14 that case was on whether executed settlement agreements involving a public entity
15 were subject to public disclosure under the IPRA. Id. ¶¶ 1, 25. The holding that
16 settlement agreements are disclosable under the IPRA does not contradict the Ogden
17 holding that the decision to settle may be made in a closed meeting. Based on Ogden,
18 we conclude that the district court did not err in holding that the OMA was not
48
1 violated by the Litigation Committee’s approval of the settlement agreements in
2 private meetings.
3 {81} However, the district court’s analysis did not go far enough because other
4 provisions of the OMA were violated. For instance, Section 10-15-1(I)(1) states that
5 if [the decision to hold a closed session is] made in an open meeting, [it]
6 shall be approved by a majority vote of a quorum of the policy[-]making
7 body; the authority for the closure and the subject to be discussed shall
8 be stated with reasonable specificity in the motion calling for the vote
9 on a closed meeting; the vote shall be taken in an open meeting; and the
10 vote of each individual member shall be recorded in the minutes.
11 {82} Section 10-15-1(I)(2) provides that when the decision to hold a closed session
12 is not made in a public meeting, “the closed meeting shall not be held until public
13 notice, appropriate under the circumstances, stating the specific provision of the law
14 authorizing the closed meeting and stating with reasonable specificity the subject to
15 be discussed is given to the members and to the general public.” Finally, Section 10-
16 15-1(J) states that
17 the minutes of the open meeting that was closed or the minutes of the
18 next open meeting if the closed meeting was separately scheduled shall
19 state that the matters discussed in the closed meeting were limited only
20 to those specified in the motion for closure or in the notice of the
21 separate closed meeting. This statement shall be approved by the public
22 body . . . as part of the minutes.
23 {83} The parties do not direct us to evidence in the record that NMSIC and the
24 Litigation Committee complied with these requirements. Thus, these provisions of the
49
1 OMA were violated and the Litigation Committee’s approval of the settlement
2 agreements was invalid.
3 d. May 2015 Meeting Cured OMA Violations
4 {84} The final question is whether the settlement agreements became valid when
5 nine of the eleven members of NMSIC voted to approve them in May 2015.
6 Assuming NMSIC has the power to enter into such agreements, we conclude that the
7 May 2015 vote rectified the delegation issue.
8 {85} We also conclude that the May 2015 meeting cured the OMA violations.
9 “[P]rocedural defects in [compliance with the OMA] may be cured by taking prompt
10 corrective action.” Kleinberg v. Bd. of Educ. of Albuquerque Pub. Sch., 1988-NMCA-
11 014, ¶ 30, 107 N.M. 38, 751 P.2d 722. Previous cases have affirmed the cure of the
12 OMA violations where the curing actions were taken four days later, see id. ¶ 15, and
13 eleven months later. See Palenick v. City of Rio Rancho, 2012-NMCA-018, ¶ 1, 270
14 P.3d 1281, rev’d on other grounds by, 2013-NMSC-029, 306 P.3d 447. Here, the
15 curing meeting occurred thirty months after the first settlement was approved by the
16 Litigation Committee. Although thirty months stretches the bounds of “prompt”
17 remedial action as contemplated in Kleinberg, we conclude that it was sufficient to
18 remedy the Litigation Committee’s improper action because “the legislature did not
19 intend to unduly burden the appropriate exercise of governmental decision-making
50
1 and ability to act.” 1988-NMCA-014, ¶ 31. “To rule otherwise would improperly
2 elevate form over substance” and wreak havoc on a process already fraught with
3 complexity. Id. Most importantly, the May 2015 meeting was preceded by proper
4 notice to the public, included a public agenda and was open to the public, NMSIC
5 members publicly voted on the settlements, and minutes of the meeting were
6 published online. See http://www.sic.state.nm.us/state-investment-council.aspx
7 (providing access to NMSIC meeting calendar, and agendas and minutes of NMSIC
8 meetings) (last visited Mar. 17, 2016). The purpose of the OMA was thus achieved
9 by this public meeting. See Kleinberg, 1988-NMCA-014, ¶ 31 (concluding that an
10 OMA violation was cured where “[t]he local board, in affording [the plaintiff] a full
11 and fair hearing in compliance with due process guarantees, and ultimately, in taking
12 a public vote and openly announcing its decision in a forum where the interested
13 public could observe the action, carried out the intent and purpose of the [OMA]”).
14 {86} We recognize that our holding could be seen as stretching the notion of prompt
15 remedial action beyond the breaking point, effectively giving license to public
16 agencies to flout OMA standards without penalty. We caution strongly against any
17 such reading and emphasize that our decision to not invalidate the settlements is
18 driven by the fact that they were subjected to reasonable and appropriate review by
19 the district court. That independent review—which we have approved—provides us
51
1 assurance that the public fisc has been protected. Without the presence of judicial
2 review we would not be tolerant of the delay seen here. In addition, we are confident
3 that our ruling as to the reach and effect of the OMA in situations such as we review
4 here will result in suitable caution by public agencies of all stripes. To the extent
5 public agencies fail to meet their obligations under the OMA, the public—including
6 Amici—will have strong authority to enforce compliance.
7 {87} We also emphasize that the ratification of the settlements at the May 2015
8 meeting does not operate retroactively to make the settlement agreements valid as of
9 the date they were originally signed. See Palenick, 2012-NMCA-018, ¶ 9 (stating that
10 “no authority in New Mexico supports the [defendant’s] attempt to retroactively make
11 the prior invalid action valid and effective as of the date it was taken”). The
12 settlement agreements became valid only at the May 2015 meeting.
13 {88} Given this holding, the district court considered and approved settlements that
14 were void at the time. The question arises whether this requires that the entire matter
15 be remanded for reconsideration. We conclude that remand for what would be a
16 hearing of form only is not in the best interests of the public, the courts, or the parties.
17 The district court approved the settlements on their merits. We have found no error
18 in its process or final decision, with the exception of the delegation and the OMA
19 issues. These issues do not speak to the merits of the settlements. Requiring
52
1 reconsideration of the substance of the settlements would serve no purpose at this
2 point.
3 e. No IPRA Violation Shown by Appellants
4 {89} Finally, in the course of their arguments, Appellants also make several
5 references to violations of the IPRA and argue that the settlement agreements were
6 “kept secret for months.” The district court concluded that “[t]here is no evidence of
7 any attempt to shield these settlements from the IPRA. Moreover, the [s]ettlement
8 [a]greements have been publicly filed in this action and the [district c]ourt has held
9 a public hearing about them.” We agree with the district court. The IPRA provides
10 for public access to records; it does not require public entities to provide records in
11 the absence of a request for them. See NMSA 1978, § 14-2-8(A) (2009) (stating the
12 procedures for requesting public records). On appeal, Appellants do not argue that
13 they requested records from NMSIC and were denied. See NMSA 1978, § 14-2-
14 12(A)(2) (1993) (stating that “[a]n action to enforce the [IPRA] may be brought
15 by . . . a person whose written request has been denied”). Appellants have failed to
16 demonstrate that the IPRA was violated here.
17 {90} In sum, the Litigation Committee did not have the authority to settle with
18 Defendants here and we reverse the district court’s conclusion to the contrary. We
19 also hold that the Litigation Committee meetings violated the OMA’s notice and
53
1 documentation requirements. However, the settlement agreements were validated
2 when they were approved by NMSIC in an open meeting in May 2015. We affirm the
3 district court’s conclusion that Appellants have not shown a violation of the IPRA.
4 3. The District Court did not Err in Denying Appellants’ Motion to
5 Disqualify the Attorney General’s Office
6 {91} Finally, Appellants argue that the district court erred in dismissing their motion
7 to disqualify former Attorney General, Gary King, for conflicts of interest involving
8 representation by his office of NMSIC. They maintain that the district court
9 erroneously ruled that they lacked standing to raise these issues. In fact, the district
10 court rejected Appellants’ motion on its merits as to two of their three allegations.
11 {92} As to the third allegation, the district court ruled that Appellants lacked
12 standing to move for disqualification of the Attorney General’s office based on the
13 fact that a member of that office had served as counsel to NMSIC. Generally
14 speaking, “only a current or former client has standing to move for disqualification
15 of counsel based on an alleged conflict of interest.” Eric C. Surette, Annotation,
16 Standing of Person, Other than Former Client, to Seek Disqualification of Attorney
17 in Civil Action, 72 A.L.R. 6th 563 § 2 (2012); cf. Sanchez v. Siemens Transmission
18 Sys., 1991-NMCA-028, ¶ 36, 112 N.M. 236, 814 P.2d 104 (stating that “[t]o the
19 extent that employer[/respondent] attempts to raise [a conflict of interest between the
20 petitioner and her attorney] on claimant’s[/petitioner’s] behalf, however, we fail to
54
1 see how employer has standing”), rev’d in part on other grounds by, 1991-NMSC-
2 093, 112 N.M. 533, 817 P.2d 726. However, a nonclient party may have standing to
3 move for disqualification when “the nonclient establishes that the conflict prejudices
4 or injures the nonclient’s own rights.” Surette, supra, at § 2; cf. Evink v. Pekin Ins.
5 Co., 460 N.E.2d 1211, 1214 (Ill. App. Ct. 1984) (stating that the “plaintiffs would
6 have no standing to challenge [the] defense counsel’s ability to represent [two
7 defendants] without some showing that this representation adversely affects their
8 interests”).
9 {93} Here, the district court held a hearing on Appellants’ motion to disqualify.
10 After the hearing, it concluded that Appellants did not have standing to challenge a
11 conflict of interest between the Attorney General’s office and NMSIC. We infer from
12 this ruling that the district court determined that Appellants failed to demonstrate that
13 their interests were sufficiently adversely affected by the alleged conflict of interest
14 to overcome the general rule. Neither a transcript of the hearing nor a CD recording
15 of it is in the record on appeal. In the absence of a transcript or CD, we presume the
16 district court’s ruling is supported by the evidence. Michaluk v. Burke, 1987-NMCA-
17 044, ¶ 25, 105 N.M. 670, 735 P.2d 1176 (“Where the record on appeal is incomplete,
18 the ruling of the trial court is presumed to be supported by the evidence.”); see
19 Sandoval v. Baker Hughes Oilfield Operations, Inc., 2009-NMCA-095, ¶ 65, 146
55
1 N.M. 853, 215 P.3d 791 (“It is the duty of the appellant to provide a record adequate
2 to review the issues on appeal.”). We conclude that the district court did not err in
3 denying Appellants’ motion.
4 CONCLUSION
5 {94} Although we reverse the district court’s ruling as to the delegation of
6 settlement authority to NMSIC’s Litigation Committee and its conclusion that the
7 OMA was not violated, we conclude that the settlements are now valid because they
8 have been approved by NMSIC at a public meeting. We discern no error in the district
9 court’s other rulings. We therefore affirm the district court’s approval of the
10 settlements with the Weinstein, Meyer, and Broidy Defendants.
11 {95} IT IS SO ORDERED.
12 __________________________________
13 MICHAEL D. BUSTAMANTE, Judge
14 WE CONCUR:
15 ___________________________________
16 MICHAEL D. VIGIL, Chief Judge
17 ___________________________________
18 M. MONICA ZAMORA, Judge
56