New Mexico State Investment Council v. Weinstein

1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 Opinion Number: ___________
3 Filing Date: April 28, 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} Appellants’ motion for rehearing is denied. The opinion filed in this case on
4 March 24, 2016, is withdrawn and this Opinion is substituted in its place.
5 {2} Intervenors Frank Foy, Suzanne Foy, and John Casey (Appellants) appeal the
6 district court’s approval of settlements between the New Mexico State Investment
7 Council (NMSIC) and three sets of defendants. Having consolidated the three
8 appeals, we consider whether the district court’s approval of the settlements was
9 consistent with the Fraud Against Taxpayers Act and whether NMSIC’s Litigation
10 Committee complied with the Open Meetings Act, among other arguments. We affirm
11 the district court’s approval of the settlements.
12 BACKGROUND
13 {3} Most of the following facts are derived from the district court’s findings of fact.
14 Appellants do not specifically challenge any of these findings. “An unchallenged
15 finding of the trial court is binding on appeal.” Seipert v. Johnson, 2003-NMCA-119,
16 ¶ 26, 134 N.M. 394, 77 P.3d 298; see Rule 12-213(A)(4) NMRA (“The argument
17 shall set forth a specific attack on any finding, or such finding shall be deemed
18 conclusive.”).
1 A. The Parties
2 {4} Appellants are qui tam plaintiffs in two actions filed in 2008 and 2009 under
3 the New Mexico Fraud Against Taxpayers Act (FATA), NMSA 1978, §§ 44-9-1 to -
4 14 (2007, as amended through 2015). State ex rel. Frank C. Foy v. Vanderbilt Capital
5 Advisors, LLC, No. D-101-CV-2008-1895 (Vanderbilt); State ex rel. Frank C. Foy
6 v. Austin Capital Mgmt. Ltd., No. D-101-CV-2009-1189 (Austin). Foy is the former
7 chief investment officer at New Mexico’s Educational Retirement Board (ERB).
8 {5} NMSIC is a state agency that serves as trustee of, and is responsible for
9 investing, among other funds, the Land Grant Permanent Fund and the Severance Tax
10 Permanent Fund, which are established under the New Mexico Constitution for the
11 benefit of citizens of New Mexico. N.M. Const. art VIII, § 10, art. XII, §§ 2, 7;
12 NMSA 1978, §§ 6-8-2 to -7 (1957, as amended through 2015); NMSA 1978, § 7-27-
13 3.1 (1983).
14 {6} The defendants in the present suit are three groups of individuals and entities
15 alleged to have engaged in misconduct related to NMSIC’s management of the funds.
16 Each of the three groups is named and discussed in more detail below. For ease of
17 reference we refer to the defendants collectively as Defendants.
2
1 B. The Qui Tam Actions
2 {7} We begin with a discussion of the Appellants’ qui tam actions under FATA
3 because they form the backdrop against which we consider the three cases now before
4 us. Section 44-9-5(A) of FATA permits the filing of a “qui tam action,” which is “an
5 action . . . that allows a private person to sue for a penalty, part of which the
6 government will receive.” State ex rel. Foy v. Austin Capital Mgmt., Ltd. (Austin II),
7 2015-NMSC-025, ¶ 3, 355 P.3d 1 (alterations, internal quotation marks, and citation
8 omitted). A qui tam plaintiff is required to serve the complaint and a disclosure of
9 supporting evidence under seal to the attorney general, who “may intervene and
10 proceed with the action within sixty days after receiving the complaint and the
11 material evidence and information.” Section 44-9-5(C). If the attorney general
12 declines to intervene in the action, the qui tam plaintiff may proceed with the action.
13 Section 44-9-5(D). “Notwithstanding [these] provisions . . . , the attorney general or
14 political subdivision may elect to pursue the state’s or political subdivision’s claim
15 through any alternate remedy available” and “[a] finding of fact or conclusion of law
16 made in the other proceeding that has become final shall be conclusive on all parties
17 to an action under [FATA].” Section 44-9-6(H). If the attorney general initiates an
18 alternate proceeding, “the qui tam plaintiff shall have the same rights in such a
19 proceeding as the qui tam plaintiff would have had if the action had continued
3
1 pursuant to [FATA].” Id. As to the qui tam action, the state or political subdivision
2 may choose to settle the action “notwithstanding any objection by the qui tam
3 plaintiff if the court determines, after a hearing providing the qui tam plaintiff an
4 opportunity to present evidence, that the proposed settlement is fair, adequate[,] and
5 reasonable under all of the circumstances.” Section 44-9-6(C).
6 {8} In their qui tam actions, Appellants alleged that Vanderbilt Capital Advisors,
7 LLC and Austin Capital Management, Ltd., as well as other defendants, made false
8 claims to the ERB and to NMSIC about the risks associated with, and performance
9 of, certain financial instruments and hedge funds. They also alleged that there was
10 “pay-to-play”1 at the ERB and NMSIC.
11 {9} Vanderbilt and Austin were heard by two different judges. Judge Pfeffer,
12 presiding over Vanderbilt, dismissed some of the Appellants’ claims on the ground
13 that retroactive application of FATA to conduct occurring before its effective date
14 would violate the ex post facto clauses in both the United States and New Mexico
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 Constitutions. U.S. Const. art. 1, § 10; N.M. Const. art. II, § 19. Judge Pope entered
2 a similar order in Austin. This Court declined to hear an interlocutory appeal in
3 Vanderbilt, but later allowed an interlocutory appeal of this issue in Austin and
4 affirmed. See State ex rel. Foy v. Austin Capital Mgmt., Ltd. (Austin I), 2013-NMCA-
5 043, ¶¶ 1, 3, 297 P.3d 357.
6 {10} At the time the district court approved the settlements in the cases now before
7 us, the Supreme Court had granted certiorari but had not yet decided the question. In
8 June 2015 the Supreme Court reversed, holding that the treble damages available
9 under FATA “are predominantly compensatory [and] do not violate the ex post facto
10 clause[s] and may be awarded for conduct occurring prior to the effective date of
11 FATA.” Austin II, 2015-NMSC-025, ¶ 44. It also held that, as to the civil penalties
12 available under FATA, “[i]t is . . . conceivable that the amount awarded in civil
13 penalties could be punitive in effect, particularly if the trial judge awards the
14 maximum [of] $10,000 per violation” and that, consequently, “[i]t is not practical to
15 make that determination without knowing the actual amount assessed with full
16 briefing on appeal addressed to a specific dollar figure.” Id. ¶ 49. Hence, the Supreme
17 Court declined to decide “whether the civil penalties awarded under FATA are
18 punitive and violate ex post facto principles until there is a definitive amount
19 awarded.” Id.
5
1 C. NMSIC’s Plan and the Present Suit
2 {11} While the Appellants’ qui tam actions were proceeding as just described,
3 NMSIC developed its own plan to recover from those involved in pay-to-play
4 schemes, including some of the defendants in Vanderbilt and Austin. NMSIC is
5 pursuing recovery using theories of liability other than FATA, focusing first on
6 individuals involved in the schemes. Using information gleaned from these
7 individuals, NMSIC plans to pursue the entities involved. NMSIC anticipates greater
8 recoveries from the entities than from individual defendants.
9 {12} Consistent with this plan, NMSIC took several actions. First, it declined to
10 intervene in Appellants’ qui tam suits and moved to dismiss the pay-to-play claims
11 involving NMSIC—but only those claims—from Vanderbilt and Austin. See § 44-9-
12 6(B) (“The state or political subdivision may seek to dismiss the action for good
13 cause notwithstanding the objections of the qui tam plaintiff if the qui tam plaintiff
14 has been notified of the filing of the motion and the court has provided the qui tam
15 plaintiff with an opportunity to oppose the motion and to present evidence at a
16 hearing.”). The motions to dismiss did not address Appellants’ claims regarding
17 nondisclosure of investment risks in Vanderbilt and Austin, nor did they address the
18 claims of pay-to-play at the ERB. NMSIC’s motion to dismiss the pay-to-play claims
6
1 from Vanderbilt were granted. It appears that as of June 2015 the district court had
2 not yet ruled on the motion to dismiss these claims from Austin.
3 {13} Second, because it wanted to pursue recovery for pay-to-play in NMSIC’s
4 investment process through non-FATA claims, NMSIC initiated the present suit,
5 alleging breach of fiduciary duty, aiding and abetting breach of fiduciary duty, breach
6 of contract, and unjust enrichment. Although the present suit involves different claims
7 than those in Austin, fifteen of the seventeen named defendants in this suit are also
8 named in Austin. The district court granted Appellants’ motion to intervene. See Rule
9 1-024 NMRA.
10 {14} The parties agree that the present suit is an “alternate remedy” under FATA and
11 that, therefore, Appellants are entitled to the same rights in this suit as they enjoy in
12 Austin, including the right to a hearing on the fairness, adequacy, and reasonableness
13 of settlements. See § 44-9-6(C).
14 {15} Third, NMSIC adopted a Recovery Litigation Settlement Policy (Settlement
15 Policy). The Settlement Policy, which is discussed in more detail below, also created
16 a Litigation Committee with the power to “actively participate in settlement
17 negotiations, as appropriate, with the authority of [NMSIC] for settlement resolution
18 and related decisions.” Over objection by Appellants, the district court adopted a
7
1 discovery plan meant to facilitate settlement discussions. Under this plan, only
2 discovery essential for settlement discussions was permitted.
3 {16} Pursuant to the Settlement Policy and the district court’s discovery plan, Day
4 Pitney LLP, a firm engaged by NMSIC, initiated settlement negotiations with some
5 of the defendants, all of whom are represented by experienced attorneys. It also began
6 an investigation of the possible recoveries against individuals and entities. As part of
7 this investigation, Day Pitney reviewed (1) over 2.5 million pages of documents from
8 the SEC, (2) 130,000 pages of documents from third parties, (3) desktop or laptop
9 data from twenty-two NMSIC employees, (4) 70,000 paper documents from NMSIC,
10 (5) complete images of NMSIC file and email servers, (6) sixty-eight server backup
11 tapes, (7) complete copies of server folders used by NMSIC employees to store
12 investment-related documents through December 2010, (8) updated email files for
13 NMSIC employees through December 2010, (9) server home directories for twenty-
14 two NMSIC employees, (10) email files for email addresses used by NMSIC
15 investment groups, and (11) audio recordings of NMSIC and subcommittee meetings.
16 Its document review was facilitated by e-discovery techniques of predictive coding,
17 concept grouping, near-duplication detection, and email threading. Day Pitney also
18 conducted interviews with twenty-three individuals, including over a dozen NMSIC
8
1 employees. Discovery was obtained from NMSIC, the SEC, and third parties, as well
2 as from some of the defendants.
3 D. The Path to the Present Appeals
4 {17} Each of the three cases now on appeal took similar but slightly different routes
5 through the district court. We begin with the district court’s review of the settlements
6 with the Weinstein Defendants because (1) of the settlements now on appeal, they
7 were the first approved, and (2) the procedures adopted by the district court for
8 considering these settlements set the stage for its consideration of the subsequent
9 settlements. The cases on appeal are also discussed in the order in which the district
10 court considered the settlement agreements.
11 1. The Weinstein Defendants
12 {18} In April 2013 NMSIC reached settlement agreements with Daniel Weinstein,
13 Vicky L. Schiff, Marvin Rosen, and William Howell (the Weinstein Defendants). In
14 these agreements, the Weinstein Defendants agreed to provide information and
15 answer questions about pay-to-play practices at NMSIC, make themselves available
16 to do so, execute affidavits truthfully setting forth their knowledge of such practices,
17 appear without subpoena to provide testimony at depositions or at other civil actions
18 NMSIC may initiate, and appear without subpoena at trial. The Weinstein Defendants
19 agreed to payments to NMSIC ranging from $100,000 to $300,000. In return, NMSIC
9
1 agreed to release these Defendants from any claim “arising out of or relating to the
2 investments by NMSIC.” Importantly, the district court found that NMSIC’s release
3 “does not cover claims relating to [the] ERB.” The settlement agreements were
4 executed by a member of NMSIC’s Litigation Committee.
5 {19} On April 18, 2013, NMSIC moved for the district court’s approval of the
6 settlements and dismissal of the Weinstein Defendants. See § 44-9-6(C) (“The state
7 . . . may settle the action with the defendant notwithstanding any objection by the qui
8 tam plaintiff if the court determines, after a hearing providing the qui tam plaintiff an
9 opportunity to present evidence, that the proposed settlement is fair, adequate[,] and
10 reasonable under all of the circumstances.”). Appellants filed an objection to the
11 settlements, but did not argue that the settlements were unfair, inadequate, or
12 unreasonable, and did not request an evidentiary hearing. At a hearing on July 15,
13 2013, Appellants first challenged the fairness, adequacy, and reasonableness of the
14 settlements and requested an evidentiary hearing, claiming that they had “enough of
15 the things that [they] put together independently that” a hearing was appropriate. The
16 district court ordered Appellants to submit a memorandum within two weeks stating
17 the grounds for their objections and identifying supporting evidence. It also ordered
18 NMSIC to prepare an order memorializing its oral orders. But Appellants did not file
19 a memorandum as directed by the district court. Instead, Appellants filed objections
10
1 to the proposed order prepared by NMSIC and requested a stay in the proceedings
2 pending the Supreme Court’s decision in Austin II. The district court denied the
3 motion to stay the proceedings and Appellants’ objections to the proposed order.
4 {20} In August 2013 the district court scheduled an evidentiary hearing for
5 November 25 and 26, 2013, on Appellants’ objections to the settlements. On
6 September 1, 2013, the district court entered an order defining the procedures for
7 briefing and other issues related to Appellants’ objections to the settlements. We refer
8 to this order as the Settlement Process Order. Appellants were required to file “a
9 memorandum that sets forth the basis for their position that the proposed settlements
10 . . . are not fair, adequate[,] and reasonable under all [of] the circumstances and
11 identifies the evidence upon which they will rely at the hearing.” The order noted that
12 Appellants must overcome a presumption that the settlements are fair, adequate, and
13 reasonable. It also set out factors under which the fairness and adequacy of the
14 settlements would be assessed. Finally, the order mandated that a similar
15 memorandum would be required for all future motions for dismissal based on
16 settlement with other defendants.
17 {21} When Appellants failed to file the required memorandum by the date set by the
18 district court, NMSIC moved to dismiss the Weinstein Defendants without a hearing.
19 The district court denied NMSIC’s motion and extended the deadline for Appellants’
11
1 memorandum by approximately two weeks. Although Appellants filed a
2 memorandum by this later deadline, it did not address the specific points listed by the
3 district court’s order.
4 {22} On November 1, 2013, Appellants represented at a motion hearing that they
5 had evidence to support their opposition to the settlements but argued that they
6 needed information about gains and losses on particular investments that NMSIC had
7 withheld from them for years. Appellants argued that they needed to see the figures
8 for “cash out, cash in.” Counsel for Appellants stated that they “want[ed] to ask
9 somebody from [NMSIC], . . . , what was the gain or loss on this particular
10 investment.” Approximately two weeks later, NMSIC served a response to the
11 Appellants’ oral discovery request that provided gain and loss information on all
12 thirteen of the investments associated with the Weinstein Defendants, together with
13 a chart showing “cash in, cash out,” and, where applicable, residual values.2
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.”). In a motion for rehearing, Appellants point out that,
23 in later proceedings relating to settlement with another defendant, the district court
24 found that NMSIC had failed to provide documents elucidating the data as ordered.
12
1 {23} At the November 25-26, 2013, evidentiary hearing, NMSIC presented the
2 testimony of six witnesses by affidavit and direct testimony. These witnesses included
3 a member of the Litigation Committee and a Day Pitney attorney, as well as the four
4 Weinstein Defendants. After the witnesses attested that their affidavits were an
5 accurate representation of their testimony and provided the foundation for exhibits,
6 Appellants were afforded an opportunity to cross-examine them. Appellants did not
7 testify, nor did they present evidence related to the investment loss information they
8 had requested.
9 {24} After the hearing, the district court entered seventy-three findings of fact and
10 forty-nine conclusions of law. In a subsequent order, it granted NMSIC’s motion to
11 dismiss the Weinstein Defendants. The findings of fact and conclusions of law are
12 discussed more fully in the context of Appellants’ arguments on appeal.
13 2. The Meyer Defendants
14 {25} A few months after reaching agreement with the Weinstein Defendants,
15 NMSIC reached a settlement agreement with Saul Meyer and Renaissance Private
16 However, the district court also found that NMSIC’s “failure to produce did not
17 prevent the consideration of the reasonableness of the settlement [with that
18 defendant].” Although they point to NMSIC’s failure to produce these documents,
19 Appellants do not demonstrate that the failure prevented the district court from
20 considering the reasonableness of the settlements with the Weinstein, Meyer, or
21 Broidy Defendants either.
13
1 Equity Partners, LP, d/b/a Aldus Equity Partners, LP (the Meyer Defendants) in July
2 2013. The provisions of this settlement agreement substantially mirrored those with
3 the Weinstein Defendants. This settlement agreement also was signed by a member
4 of the Litigation Committee.
5 {26} NMSIC moved for approval of the settlement with the Meyer Defendants on
6 January 10, 2014. The motion included the settlement agreement and sworn financial
7 statements from the Meyer Defendants. Appellants filed a response to the motion
8 objecting to the settlement and requesting an evidentiary hearing. The district court
9 held a two-hour hearing on June 19, 2014, on NMSIC’s motion to dismiss and
10 Appellants’ motion for an evidentiary hearing, and ruled that Appellants had failed
11 to file a memorandum consistent with the Settlement Process Order. No evidence was
12 presented at this hearing.
13 {27} Roughly a month later, the district court granted the motion to dismiss the
14 Meyer Defendants noting that “[Appellants] were given the opportunity to identify
15 the evidence they would present in opposition to the settlement[s but] indicated at the
16 . . . hearing that they had no evidence to present in opposition to the settlement.” It
17 therefore concluded that an evidentiary hearing was unnecessary and denied
18 Appellants’ motion. The district court acknowledged Appellants’ argument that
19 further discovery was necessary to obtain evidence to support their position but
14
1 concluded that Appellants were not entitled to full discovery because “[t]he extent of
2 discovery appropriate in connection with a settlement approval hearing is limited to
3 whether the settlement is fair, adequate, and reasonable.” It concluded, “[the Meyer]
4 Defendants have admitted liability, have agreed to cooperate with [NMSIC], and have
5 demonstrated that they have limited financial means[,]” and found that the settlements
6 were fair, adequate, and reasonable. The Meyer Defendants were dismissed.
7 3. The Broidy Defendants
8 {28} Elliott Broidy (Broidy) was the founder and chairman of Markstone Capital
9 Group, LLC (Markstone) (collectively, the Broidy Defendants). NMSIC alleged that
10 Broidy secured an investment from NMSIC in Markstone’s private equity fund by
11 making undisclosed and illegal quid pro quo payments to another defendant, thereby
12 aiding other defendants in breaching their fiduciary duties to NMSIC. In June 2014
13 NMSIC and Markstone reached a settlement agreement. In exchange for a payment
14 of $1,000,000 by Markstone, NMSIC released Markstone and Broidy from “any and
15 all claims . . . arising out of, [or] in connection with, or relating to any activities
16 by . . . Markstone [and Broidy] . . . with respect to . . . NMSIC . . . , including
17 NMSIC’s investments in the Markstone Fund.” The agreement with the Broidy
18 Defendants did not require Broidy or Markstone to cooperate in NMSIC’s civil
19 actions against other defendants. This agreement was signed by Governor Susana
15
1 Martinez as Chair of NMSIC. See § 6-8-2(B) (stating that the chair of NMSIC shall
2 be the Governor).
3 {29} Shortly thereafter, NMSIC filed a motion to dismiss the Broidy Defendants
4 asserting that Appellants had no standing to object to the dismissal because they had
5 not named Broidy or Markstone in their qui tam actions. Nevertheless, Appellants
6 filed a response to the motion to dismiss stating their objections to the settlement. The
7 district court decided that no hearing was necessary because the cases on which
8 Appellants relied to establish standing to challenge the Broidy Defendants’ dismissal
9 were all distinguishable, and because Appellants’ objections to the settlement had
10 been previously rejected and Appellants presented no new reasons to change the
11 district court’s decision. NMSIC’s motion to dismiss Broidy was granted.
12 {30} Appellants now appeal the district court’s approval of the settlements and
13 dismissal of the Weinstein Defendants, the Meyer Defendants, and Defendant Broidy
14 from NMSIC’s suit.
15 DISCUSSION
16 A. Preliminary Matters3
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 1. Finality
2 {31} To the extent that Appellants argue that the district court’s orders dismissing
3 the Defendants were not final appealable orders, we disagree. See Rule 1-054(B)(2)
4 NMRA. Appellants argue that the orders are not final because they “do[] not
5 adjudicate all issues relating to these . . . [D]efendants, because [they] do[] not
6 adjudicate the [twenty-five] to [thirty percent] share of the settlement [that] goes to
7 [Appellants], or the amount of attorney fees [that will be] paid by these
8 [D]efendants.” Appellants’ argument is based on NMSA 1978, Section 44-9-7 (2015),
9 which sets out how a qui tam plaintiff may be compensated when the state prevails
10 in a FATA action. Section 44-9-7(A)-(C) guides how much a qui tam plaintiff may
11 recover. Section 44-9-7(D) provides that “[a]ny award to a qui tam plaintiff shall be
12 paid out of the proceeds of the action or settlement, if any. The qui tam plaintiff shall
13 also receive an amount for reasonable expenses incurred in the action plus reasonable
14 attorney fees that shall be paid by the defendant.”
15 {32} Here, Appellants never filed a motion for the statutory award and attorney fees,
16 and the district court did not hold a hearing on these issues. The orders dismissing
17 Defendants do not address the statutory award or attorney fees. We disagree with
18 Appellants that the pendency of these issues renders the dismissal orders non-final
19 for two reasons.
17
1 {33} First, the language of FATA itself contemplates resolution of the merits of the
2 action before determination of the qui tam plaintiff’s award and attorney fees. Section
3 44-9-7 provides for such awards when the state “prevails in the action” and when
4 there are “proceeds of the action or settlement.” This language indicates that
5 calculation of the qui tam plaintiff’s award is subsequent to and supplementary to
6 adjudication of the merits of the action or resolution by settlement. See Valley
7 Improvement Ass’n v. Hartford Accident & Indem. Co., 1993-NMSC-061, ¶ 11, 116
8 N.M. 426, 863 P.2d 1047 (distinguishing between attorney fees that are an integral
9 part of compensatory damages and attorney fees that are “analogous to costs” and
10 thus “supplementary to relief on the merits”).
11 {34} Second, our Supreme Court has held that “[w]here a postjudgment request,
12 such as one for attorney[] fees, raises issues ‘collateral to’ and ‘separate from’ the
13 decision on the merits, such a request will not destroy the finality of the decision[.]”
14 Kelly Inn No. 102, Inc. v. Kapnison, 1992-NMSC-005, ¶ 21, 113 N.M. 231, 824 P.2d
15 1033. Here, by approving the settlements and dismissing Defendants, the district
16 court’s orders “declare[d] the rights and liabilities of the parties to the underlying
17 controversy,” i.e., the settlement amounts and terms. Id. Any determination as to the
18 Appellants’ proper share of the settlement amount and attorney fees “will not alter[,]
19 . . . moot or revise” the district court’s approval of the rights and liabilities set out in
18
1 the settlement agreements. Id. Hence, the proceedings to determine Appellants’ share
2 of the settlements are “collateral to” and “separate from” the approval of the
3 settlements. Id.
4 2. Jurisdictional Limits
5 {35} Appellants also argue briefly that the district court acted beyond its jurisdiction
6 in approving the settlements (1) because the settlements released Defendants from the
7 FATA claims in Austin, which was presided over by another judge, and (2) because
8 those claims could not be released while the Austin case was stayed pending appeal.
9 For the most part, Appellants provide no authority for these contentions or to support
10 their argument that the district court’s jurisdiction here is limited by proceedings in
11 an entirely separate case. Generally, this Court will not consider propositions that are
12 unsupported by citation to authority. ITT Educ. Servs., Inc. v. Taxation & Revenue
13 Dep’t, 1998-NMCA-078, ¶ 10, 125 N.M. 244, 959 P.2d 969.
14 {36} In any case, we are unpersuaded that the district court exceeded its jurisdiction.
15 There is no dispute that the district court had jurisdiction over this case. The fact that
16 a decision in this case may have an impact on another pending proceeding does not
17 diminish its jurisdiction here. Indeed, Section 44-9-6(H) states that “[a] finding of fact
18 or conclusion of law made in the other proceeding that has become final shall be
19 conclusive on all parties to an action under [FATA].” Thus, this provision appears to
19
1 contemplate the disposal of claims in a qui tam action by decisions rendered in an
2 alternate remedy proceeding. See In re Pharm. Indus. Average Wholesale Price Litig.,
3 892 F. Supp. 2d 341, 343-45 (D. Mass. 2012) (recognizing that a settlement
4 agreement in a separate qui tam action may extinguish a qui tam plaintiff’s claims and
5 holding that such a settlement was an “alternate remedy” under Section 3730(c)(5)
6 of the False Claims Act (FCA), 31 U.S.C. §§ 3729–3733 (2012)).
7 3. Violation of Stay
8 {37} Appellants also argue that the stay was violated because the district court
9 released the FATA claims before the Supreme Court had a chance to rule on the
10 constitutional/retroactivity issue in Austin II and that, consequently, the Supreme
11 Court’s authority was “usurp[ed].” But the district court assumed that FATA was
12 constitutional, an assumption that favored Appellants’ position because, generally
13 speaking, the longer the period of alleged misconduct, the weaker the settlements
14 appear. Conversely, if the Supreme Court had decided that the retroactivity provision
15 of FATA was unconstitutional, then the period encompassing the alleged misconduct
16 would have been shorter, which would have weighed in favor of the adequacy of the
17 settlements and against Appellants’ position. We conclude that the district court
18 properly assessed the settlements in light of the pending appeals in Austin and did not
19 usurp the Supreme Court’s authority.
20
1 B. Appellants Do Not Have Standing to Challenge the Dismissal of Defendant
2 Broidy
3 {38} The district court held that Appellants did not have standing to challenge the
4 settlement with the Broidy Defendants because they were not named as defendants
5 in Appellants’ qui tam actions. The district court reasoned that, because Appellants’
6 rights in the present action stem solely from their rights in their qui tam actions,
7 Appellants’ failure to name the Broidy Defendants there means that they had no rights
8 as to them here.
9 {39} Although Appellants appealed the district court’s decision and dismissal of the
10 Broidy Defendants, they did not address the legal principles of standing in their brief
11 in chief nor specifically argue that the district court’s ruling was incorrect. Nor did
12 they address this issue in their reply brief even after NMSIC raised it in its answer
13 brief. “In this circumstance, such a failure to respond constitutes a concession on the
14 matter.” Delta Automatic Sys., Inc. v. Bingham, 1999-NMCA-029, ¶ 31, 126 N.M.
15 717, 974 P.2d 1174. “This Court has no duty to search the record or research the law
16 to ‘defend’ in a civil case a party that fails to defend itself on an issue.” Id. This issue
17 having been waived, we turn to Appellants’ substantive arguments as to the district
18 court’s approval of the settlements with the Weinstein and Meyer Defendants.
21
1 C. Appellants’ Substantive Arguments as to the Weinstein and Meyer
2 Defendants
3 {40} In these two appeals, Appellants raise the same four arguments. First, they
4 maintain that the district court erred in limiting discovery before approving the
5 settlements. Second, they argue that the district court’s rulings violate FATA. Third,
6 they argue that NMSIC violated the Open Meetings Act (OMA), NMSA 1978, §§ 10-
7 15-1 to -4 (1974, as amended through 2013),4 the Inspection of Public Records Act
8 (IPRA), NMSA 1978, §§ 14-2-1 to -12 (1947, as amended through 2013), and the
9 statute governing NMSIC, Section 6-8-2. Finally, Appellants contend that the district
10 court erred in ruling that they lacked standing to raise issues related to alleged
11 conflicts of interest of the former attorney general, Gary King, and his staff. We
12 address the first two arguments together, then the third and fourth in turn.
13 1. The District Court Did Not Abuse its Discretion as to Discovery nor
14 Violate FATA
15 {41} Appellants argue that the district court erred when it “refused to allow
16 discovery” and “refused to allow the [Appellants] to take any depositions . . . [o]r to
17 propound any interrogatories . . . [o]r to serve any requests for production.” In
18 essence, they maintain that they were denied the opportunity to present evidence that
4
19 The 2013 amendments to the OMA were effective June 14, 2013, after some
20 of the settlements were signed by the Litigation Committee. The 2013 amendments
21 do not alter our analysis.
22
1 the settlements were unfair and unreasonable—an opportunity to which they are
2 entitled by statute—because they were unduly limited in their ability to propound
3 discovery. See § 44-9-6(C). “Although the rules favor the allowance of liberal pretrial
4 discovery, the trial court is vested with discretion in determining whether to limit
5 discovery.” DeTevis v. Aragon, 1986-NMCA-105, ¶ 10, 104 N.M. 793, 727 P.2d 558
6 (citation omitted). Hence, “[a] trial court’s ruling limiting discovery is subject to
7 reversal only upon a showing of an abuse of discretion.” Id.
8 {42} We begin by addressing Appellants’ argument that, because of the differences
9 between FATA and the FCA, it is inappropriate to rely on federal cases construing
10 the FCA in construing FATA. They point to San Juan Agricultural Water Users
11 Ass’n v. KNME-TV, in which the Supreme Court stated that “[t]he differences in
12 substantive text and legislative purposes [between a federal statute and a New Mexico
13 statute] make the application of federal . . . law inappropriate when construing [that
14 New Mexico statute].” 2011-NMSC-011, ¶ 38, 150 N.M. 64, 257 P.3d 884. We
15 therefore consider whether differences between the FCA and FATA make federal
16 case law inapposite.
17 {43} Our courts have recognized that “FATA closely tracks the longstanding federal
18 [FCA]” and that “cases construing FATA’s federal analogue, the [FCA], [are] helpful
19 in understanding the context and purpose of FATA.” Austin II, 2015-NMSC-025,
23
1 ¶¶ 16, 25; see State ex rel. Peterson v. Aramark Corr. Servs., LLC, 2014-NMCA-036,
2 ¶ 4, 321 P.3d 128 (recognizing that FATA is similar to the FCA). Appellants argue
3 that this principle is inapplicable because the differences between FATA and the FCA
4 indicate that the New Mexico Legislature intended to afford qui tam plaintiffs broader
5 protections than those provided under the FCA. They derive this idea from the fact
6 that, whereas the FCA permits settlement “after a hearing,” FATA permits settlement
7 “after a hearing providing the qui tam plaintiff an opportunity to present evidence.”
8 Compare 31 U.S.C. § 3730(c)(2)(B), with § 44-9-6(C) (emphasis added).
9 {44} Under the FCA, a qui tam plaintiff may request an evidentiary hearing, which
10 “should be granted only upon a showing by the [qui tam plaintiff] of ‘substantial and
11 particularized need.’ ” Claire M. Sylvia, The False Claims Act: Fraud Against the
12 Government § 11:127 (2d ed. 2015); see Ridenour v. Kaiser-Hill Co., 397 F.3d 925,
13 935 (10th Cir. 2005); Nasuti ex rel. United States v. Savage Farms, Inc., No. 12-
14 30121-GAO, 2014 WL 1327015, at *13 (D. Mass. Mar. 27, 2014) (order), aff’d, No.
15 14-1362, 2015 WL 9598315 (Mar. 12, 2015). Thus, the opportunity to present
16 evidence at a hearing is permissible under the FCA upon a sufficient showing, but
17 required under FATA. Federal case law addressing when an evidentiary hearing
18 should be granted is therefore likely inapposite to Section 44-9-6(C) of FATA. Once
24
1 granted, however, we see no reason why federal case law addressing the conduct of
2 the evidentiary hearing itself is inapplicable to evidentiary hearings under FATA.5
3 {45} In addition to federal case law addressing the FCA, the law governing review
4 of class action settlements is also instructive here. In United States ex rel. Schweizer
5 v. Océ North America Inc., the court held that case law addressing the fairness,
6 adequacy, and reasonableness of class action settlements is analogous to the same
7 analysis under the FCA. 956 F. Supp. 2d 1, 10-11 (D.D.C. 2013); see Fed. R. Civ. P.
8 23(e)(2) (stating that class action settlements may be approved “only after a hearing
9 and on finding that it is fair, reasonable, and adequate”). This approach has been
10 adopted by other federal courts. See, e.g., United States ex rel. Nudelman v. Int’l
11 Rehab. Assocs., Inc., No. CIV A 00-1837, 2004 WL 1091032, at *1 n.1 (E.D. Pa. May
12 14, 2004) (order); United States ex rel. Resnick v. Weill Med. Coll. of Cornell Univ.,
13 No. 04 CIV 3088(WHP), 2009 WL 637137, at *2 (S.D.N.Y. Mar. 5, 2009).
14 {46} Similarly, in New Mexico, class action settlements are evaluated by the district
15 court for their fairness, adequacy, and reasonableness. See Rivera-Platte v. First
16 Colony Life Ins. Co., 2007-NMCA-158, ¶ 43, 143 N.M. 158, 173 P.3d 765 (stating
17 that the settlement proponents bear the burden of demonstrating that the settlement
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.
25
1 is fair, adequate, and reasonable). Given the similarity between the standards for
2 approval of settlement of false claims actions and class actions, we look to class
3 action law for guidance on FATA settlement hearings.
4 {47} Having concluded that federal case law governing objections to settlements
5 under the FCA and case law on class action settlements is applicable, we next
6 examine that law. In Schweizer, the court considered whether a qui tam plaintiff “who
7 objects to a proposed [FCA] settlement reached between the government and the
8 defendant [is] entitled to full-blown discovery on her claims in order to prove that the
9 settlement [is] inadequate[.]” 956 F. Supp. 2d at 11. The court concluded that the
10 hearing required by statute “serves a . . . limited purpose of forcing the government
11 to provide some reasoning behind its decision to settle the case and giving the
12 plaintiff-relators an opportunity to direct the court’s attention to facts or allegations
13 that would suggest the settlement was not ‘fair, adequate[,] and reasonable under all
14 the circumstances[.]’ ” Id. Based on this limited purpose, it further concluded that
15 “allowing full-blown discovery as of right would risk transforming the [FCA
16 settlement] hearing into a trial on the merits of [the qui tam] plaintiff’s claims and the
17 government’s estimations of the litigation risks. It would put the cart before the horse,
18 in essence making trial a precondition of settlement.” Id. Although it held that there
19 was no right to full discovery, the court noted that limited discovery would be
26
1 appropriate when “the government has not adequately explained its reasoning behind
2 the settlement.” Id.; see United States ex rel. McCoy v. Cal. Med. Review, Inc., 133
3 F.R.D. 143, 149 (N.D. Cal. 1990) (stating that although a qui tam plaintiff is entitled
4 “to discovery on the fairness of the proposed settlement, the discovery must be
5 limited to effectuate the goal of allowing plaintiffs meaningful participation in the
6 fairness hearing without unduly burdening the United States or the defendants or
7 causing unnecessary delay”); 5B Fed. Proc., L. Ed. § 10:73 (2004) (“The qui tam
8 plaintiffs may be allowed limited discovery to enable them to play an active role in
9 hearings on a proposed settlement agreement.”); cf. 32B Am. Jur. 2d Federal Courts
10 § 1870 (2016) (stating that “formal discovery is not a prerequisite to the approval of
11 a [class action] settlement as long as the plaintiffs’ negotiators had access to sufficient
12 information regarding the facts of the case, and if the terms of the settlement are fair,
13 the court may reasonably conclude that counsel performed adequately in obtaining
14 a working knowledge of the case”).
27
1 {48} The Schweizer holding is paralleled in Rivera-Platte,6 in which this Court
2 considered whether “the settlement process was unfair because [the objectors’] . . .
3 requests for discovery were denied.” 2007-NMCA-158, ¶ 52. We rejected the
4 objectors’ argument that “informal” discovery was inadequate to permit the court to
5 evaluate the settlement, id. ¶ 49, and that they had “an absolute right to discovery.”
6 Id. ¶ 94 (internal quotation marks and citation omitted). Instead, we stated that
7 informal discovery is appropriate so long as it is sufficient “to fairly evaluate the
8 merits of [the d]efendants’ positions during settlement negotiations.” Id. ¶ 49. We
9 also noted that “[o]ne of the major reasons courts encourage settlement is to reduce
10 the cost of litigation” and that because settlement is “an extra judicial process,
11 informality in the discovery of information is desired.” Id. ¶ 51 (internal quotation
12 marks and citation omitted). Although in Rivera-Platte we reversed the district
13 court’s denial of discovery, we held that “the district court would not have abused its
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.
28
1 discretion in denying discovery if it had sufficient information before it to determine
2 whether to approve the settlement.” Id. ¶ 95; accord Hershey v. ExxonMobil Oil
3 Corp., No. 07-1300-JTM, 2012 WL 4758040, at *2 (D. Kan. Oct. 5, 2012) (stating
4 that “[t]he fundamental question is whether the district [court] has sufficient facts
5 before [it] to intelligently approve or disapprove the settlement” (internal quotation
6 marks and citation omitted)).
7 {49} Consistent with these principles, the district court here properly concluded that
8 “[Appellants] are not entitled to conduct or complete full-blown discovery prior to
9 proposed settlement approval.” Hence, we reject Appellants’ contention that the
10 district court violated FATA by limiting discovery before settlement.
11 {50} We turn next to Appellants’ arguments that the way the district court limited
12 discovery unduly hindered their ability to challenge the settlements contrary to
13 FATA. Appellants argue that they were improperly denied any discovery. They also
14 argue that the district court improperly ruled that damages calculations were not
15 important for evaluation of the settlements and therefore denied their request for
16 discovery as to damages. Neither of these contentions is supported by the record.
17 {51} Contrary to their statement that they were denied all discovery, we note that
18 Appellants were provided with all of the discovery obtained by NMSIC from
19 Defendants. Also, Appellants conceded in the district court that they had received
29
1 some discovery from NMSIC, that they were “satisifed” with NMSIC’s response, and
2 that there was “no dispute with the [q]ui [t]am [p]laintiffs and [NMSIC] with [how]
3 they have responded to discovery,” and the district court entered an order stating that
4 Appellants were entitled to receive any further materials that were produced to
5 NMSIC counsel by Defendants. In addition, the district court ordered that “basic
6 documents relating to the transactions at issue in this case” must be produced by
7 Defendants to both NMSIC and Appellants. The district court also ordered that
8 personal financial information for Defendants should be produced to Appellants.
9 Finally, the district court ordered that “each [D]efendant shall provide to [Appellants]
10 . . . a copy of any insurance agreement under which an insurance business may be
11 liable to satisfy all or part of a possible judgment in this suit or to indemnify or
12 reimburse any defendant for payments made to satisfy any judgment in this suit.”
13 {52} Given the production of the above described discovery, we understand
14 Appellants’ argument to be that their other specific requests for discovery were
15 improperly denied. Appellants requested “the name and . . . address . . . of each
16 individual likely to have discoverable information” about the case; copies of “all
17 documents, electronically stored information, and tangible things that the disclosing
18 party” might “use to support its claims or defenses”; “a computation of each category
19 of damages claimed by the disclosing party”; and a “copy of any insurance agreement
30
1 under which an insurance business may be liable to satisfy all or part of a possible
2 judgment.” They argued below and on appeal that these four requests “track[] the list
3 in Rule 1-026(B)(3) [NMRA]” and in its federal counterpart, Fed. R. Civ. P.
4 26(a)(1)(A), and that this information is “part of the minimal due diligence and
5 competence that is required in every case.” In addition, they asked Defendants to
6 “describe all communications between you and any of the other parties to this
7 lawsuit,” “[p]rovide a copy of all documents, electronically stored information, and
8 tangible things that record or reflect any [such] communications,” and “[p]rovide a
9 copy of all documents, electronically stored information, and tangible things relating
10 to the transactions giving rise to this lawsuit.”
11 {53} Defendants objected to these requests and some sought protective orders. The
12 district court issued an order preventing Appellants from promulgating the requested
13 discovery on Defendants, with the exception of the materials discussed in paragraph
14 50. In its oral remarks, the district court stated that “[it did] not believe that due
15 diligence requires answers to the mandatory . . . disclosures” in Rule 1-026(B)(3) and
16 that the answers to those requests were not necessary for it to evaluate the
17 settlements.
31
1 {54} We conclude that the district court did not abuse its discretion in limiting
2 Appellants’ discovery as it did. In the Settlement Process Order, the district court
3 notified Appellants that they must demonstrate that
4 (1) there is a low risk of . . . failing to establish liability against [the]
5 [s]ettling [d]efendants under FATA,
6 (2) there is a low risk of . . . failing to establish damages against [the
7 settling defendants] under FATA,
8 (3) the settlement amounts are not within the range of reasonableness in
9 light of the best possible recovery[,] and
10 (4) the settlement amounts are not within the range of reasonableness in
11 light of all . . . the attendant risks of litigation.
12 {55} Appellants did not demonstrate to the district court, and do not demonstrate on
13 appeal, how their broad discovery requests were related to the factors the district
14 court considered to assess the settlements. As discussed above, in the months leading
15 up to the evidentiary hearing on the settlements with the Weinstein Defendants,
16 Appellants were given multiple opportunities to present the evidence they claimed
17 they already had and to state why the settlements were not fair, adequate, or
18 reasonable. Considering the stage of the proceedings, the amount of discovery
19 produced to Appellants, Appellants’ multiple opportunities to present evidence they
20 claimed to have, and Appellants’ opportunity to cross-examine the witnesses
32
1 presented by NMSIC, it was within the district court’s discretion to curb Appellants’
2 discovery.
3 {56} Appellants next argue that the district court erred by ruling that calculation of
4 damages was not important to evaluation of the settlements. They glean this argument
5 from an exchange at a motion hearing after Appellants stated that they wanted “all
6 documents relating to the various investments” in order “to do a real calculation with
7 admissible evidence as to what the loss or gain . . . might be on a particular
8 investment.” They stated that “the best way of doing that is cash out, cash in.”
9 Counsel for Appellants: So there is complexity there. And without
10 simply having had discovery, we don’t have
11 that information.
12 Court: Mr. Marshall, to me, the issue at this hearing is not whether
13 you had the ability to make that calculation now, but . . .
14 whether somebody who is making the decision to settle
15 considered those facts.
16 Counsel for Appellants: I want the facts, Your Honor.
17 Court: I understand you want the facts, but that’s not important for
18 settlement purposes.
19 ....
20 Counsel for Appellants: I want to ask somebody from the
21 [NMSIC], . . . what was the gain or loss on
22 this particular investment. We don’t know
23 that information.
24 Court: I don’t think you need to know that at this stage.
33
1 {57} Appellants misinterpret the district court’s ruling. The district court did not
2 decide that calculation of damages was irrelevant to the fairness, adequacy, and
3 reasonableness of the settlements: it ruled that it was not critical to evaluation of the
4 settlements that Appellants have the information on which NMSIC’s damages
5 calculations were based, so long as NMSIC could demonstrate to the district court
6 that it adequately considered the potential damages. See Hershey, 2012 WL 4758040,
7 at *2 (stating that “[t]he fundamental question is whether the district [court] has
8 sufficient facts before [it] to intelligently approve or disapprove the settlement.”
9 (internal quotation marks and citation omitted)).
10 {58} Furthermore, Appellants’ contention that the district court did not consider the
11 potential damages is contradicted by the record. The district court made several
12 findings of fact related to potential damages. Additionally, in its conclusions of law,
13 the district court noted that assessment of the settlement included examination of “the
14 range of reasonableness of the settlement fund in light of the best possible recovery.”
15 It further concluded that NMSIC had conducted sufficient discovery to “fairly
16 evaluate the . . . range of [best] possible recovery.” In other conclusions, the district
17 court considered the “complexity of establishing damages,” recognized that
18 Appellants estimated damages to be in excess of $300,000,000 based on investment
19 losses, and contemplated the possible types of damages available under FATA. These
34
1 findings and conclusions indicate that the district court properly considered damages
2 in its assessment of the settlements.
3 {59} Appellants also argue that the district court deprived them of their rights under
4 FATA, specifically the “right to [Appellants’] reward and attorney fees, the right to
5 intervene and participate as a party in the alternate action, and the right to present
6 evidence in the alternate action.” But Appellants were permitted to intervene as
7 parties and, as already discussed, were permitted to present evidence at the fairness
8 hearing. Because the propriety of the settlements is on appeal, Appellants’ right to a
9 reward and attorney fees has yet to be litigated. Thus, Appellants have not been
10 deprived of these rights.
11 {60} Appellants’ general arguments that the district court violated FATA by
12 “rubber-stamping” the settlements are unpersuasive. As discussed above, the district
13 court requested memoranda on Appellants’ opposition to the settlements multiple
14 times, held several hearings, and conducted a two-day evidentiary hearing. It issued
15 seventy-three detailed findings of fact. In its evaluation, the district court indulged
16 several presumptions in Appellants’ favor. For example, although the issue of the
17 constitutionality of FATA’s retroactivity provision was on appeal to the Supreme
18 Court, the district court assumed that it was constitutional. In spite of its reservations
19 about whether Appellants had a right to object to settlements with defendants on
35
1 whom process was not served in their qui tam actions, it also presumed that
2 Appellants had a right to object to those settlements. Moreover, although Appellants
3 “ha[d] not articulated a viable FATA claim against any of the [Weinstein]
4 Defendants,” the district court nevertheless assumed that Appellants might yet do so
5 and therefore assumed they had a right to object to settlements with those defendants.
6 The district court did not “rubber-stamp” the settlement agreements.
7 {61} Finally, Appellants argue that the district court violated NMSA 1978, Section
8 6-8-24 (2011). This statute provides that “[n]othing in this 2011 act shall prejudice
9 or impair the rights of a qui tam plaintiff pursuant to [FATA].” Since we have
10 determined that Appellants’ rights under FATA were not infringed, we further
11 conclude that no violation of Section 6-8-24 occurred. Appellants also make several
12 statements that because of the inadequate discovery “the proposed settlement amounts
13 are grossly inadequate.” Other than these statements, however, Appellants do not
14 challenge the district court’s factual findings or conclusions as to adequacy, fairness,
15 or reasonableness, which involved a number of findings and conclusions on the
16 settling defendants’ resources, the likelihood of success at trial, and the role of the
17 settlements in the State’s litigation plan, among others. In the absence of
18 particularized challenges to these findings and conclusions, we do not address
19 Appellants’ general assertions that the settlements are inadequate. See Rule 12-
36
1 213(A)(4) (stating that “[t]he argument shall set forth a specific attack on any finding,
2 or such finding shall be deemed conclusive”).
3 {62} We conclude that the district court did not abuse its discretion in limiting
4 discovery, nor did it fail to adequately assess the settlements. In addition, we discern
5 no violation of FATA by the district court.
6 2. The Settlement Agreements are Valid as of May 2015
7 {63} Appellants, together with Amici New Mexico Foundation for Open
8 Government (NMFOG) and New Mexico Press Association, argue that the
9 settlements are void for three reasons. First, NMSIC did not have the power to
10 delegate authority to settle with Defendants to the Litigation Committee. Second,
11 even if settlement authority was properly delegated, the Litigation Committee was a
12 public body subject to the requirements of the OMA and failed to comply with those
13 requirements. Section 10-5-1. Third, the Litigation Committee was improperly
14 constituted because it did not conform with NMSIC’s settlement policy or Section 6-
15 8-2(B), which states that “[a]ll actions of the [NMSIC] shall be by majority vote, and
16 a majority of the members shall constitute a quorum.”
17 {64} Appellants made these arguments in the district court as well. The district court
18 disagreed and held that NMSIC properly delegated settlement authority to the
19 Litigation Committee and that the OMA does not require litigation decisions,
37
1 including settlement decisions, to be made in a public meeting. See § 10-15-1(H)(7)
2 (excluding “meetings subject to the attorney-client privilege pertaining to threatened
3 or pending litigation in which the public body is or may become a participant” from
4 the scope of the OMA). In reaching this conclusion, the district court relied in part on
5 the fact that NMSIC delegated authority to the Litigation Committee in its Settlement
6 Policy, which was voted on and approved by NMSIC at a public meeting.
7 {65} NMSIC’s position on appeal is multifaceted. First, NMSIC argues that
8 Appellants “implicitly conceded” that delegation of settlement authority to the
9 Litigation Committee was proper, and thus the issue is not preserved for appeal. Next,
10 it argues that “the actions of the Litigation Committee are the very type of attorney-
11 client privileged litigation decision-making exempted by [the] OMA.” In addition, it
12 argues that “[e]ven if the Litigation Committee were subject to the OMA, the
13 processes followed here satisfied [the] OMA’s purposes and therefore did not violate
14 [the] OMA.” Finally, it maintains that any violation of the OMA was cured by
15 NMSIC’s ratification of the settlements in a properly-noticed public meeting held in
16 May 2015, approximately thirty months after the Litigation Committee approved the
17 first settlements, and that, therefore, this issue is moot.
18 {66} We begin by addressing NMSIC’s preservation and mootness arguments. The
19 district court’s conclusion that the issue of whether settlement authority was properly
38
1 delegated was “implicitly conceded” is based on a pleading in which Appellants
2 argued that there were no records of such a delegation and requested that any records
3 of delegation be produced. But Appellants also stated in that pleading that “a blanket
4 delegation [of settlement authority] to the [state investment officer] . . . would be in
5 derogation of the statutory and fiduciary obligations of [NMSIC] members
6 themselves” and that decisions about “settlement of actual or potential litigation . . .
7 must be made by the . . . [NMSIC] itself, by vote.” By making these arguments,
8 Appellants sufficiently apprised the district court of their contention that the authority
9 to settle litigation rests solely with NMSIC. Thus, this argument was sufficiently
10 preserved for appeal.
11 {67} As to NMSIC’s argument that this Court need not address Appellants’
12 arguments as to the OMA because the May 2015 meeting cured any OMA violations,
13 we disagree. Even if an issue is moot as between the parties, we may address it if it
14 is an issue “of substantial public interest, and capable of repetition, yet evading
15 review.” Howell v. Heim, 1994-NMSC-103, ¶ 7, 118 N.M. 500, 882 P.2d 541
16 (internal quotation marks and citation omitted). The present matter satisfies both of
17 these criteria. In promulgating the OMA, the New Mexico Legislature has evinced
18 a strong interest in transparency in government and agency compliance with the OMA
19 is an issue of substantial public interest. Furthermore, the problems in NMSIC’s
39
1 processes here are capable of repetition by it and other agencies. See Paragon Found.,
2 Inc. v. State Livestock Bd., 2006-NMCA-004, ¶ 10, 138 N.M. 761, 126 P.3d 577
3 (stating that “the implication of the OMA is an important policy issue that is likely
4 to occur again if the issue is not directly addressed” and examining the OMA issues
5 even though the matter was moot).
6 {68} We move on to the parties’ substantive arguments, which present a series of
7 questions. First, are the actions of the Litigation Committee void, because either (1)
8 NMSIC improperly delegated authority to settle with Defendants, or (2) the Litigation
9 Committee failed to comply with the OMA? Second, did the May 2015 meeting cure
10 any improper delegation or violation of the OMA such that the settlements are now
11 valid?
12 a. Actions of the Litigation Committee Were Void
13 {69} As to the first question, we agree with Appellants and Amici that the Litigation
14 Committee’s actions were void because the Committee did not have the authority to
15 settle with Defendants. In addition, even if settlement authority was properly
16 delegated, the Litigation Committee’s meetings did not comply with the OMA and
17 hence were invalid. We address the delegation issue first.
18 {70} In pertinent part, the Settlement Policy states that the Litigation Committee
19 “may actively participate in settlement negotiations, as appropriate, with the authority
40
1 of the [NMSIC] for settlement resolution and related decisions.” It also states that
2 “the authority to settle legal matters rests not with the [State Investment Officer] but
3 with [NMSIC’s L]itigation [C]ommittee.” The Settlement Policy specifies that the
4 Litigation Committee “shall be comprised of at least three [NMSIC] members” and
5 permits the Governor’s general counsel to serve on the committee. Pursuant to the
6 Settlement Policy, a Litigation Committee consisting of two NMSIC members and
7 the Governor’s general counsel met “seven or eight” times to discuss the settlement
8 negotiations with Defendants. The Litigation Committee approved the settlement
9 agreements with Defendants without obtaining a vote on the final decision by
10 NMSIC. These settlement agreements were signed on behalf of NMSIC by Litigation
11 Committee members.
12 {71} As a creature of statute, NMSIC functions solely within the powers granted by
13 the Legislature. Chalamidas v. Envtl. Improvement Div., 1984-NMCA-109, ¶ 13, 102
14 N.M. 63, 691 P.2d 64. NMSIC’s powers are limited by Section 6-8-2(B) and Section
15 6-8-7(A) and (E). Under Section 6-8-2(B), “[a]ll actions of the council shall be by
16 majority vote, and a majority of the members shall constitute a quorum.” (Emphasis
17 added). The only mention of NMSIC’s ability to delegate its responsibilities states
18 that “[t]he [NMSIC] may delegate administrative and investment-related functions
19 to the state investment officer.” Section 6-8-7(A). Section 6-8-7(E) provides that
41
1 NMSIC may “form and use committees,” but only to “study and make
2 recommendations to [NMSIC].” Notwithstanding the Settlement Policy, these
3 provisions do not permit NMSIC to delegate authority to settle litigation to a
4 committee. Indeed, read together, they prohibit such delegation. Cf. Kerr-McGee
5 Nuclear Corp. v. N.M. Envtl. Improvement Bd., 1981-NMCA-044, ¶ 52, 97 N.M. 88,
6 637 P.2d 38 (stating that “[a]dministrative bodies and officers cannot delegate power,
7 authority and functions which under the law may be exercised only by them, which
8 are quasi-judicial in character, or which require[] the exercise of judgment”). Because
9 the Litigation Committee did not have the authority to do so, its approval of the
10 settlements in 2013 and 2014 was without any binding effect.7
11 b. Litigation Committee Was Subject to the OMA
12 {72} Even if NMSIC’s delegation of settlement authority to the Litigation
13 Committee had been proper, the Litigation Committee violated the OMA’s
14 requirements for closed meetings. Hence, its actions are void for that reason as well.
15 We explain.8
7
16 Since we conclude that the Litigation Committee did not have the authority
17 to act on the settlements, we need not address whether it was properly constituted.
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 {73} The OMA embodies the Legislature’s declaration that “[the] public policy of
2 this state [is] that all persons are entitled to the greatest possible information
3 regarding the affairs of government and the official acts of those officers and
4 employees who represent them.” Section 10-15-1(A). In keeping with this policy, we
5 construe the OMA’s provisions broadly and their exceptions narrowly. Cf. State ex
6 rel. Toomey v. City of Truth or Consequences, 2012-NMCA-104, ¶ 22, 287 P.3d 364
7 (“We emphasize, however, that [the] IPRA should be construed broadly to effectuate
8 its purposes, and courts should avoid narrow definitions that would defeat the intent
9 of the Legislature.”); see also NMSA 1978, § 14-2-5 (1993) (stating that, under the
10 IPRA, “it is declared to be the public policy of this state, that all persons are entitled
11 to the greatest possible information regarding the affairs of government and the
12 official acts of public officers and employees[,]” which is nearly identical to the
13 policy declaration in the OMA).
14 {74} The OMA provides that
15 All meetings of a quorum of members of any board, commission,
16 administrative adjudicatory body or other policy[-]making body of any
17 state agency . . . , held for the purpose of formulating public policy, . . .
18 discussing public business or taking any action within the authority of
19 or the delegated authority of any board, commission or other
20 policy[]making body are declared to be public meetings open to the
21 public at all times, except as otherwise provided in the constitution of
22 New Mexico or the [OMA].
23 Section 10-15-1(B) (emphasis added).
43
1 {75} We conclude that this provision applied to the Litigation Committee because
2 the Litigation Committee was intended to be a “policy[-]making body” and its
3 meetings were for the purpose of taking an action within the authority of NMSIC.9
9
4 We note that there is nothing in the statutes governing NMSIC explicitly
5 indicating that it has the authority to settle litigation either. Compare NMSA 1978,
6 §§ 6-8-1 to -24 (1957, as amended through 2015), with NMSA 1978, § 58-24-5(A)
7 (1983) (stating that the Industrial and Agricultural Finance Authority “shall have all
8 the powers necessary or convenient to carry out and effectuate the purposes and
9 provisions of the Industrial and Agricultural Finance Authority Act, including, . . . the
10 power . . . to sue and be sued”), and NMSA 1978, § 72-14-21 (1955) (stating that the
11 Interstate Stream Commission “shall have power to institute in any of the courts of
12 this state, or in any other state, or in any of the federal courts of this state or any other
13 state, any actions, suits and special proceedings necessary to enable it to acquire, own
14 and hold title to lands for dam sites,” and other sites), and NMSA 1978, § 36-1-19(B)
15 (1985) (stating that “a board of county commissioners may contract with private
16 counsel for legal assistance to or representation of the county” and that “[s]uch
17 private counsel shall have the same powers of compromise, satisfaction or release in
18 civil proceedings as are held by district attorneys”). NMSIC states in its brief that the
19 power to settle litigation is vested in the Attorney General and that the Attorney
20 General delegated such power to NMSIC or to NMSIC’s counsel, but conceded at
21 oral argument that the record does not reflect such delegation. See § 36-1-19 and
22 NMSA 1978, § 36-1-22 (1875-1876) (stating that the Attorney General represents the
23 state and that the Attorney General has the authority to settle matters involving the
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 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 any decisions on behalf of, formulates recommendations that are binding
16 in any legal or practical way on, or otherwise establishes policy for the
17 public body. A public body may not evade its obligations under the
18 [OMA] by delegating its responsibilities for making decisions and
19 taking final action to a committee.
20 p. 9 (8th ed. 2015) http://www.nmag.gov/oma-and-ipra-nm-sunshine-laws.aspx.
21 {76} In Paragon Foundation, Inc., this Court considered whether the acts of an
22 individual on behalf of a public agency were subject to the OMA. 2006-NMCA-004,
45
1 ¶¶ 2-3. After a federal district court ordered the plaintiffs to remove their livestock
2 from United States Forest Services land, the Forest Service and the executive director
3 of the New Mexico Livestock Board (Board) entered into a memorandum of
4 understanding (MOU) governing how the livestock would be removed. Id. The
5 plaintiffs filed suit, alleging that the MOU violated the OMA because “no public
6 meeting of the Board was held and a majority of the Board did not approve or
7 authorize the MOU before the MOU was executed by” the executive director. Id. ¶ 4.
8 The Board moved for summary judgment on the ground that the MOU was not voted
9 on or executed by a quorum of the Board and that, because the Board did not so act,
10 the OMA did not apply. Id. ¶ 5. The district court granted the motion for summary
11 judgment. Id. ¶ 7.
12 {77} On appeal, we affirmed. Relying on Section 10-15-1(B), quoted above, we held
13 that “[u]nder the law, if a quorum of the Board members did not act on the MOU, the
14 OMA was inapplicable, there was no OMA violation, and summary judgment was
15 proper.” Paragon Found., Inc., 2006-NMCA-004, ¶¶ 12, 13. We also noted that the
16 executive director’s “largely unilateral action [in signing the MOU was] non-binding
17 and meaningless, as he can only act pursuant to those powers delineated in the Code.”
18 Id. ¶ 24.
46
1 {78} Importantly, we noted that the executive director “did not have the authority
2 or approval of the Board to enter into the MOU” and that the “MOU was not
3 approved or authorized by a quorum of the Board in public or private meetings.” Id.
4 ¶¶ 15, 16. We repeatedly reiterated the fact that members of the Board had limited or
5 no knowledge of the MOU before it was signed, and that some members were
6 “surprised” when presented with it after its execution. Id. ¶¶ 17-22. These facts
7 clearly distinguish Paragon Foundation, Inc. from the present matter. Unlike in that
8 case, here, NMSIC unanimously approved the Settlement Policy, purportedly giving
9 the Litigation Committee authority to act on its behalf. See Signed Minutes, pg. 5-7,
10 N M S I C Meeting June 26, 2012, available at
11 http://www.sic.state.nm.us/uploads/FileLinks/39153cc7c39a496c823e7a6fdba7da
12 d6/6_26_12_SIC_SIGNED_MINUTES.pdf. It is clear that NMSIC fully endorsed the
13 actions of the Litigation Committee and intended it to take action that would be
14 subject to the OMA if acted on by the full NMSIC.
15 c. Litigation Committee Actions Were Subject to the OMA
16 {79} Having determined that the Litigation Committee was a body subject to the
17 OMA, we turn to whether the Litigation Committee’s actions were subject to the
18 OMA. NMSIC relies on Board of County Commissioners v. Ogden to argue that the
19 Litigation Committee’s approval of the settlements falls within an exception to the
47
1 OMA. 1994-NMCA-010, 117 N.M. 181, 870 P.2d 143. The focus of the Ogden
2 opinion is on construction of Section 10-15-1(H)(7) (the litigation exception),10 which
3 states that “meetings subject to the attorney-client privilege pertaining to threatened
4 or pending litigation in which the public body is or may become a participant” are not
5 subject to the OMA. Ogden, 1994-NMCA-010, ¶ 13. There, the issue was whether
6 the “threatened or pending litigation” exception included the Board of
7 Commissioners’ decision to sue the defendants. Id. The Court concluded “that
8 ‘pending’ or ‘threatened’ litigation can include litigation that the public body may
9 initiate and legal disputes that have not yet reached the courts” and that “under [this
10 exception], [the Board of Commissioners] could properly discuss and decide to file
11 suit against [the d]efendants in a closed session.” Id. ¶¶ 15-16.
12 {80} More pertinent to our purposes is the Court’s rejection of the argument that
13 “even if [the Board of Commissioners was] allowed to obtain legal advice in closed
14 session, [it] was required to make its decision to sue [the d]efendants in an open
15 meeting.” Id. ¶ 17. We reasoned that, unlike some of the other exceptions, the
16 litigation exception “does not require that a decision regarding litigation be made in
10
17 At the time of the Ogden decision, the litigation exception was Section 10-15-
18 1(E)(5).
48
1 an open meeting.” Id.; see, e.g., § 10-15-1(H)(6) (actual approval of certain purchases
2 must be made in open meeting).
3 {81} Amici argue that the holding in Ogden has been overruled by the Board of
4 Commissioners of Doña Ana County v. Las Cruces Sun-News, in which this Court
5 stated that “settlement agreements entered into between parties are outside the
6 privilege” addressed by the litigation exception. 2003-NMCA-102, ¶ 25, 134 N.M.
7 283, 76 P.3d 36, overruled on other grounds by Republican Party of N.M. v. N.M.
8 Taxation & Revenue Dep’t, 2012-NMSC-026, ¶ 16, 283 P.3d 853. But the focus of
9 that case was on whether executed settlement agreements involving a public entity
10 were subject to public disclosure under the IPRA. Id. ¶¶ 1, 25. The holding that
11 settlement agreements are disclosable under the IPRA does not contradict the Ogden
12 holding that the decision to settle may be made in a closed meeting. Based on Ogden,
13 we conclude that the district court did not err in holding that the OMA was not
14 violated by the Litigation Committee’s approval of the settlement agreements in
15 private meetings.
16 {82} However, the district court’s analysis did not go far enough because other
17 provisions of the OMA were violated. For instance, Section 10-15-1(I)(1) states that
18 if [the decision to hold a closed session is] made in an open meeting, [it]
19 shall be approved by a majority vote of a quorum of the policy[-]making
20 body; the authority for the closure and the subject to be discussed shall
21 be stated with reasonable specificity in the motion calling for the vote
49
1 on a closed meeting; the vote shall be taken in an open meeting; and the
2 vote of each individual member shall be recorded in the minutes.
3 {83} Section 10-15-1(I)(2) provides that when the decision to hold a closed session
4 is not made in a public meeting, “the closed meeting shall not be held until public
5 notice, appropriate under the circumstances, stating the specific provision of the law
6 authorizing the closed meeting and stating with reasonable specificity the subject to
7 be discussed is given to the members and to the general public.” Finally, Section 10-
8 15-1(J) states that
9 the minutes of the open meeting that was closed or the minutes of the
10 next open meeting if the closed meeting was separately scheduled shall
11 state that the matters discussed in the closed meeting were limited only
12 to those specified in the motion for closure or in the notice of the
13 separate closed meeting. This statement shall be approved by the public
14 body . . . as part of the minutes.
15 {84} The parties do not direct us to evidence in the record that NMSIC and the
16 Litigation Committee complied with these requirements. Thus, these provisions of the
17 OMA were violated and the Litigation Committee’s approval of the settlement
18 agreements was invalid.
19 d. May 2015 Meeting Cured OMA Violations
20 {85} The final question is whether the settlement agreements became valid when
21 nine of the eleven members of NMSIC voted to approve them in May 2015.
50
1 Assuming NMSIC has the power to enter into such agreements, we conclude that the
2 May 2015 vote rectified the delegation issue.
3 {86} We also conclude that the May 2015 meeting cured the OMA violations.
4 “[P]rocedural defects in [compliance with the OMA] may be cured by taking prompt
5 corrective action.” Kleinberg v. Bd. of Educ. of Albuquerque Pub. Sch., 1988-NMCA-
6 014, ¶ 30, 107 N.M. 38, 751 P.2d 722. Previous cases have affirmed the cure of the
7 OMA violations where the curing actions were taken four days later, see id. ¶ 15, and
8 eleven months later. See Palenick v. City of Rio Rancho, 2012-NMCA-018, ¶ 1, 270
9 P.3d 1281, rev’d on other grounds by, 2013-NMSC-029, 306 P.3d 447. Here, the
10 curing meeting occurred thirty months after the first settlement was approved by the
11 Litigation Committee. Although thirty months stretches the bounds of “prompt”
12 remedial action as contemplated in Kleinberg, we conclude that it was sufficient to
13 remedy the Litigation Committee’s improper action because “the legislature did not
14 intend to unduly burden the appropriate exercise of governmental decision-making
15 and ability to act.” 1988-NMCA-014, ¶ 31. “To rule otherwise would improperly
16 elevate form over substance” and wreak havoc on a process already fraught with
17 complexity. Id. Most importantly, the May 2015 meeting was preceded by proper
18 notice to the public, included a public agenda and was open to the public, NMSIC
19 members publicly voted on the settlements, and minutes of the meeting were
51
1 published online. See http://www.sic.state.nm.us/state-investment-council.aspx
2 (providing access to NMSIC meeting calendar, and agendas and minutes of NMSIC
3 meetings) (last visited Mar. 17, 2016). The purpose of the OMA was thus achieved
4 by this public meeting. See Kleinberg, 1988-NMCA-014, ¶ 31 (concluding that an
5 OMA violation was cured where “[t]he local board, in affording [the plaintiff] a full
6 and fair hearing in compliance with due process guarantees, and ultimately, in taking
7 a public vote and openly announcing its decision in a forum where the interested
8 public could observe the action, carried out the intent and purpose of the [OMA]”).
9 {87} We recognize that our holding could be seen as stretching the notion of prompt
10 remedial action beyond the breaking point, effectively giving license to public
11 agencies to flout OMA standards without penalty. We caution strongly against any
12 such reading and emphasize that our decision to not invalidate the settlements is
13 driven by the fact that they were subjected to reasonable and appropriate review by
14 the district court. That independent review—which we have approved—provides us
15 assurance that the public fisc has been protected. Without the presence of judicial
16 review we would not be tolerant of the delay seen here. In addition, we are confident
17 that our ruling as to the reach and effect of the OMA in situations such as we review
18 here will result in suitable caution by public agencies of all stripes. To the extent
52
1 public agencies fail to meet their obligations under the OMA, the public—including
2 Amici—will have strong authority to enforce compliance.
3 {88} We also emphasize that the ratification of the settlements at the May 2015
4 meeting does not operate retroactively to make the settlement agreements valid as of
5 the date they were originally signed. See Palenick, 2012-NMCA-018, ¶ 9 (stating that
6 “no authority in New Mexico supports the [defendant’s] attempt to retroactively make
7 the prior invalid action valid and effective as of the date it was taken”). The
8 settlement agreements became valid only at the May 2015 meeting.
9 {89} Given this holding, the district court considered and approved settlements that
10 were void at the time. The question arises whether this requires that the entire matter
11 be remanded for reconsideration. We conclude that remand for what would be a
12 hearing of form only is not in the best interests of the public, the courts, or the parties.
13 The district court approved the settlements on their merits. We have found no error
14 in its process or final decision, with the exception of the delegation and the OMA
15 issues. These issues do not speak to the merits of the settlements. Requiring
16 reconsideration of the substance of the settlements would serve no purpose at this
17 point.
53
1 e. No IPRA Violation Shown by Appellants
2 {90} Finally, in the course of their arguments, Appellants also make several
3 references to violations of the IPRA and argue that the settlement agreements were
4 “kept secret for months.” The district court concluded that “[t]here is no evidence of
5 any attempt to shield these settlements from the IPRA. Moreover, the [s]ettlement
6 [a]greements have been publicly filed in this action and the [district c]ourt has held
7 a public hearing about them.” We agree with the district court. The IPRA provides
8 for public access to records; it does not require public entities to provide records in
9 the absence of a request for them. See NMSA 1978, § 14-2-8(A) (2009) (stating the
10 procedures for requesting public records). On appeal, Appellants do not argue that
11 they requested records from NMSIC and were denied. See NMSA 1978, § 14-2-
12 12(A)(2) (1993) (stating that “[a]n action to enforce the [IPRA] may be brought
13 by . . . a person whose written request has been denied”). Appellants have failed to
14 demonstrate that the IPRA was violated here.
15 {91} In sum, the Litigation Committee did not have the authority to settle with
16 Defendants here and we reverse the district court’s conclusion to the contrary. We
17 also hold that the Litigation Committee meetings violated the OMA’s notice and
18 documentation requirements. However, the settlement agreements were validated
54
1 when they were approved by NMSIC in an open meeting in May 2015. We affirm the
2 district court’s conclusion that Appellants have not shown a violation of the IPRA.
3 3. The District Court did not Err in Denying Appellants’ Motion to
4 Disqualify the Attorney General’s Office
5 {92} Finally, Appellants argue that the district court erred in dismissing their motion
6 to disqualify former Attorney General, Gary King, for conflicts of interest involving
7 representation by his office of NMSIC. They maintain that the district court
8 erroneously ruled that they lacked standing to raise these issues. In fact, the district
9 court rejected Appellants’ motion on its merits as to two of their three allegations.
10 {93} As to the third allegation, the district court ruled that Appellants lacked
11 standing to move for disqualification of the Attorney General’s office based on the
12 fact that a member of that office had served as counsel to NMSIC. Generally
13 speaking, “only a current or former client has standing to move for disqualification
14 of counsel based on an alleged conflict of interest.” Eric C. Surette, Annotation,
15 Standing of Person, Other than Former Client, to Seek Disqualification of Attorney
16 in Civil Action, 72 A.L.R. 6th 563 § 2 (2012); cf. Sanchez v. Siemens Transmission
17 Sys., 1991-NMCA-028, ¶ 36, 112 N.M. 236, 814 P.2d 104 (stating that “[t]o the
18 extent that employer[/respondent] attempts to raise [a conflict of interest between the
19 petitioner and her attorney] on claimant’s[/petitioner’s] behalf, however, we fail to
20 see how employer has standing”), rev’d in part on other grounds by, 1991-NMSC-
55
1 093, 112 N.M. 533, 817 P.2d 726. However, a nonclient party may have standing to
2 move for disqualification when “the nonclient establishes that the conflict prejudices
3 or injures the nonclient’s own rights.” Surette, supra, at § 2; cf. Evink v. Pekin Ins.
4 Co., 460 N.E.2d 1211, 1214 (Ill. App. Ct. 1984) (stating that the “plaintiffs would
5 have no standing to challenge [the] defense counsel’s ability to represent [two
6 defendants] without some showing that this representation adversely affects their
7 interests”).
8 {94} Here, the district court held a hearing on Appellants’ motion to disqualify.
9 After the hearing, it concluded that Appellants did not have standing to challenge a
10 conflict of interest between the Attorney General’s office and NMSIC. We infer from
11 this ruling that the district court determined that Appellants failed to demonstrate that
12 their interests were sufficiently adversely affected by the alleged conflict of interest
13 to overcome the general rule. Neither a transcript of the hearing nor a CD recording
14 of it is in the record on appeal. In the absence of a transcript or CD, we presume the
15 district court’s ruling is supported by the evidence. Michaluk v. Burke, 1987-NMCA-
16 044, ¶ 25, 105 N.M. 670, 735 P.2d 1176 (“Where the record on appeal is incomplete,
17 the ruling of the trial court is presumed to be supported by the evidence.”); see
18 Sandoval v. Baker Hughes Oilfield Operations, Inc., 2009-NMCA-095, ¶ 65, 146
19 N.M. 853, 215 P.3d 791 (“It is the duty of the appellant to provide a record adequate
56
1 to review the issues on appeal.”). We conclude that the district court did not err in
2 denying Appellants’ motion.
3 CONCLUSION
4 {95} Although we reverse the district court’s ruling as to the delegation of
5 settlement authority to NMSIC’s Litigation Committee and its conclusion that the
6 OMA was not violated, we conclude that the settlements are now valid because they
7 have been approved by NMSIC at a public meeting. We discern no error in the district
8 court’s other rulings. We therefore affirm the district court’s approval of the
9 settlements with the Weinstein, Meyer, and Broidy Defendants.
10 {96} IT IS SO ORDERED.
11
12 __________________________________
13 MICHAEL D. BUSTAMANTE, Judge
14 WE CONCUR:
15 ___________________________________
16 MICHAEL E. VIGIL, Chief Judge
17 ___________________________________
18 M. MONICA ZAMORA, Judge
57