2 MILR 105

IN THE SUPREME COURT
REPUBLIC OF THE MARSHALL ISLANDS

S. CT. CIVIL NO. 97-03
(High Ct. Civil No. 1996-167)

IN THE MATTER OF PUBLIC LAW NO. 1995-118
Respondent-Appellee,

-v-

THE MARSHALL ISLANDS NATIONAL TELECOMMUNICATIONS AUTHORITY,
Petitioner-Appellant.

APPEAL FROM THE HIGH COURT

DECEMBER 31, 1997

FIELDS, C.J.
TAYLOR, A.J. pro tem,1 and DANZ, A.J. pro tem2

SUMMARY:

The High Court ruled that the Marshall Islands National Telecommunication Authority (NTA) was not a private corporation with a due process right to counsel of its choice. The Supreme Court reversed.

DIGEST:

1. APPEAL AND ERROR - Review - Questions of Law: Both issues [the right to counsel and the constitutionality of an Act] are questions of law which are reviewed de novo.

2. CONSTITUTION LAW - Construction -Rules of Interpretation: Under Article I, § 3(1) of the RMI Constitution, the Court may look to court decisions of the United States as well as generally accepted common law principles for guidance.

3. CORPORATIONS - In General: The Marshall Islands National Telecommunication Authority is a private corporation, and is not an instrumentality or agent of the RMI government because: (1) it is not wholly owned by the RMI, that is, the government does not own all assets of NTA or all the stocks of NTA [28% of the issued stock has been purchased by private individuals, (Ex. B)]; (2) it is operated for profit; (3) it is not primarily engaged or even engaged at all, in the administration of government; (4) the board of NTA is not exclusively controlled by the government; (5) and, the government is not entitled to all profits and does not risk all losses of NTA, rather private shareholders' money is also at risk.

Even though NTA provides telecommunication to the public at large, it remains a private corporation.

4. CONSTITUTIONAL LAW - Due Process - Right to Counsel: A private company has a due process right to counsel of its choice.

OPINION OF THE COURT BY TAYLOR, A.J.

Appellant, Marshall Islands National Telecommunications Authority ("NTA"), appeals the judgment of the Marshall Islands High Court dated January 20, 1997, which held that (1) NTA is part of the government; (2) NTA and its numerous individual private shareholders are not entitled to the benefits and protections of the Marshall Islands Constitution; and (3) §§ 13(1)(i) and 13(1)(m) of the Office of the Attorney General Act 1995 ("OAGA") as applied to NTA are constitutional. We have jurisdiction pursuant to Article VI, § 2(2)(a) of the Marshall Islands Constitution. We reverse.

ISSUES PRESENTED AND STANDARD OF REVIEW

We are asked to determine whether the NTA is a private corporation entitled to the benefits and protections of the Constitution, including the right to counsel of its choice; and whether the OAGA, as applied to NTA, is unconstitutional.

[1] Both issues are questions of law which are reviewed de novo. Abija v. Bwijmaron, 2 MILR 6 (Aug 11, 1994).

FACTS AND PROCEDURAL BACKGROUND

I. Uncontroverted Facts:

Prior to 1987, the department of the Ministry of Transportation and Communication provided domestic and international telecommunications services in the Marshall Islands. In 1987, the Nitijela enacted Public Law ("P.L.") 1987-15, the National Telecommunication Authority Act ("the old NTA Act"), which created NTA for the purpose of taking over the management of telecommunication services in the Republic of the Marshall Islands ("RMI"). On September 4, 1990, Nitijela's Resources and Development Committee held a public hearing on Nitijela Bill No. 161, which was introduced to provide for the establishment and privatization of the NTA. On September 17, 1990, the Committee met in executive session to study the revisions proposed at the public hearing. As a result, Standing Committee Report No. 205 on Nitijela Bill No. 161 was issued. The intent of Bill No. 161 was "to provide for the establishment and privatization" of the NTA. (Tr. 6) (emphasis added).

Following the hearing and in accord with the Standing Committee Report, the Nitijela enacted P.L. 1990-105, the Marshall Islands National Telecommunications Authority Act of 1990 ("the NTA Act"). The NTA Act required NTA to comply with certain directives during the process of privatization, all of which were complied with, including: a determination of the initial capital of NTA ($3,600,000); the adoption of articles of incorporation and bylaws to govern NTA's operations and functions; and the authorization to allow management to seek proposals for privatization.

Pursuant to § 12(3) of the NTA Act, 25% or 90,000 shares of the initial authorized capital stock of 360,000 shares were issued to the RMI government. NTA commenced selling shares to the public on December 2, 1991. Section 12(6) of the NTA Act required the board to hold an initial shareholders meeting to elect new directors within 60 days from the date of the initial stock offering. On January 22, 1992, at a special meeting, the board confirmed that 4,048 shares had already been sold to 138 private individuals. The first shareholders' meeting was held on January 30, 1992, and has been held annually thereafter.

From 1988 until May 22, 1996, the NTA and its predecessor (the old NTA) retained the services of a private attorney to provide it with legal advice and representation on a wide variety of legal matters, including: collection of outstanding debts due to NTA; legal advice regarding telecommunications law; and contract review, drafting and litigation. On February 28, 1995, the speaker signed P.L. 1995-118 which in effect required NTA to retain the services of the Attorney General's office. NTA's President and General Manager subsequently opposed the law, desiring instead to retain its own private counsel, Mr. Carl Ingram, Esq., who had served as both legal counsel and Secretary of the Board of Directors since 1988.

II. Procedural History:

On May 27, 1996, NTA filed a complaint for declaratory judgment and injunctive relief challenging the constitutionality of P.L. 1995-118. There were no material facts in dispute, and both parties agreed that the only genuine issues were questions of law involving the construction and application of the Republic's Constitution and statutes, and that the matter should be disposed by summary judgment. The High Court declined to rule on the summary judgment motion and instead scheduled the matter for trial on January 16, 1997. Following trial, the High Court held:

(1) NTA is part of the government;

(2) NTA and its numerous individual private shareholders are not entitled to the benefits and protection of the Constitution; and, therefore

(3) the provisions of the OAGA which require NTA to use only the Attorney General's Office for legal services, do not violate the Constitution.3

NTA timely appealed.

ANALYSIS

I. NTA is a private corporation.

Both parties and the High Court agreed that if NTA is not a governmental instrumentality or agency, §§ 13(1)(i) and 13(1)(m) of P.L. No. 1995-118 of the OAGA, as applied to NTA, violates the Constitution.4 The question remains, therefore, whether NTA is a private or public corporation.

[2] Article I, § 3(1) of the RMI Constitution governs how the Courts are to interpret and apply the Constitution:

[i]n interpreting and applying this Constitution, a Court shall look to the decisions of the courts of other countries having constitutions similar, in the relevant respect, to the Constitution of the Republic of the Marshall Islands, but shall not be bound thereby; and, in following any such decision, a court shall adapt it to the needs of the Republic, taking into account this Constitution as a whole and the circumstances of the Republic from time to time.5

Accordingly, the Court may look to court decisions of the United States as well as generally accepted common law principles for guidance.

Corporations are either public or private, depending upon its powers and the purpose of its creation.6 Public corporations are created for public purposes only, connected with the administration of the government, and the interests and franchises of which are the exclusive property and domain of the government itself.7 Alternatively, private corporations are created for private purposes, and they are not considered by law public merely because it may have been supposed by the legislature that their establishment would promote either directly or consequently the public interest.8

In a landmark decision, the United States Supreme Court found that even though a corporation was an educational institution in which the public was keenly interested, it was nonetheless a private corporation because the state did not own it entirely and because its board was not exclusively controlled by the state. Trustees of Dartmouth College v. Woodward, 17 U.S. 518 (1819). Subsequently, the Court held that the state could not constitutionally alter the corporation's charter once it had been granted. Following Dartmouth College, the test for a public corporation is whether the government owns 100% of the stock of the corporations; or whether the government has the sole right to regulate, control and direct the corporation, and its funds and its franchises, at its own will and pleasure; or some combination of both. Trustees of Columbia Acad. v. Board of Trustees of Richland County School, 202 S.E.2d 860 (S.C. 1974); Providence Eng'g Corp. v. Downey Shipbuilding Corp., 294 F. 641 (2d Cir. 1923), cert. denied, 264 U.S. 586 (1924).

[3] We find that NTA is a private corporation, and is not an instrumentality or agent of the RMI government because: (1) it is not wholly owned by the RMI, that is, the government does not own all assets of NTA or all the stocks of NTA [28% of the issued stock has been purchased by private individuals, (Ex. B)]; (2) it is operated for profit; (3) it is not primarily engaged or even engaged at all, in the administration of government; (4) the board of NTA is not exclusively controlled by the government; (5) and, the government is not entitled to all profits and does not risk all losses of NTA, rather private shareholders' money is also at risk.

Even though NTA provides telecommunication to the public at large, it remains a private corporation.

We disagree with appellee's contention that the legislative history leading up to the enactment of P.L. 1990-105 which established the NTA, and subsequent conduct clearly indicate that the ultimate goal of having the NTA privatized has not yet been achieved. The High Court focused its decision upon the need for complete independence from the RMI and that a "sliding scope towards privatization has been established, but that NTA is not there yet"9; however, none of the tests articulated by the United States Supreme Court require complete independence, nor speak of "sliding scopes." A corporation is either public or private,10 depending upon its character and organization. Here, because NTA is not wholly owned by the RMI government, and we find that it is a private corporation, we need not determine at which point (when NTA sold its first shares of stock to private individuals or when the shareholder's first elected the board of directors) NTA ceased being an agency or instrumentality of the government and became a private corporation.

II. As a private corporation, NTA is entitled to the protection, rights and guarantees of the Constitution.

Both parties have already acknowledged that private corporations are entitled to the protection of constitutional rights.11 It is undisputed that § 13 of the OAGA denies NTA its choice of counsel. The due process provision of Art. II, § 4(1) of the RMI Constitution is identical to the due process clause of the Fifth Amendment of the U.S. Constitution, incorporated by the Fourteenth Amendment to the individual States.

[4] This Court has previously recognized a due process right to counsel of one's choice. In In re Public Laws No. 1993-56 & 1994-87, supra at 339, the RMI Supreme Court cited the following:

The concept of due process protects rights that cannot be denied without violating fundamental principles of liberty and justice. It has long been recognized that in criminal proceedings, the right to the assistance of counsel of one's choice is such a right. Powell v. Alabama, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158 (1932). Many recent cases have recognized that the right to counsel is also preserved by the due process clause in civil cases. See, e.g., Potashnick v. Port City Const. Co., 609 F.2d 1101 (5th Cir. 1980), reh. den. 613 F.2d 314 (1980), cert. den. 449 U.S. 820, 101 S.Ct. 78, 66 L.Ed. 2d 22 (1980); Gray v. New England Tel. & Tel. Co., 792 F.2d 251 (1st Cir. 1986). It is also established that this right extends to administrative proceedings as well as to courtroom proceedings. Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct, 1011, 25 L.Ed. 2d 287 (1970). While it is conceded that government is not required to furnish counsel to civil litigants, whose personal liberty is not at stake, recently one court has expressed the view that the right to counsel in civil proceedings mean, in most instances, the right to counsel of one's choice. McCuin v. Texas Power & Light Co., 714 F.2d 1255 (5th Cir. 1983); Texas Catastrophe Property Ins. Assn v. Morales, 975 F.2d 1178 (5th Cir. 1992), reh. den. 980 F.2d 1442 (1992), cert. den., 507 U.S. 1018, 113 S.Ct. 1815, 123 L.Ed. 2d446 (1993).

Section 13 of the OAGA would require NTA to retain the legal services of the Attorney General's office, thus denying NTA the right to counsel of its choice. Such a deprivation would violate NTA's fundamental due process rights. Therefore, the OAGA as applied to NTA is unconstitutional.12

CONCLUSION

For the foregoing reasons, we hereby REVERSE the decision of the High Court.

David M. Strauss, counsel for Appellant
Atbi A. Riklon, counsel for Appellee

___________________

1Honorable Marty W.K. Taylor, Chief Justice of the Supreme Court of the Commonwealth of the Northern Mariana Islands, sitting by designation by the Cabinet.

2Honorable Gregory J. Danz, Member of the Nuclear Claims Tribunal, sitting by designation by the Cabinet.

3In re Public Law No. 1995-118, High Court Civil Action No. 1996-167 slip op. (RMI Jan. 20, 1997).

4Section 13 of the OAGA provides in pertinent part

(1) The Civil Division [of the Attorney General's Office] and no other attorney, public or private, shall be the attorney for:

(i) National Telecommunications Authority;

(m) Any corporation in which the Government of the Marshall Islands owns more than 50% of the issued voting stock;

(2) This section 13 shall apply to any corporation listed or described in subsection (1) for so long as the Government of the Marshall Islands owns more than fifty percent (50%) of the issued, voting stock.

(3) The Attorney-General may hire outside counsel, at the expense of the represented entity, to assist the Civil Division in its representation of public corporations and agencies. Such outside counsel shall report to and be responsible to the Chief-Civil Division and the Attorney-General.

(4) Outside counsel hired by the Attorney-General shall not be deemed to be members of the Public Service. No outside counsel shall assist the Civil Division with more than one public corporation or agency described or listed in this Section 13.

(5) The Office of the Attorney-General shall be entitled to reasonable compensation from the public corporation or agency for its representation.

5See also In re Public Laws No. 1993-56 and 1994-87, 2 MILR 27, 35 (Feb 3, 1995).

6See generally 18 Am Jur 2d, Corporations § 30 (1985).

7Id. 

8Id. 

9In re Public Law No. 1995-118, supra at 7.

10There is a large class of private corporations which owe a special duty to the public which they may be compelled to perform. These corporations are known commonly as public service corporations and in legal phraseology as quasi-public corporations or corporations affected with a public interest. Quasi-public corporations are private corporations which have been given certain powers of a public nature, such as telecommunications. See generally 18 Am Jur 2d, Corporations § 64 (1985) (Quasi-public Corporations).

11See generally 18 Am Jur 2d, Corporations § 64 (1985) (enumerating a corporation's constitutional rights).

12Because we find that NTA is entitled to counsel of its choice, we need not address the issue of whether representation of NTA by the Attorney General's Office would create a conflict of interest.