Jeff Jessee was interviewed by Bill Schneider with videography by Deborah Lawton and Aaron Elterman of KUAC radio/tv, Fairbanks on November 30, 2009 in a recording studio at KUAC radio/tv on the University of Alaska Fairbanks campus. Karen Brewster was also present during the interview. Jeff Jessee is the Chief Executive Officer of the Alaska Mental Health Trust Authority based in Anchorage, Alaska. He talks about being a young lawyer working for the Disability Law Center and how he got involved with the Mental Health Trust lawsuit, the different perspectives of the lawyers for the various beneficiary groups, working on the political side trying to get the Alaska State Legislature to accept the settlement terms, and being chosen to lead the Mental Health Trust Authority. Jeff provides a detailed discussion of the progression of events throughout the lawsuit and settlement period. This interview continues in parts two and three. Jeff was interviewed again by Bill Schneider and Karen Brewster on December 1, 2010 in Fairbanks, Alaska and there are two parts to that interview.
Digital Asset Information
Project: Alaska Mental Health Trust History
Date of Interview: Nov 30, 2009
Narrator(s): Jeff Jessee
Interviewer(s): Bill Schneider
Videographer: Deborah Lawton , Aaron Elterman
Transcriber: Carol McCue
People Present: Karen Brewster
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Section 1: Personal background, childhood, parental influence, and education.
Section 2: Attending law school and specializing in juvenile justice.
Section 3: Coming to Fairbanks, Alaska in 1980 as a lawyer with the VISTA program, and moving on into other legal issues.
Section 4: Working for the Disability Law Center in Fairbanks in the 1980s and hearing about the Mental Health Trust lawsuit.
Section 5: Getting involved in the Mental Health Trust class-action lawsuit on behalf of the developmentally disabled.
Section 6: Roles of the different attorneys involved in the Mental Health Trust lawsuit and the legal arguments used to attain settlement.
Section 7: Negotiation over final settlement of the Mental Health Trust lawsuit, and concern about the results benefiting the beneficiaries.
Section 8: Negotiations over settlement of the Mental Health Trust lawsuit in terms of land value issues, and rejection of the initial settlement proposal.
Section 9: The court and State of Alaska’s response to the initial settlement of the Mental Health Trust lawsuit, and talking with Harry Noah of the Department of Natural Resources to work out a new settlement plan.
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Section 1: BILL SCHNEIDER: All righty. Well, today is November 30th, 2009. I'm Bill Schneider; Karen Brewster is here, and Deb Lawton and her assistant, and we have the pleasure of doing an interview with Jeff Jessee. And we've been waiting to do this until we knew more. So thank you for taking the time to ‑‑ to do it today. And I appreciate it. JEFF JESSEE: My pleasure.
BILL SCHNEIDER: I want to back up to your childhood, where you grew up, and a little bit about your parents and some of the early influences on your life. JEFF JESSEE: Well, I grew up, I'm born and raised in Sacramento, California. Both of my parents were from Colorado, and came out to Sacramento pretty much near the beginning of the Second World War.
And my mother was one of the very first women to get a scholarship to the University of Colorado, and worked as a civilian for the Air Force in early computer technology. In fact, one of her first computer projects was a main frame that took up an entire building and had elevated refrigerated rooms.
And my father was an equipment designer, an inventor for the military, and designed grappling hooks that would grab spy satellites, parachutes in midair, and reel them in so they could get the pictures off of them before they hit the water. So that was interesting growing up in Sacramento.
Probably the biggest influence on my life was ‑‑ well, two. One is I was the youngest of four boys, and my next oldest brother is nine years older than I am, and so I was kind of a surprise. And they were hoping I'd be a girl. They didn't get lucky in that regard, so I was raised kind of as an only child.
I was born with a cleft palate, which I think has had a lot of influence on the course of my life. I was not understandable to order a meal in a restaurant until I was 12 or 13. So if you didn't know me, I was pretty difficult to understand for a long time. So I got teased a lot as a kid.
And ended up graduating from high school a year early and went to school in Sacramento. And it's sort of an interesting story of how I became a lawyer. I was originally a chemistry major. I loved chemistry. And in 1972, Dow Chemical came to Sac State and took several of us in the honors chemistry program down to their plant in the Bay area to show us, you know, what our future held if we worked for Dow Chemical.
And they had two big projects. One, our tour guide said, well, we realize you guys probably won't like this too much, it was making a stickier napalm. Napalm was bouncing off of people, so they were trying to fix that. And the other was product development, and it was a fruit‑flavored feminine deodorant spray, which apparently never really made it to market.
So I went back to Sac State and talked to my advisor and said exactly what am I going to do with this chemistry degree? And he says, well, it's product development or teach, you know, that's pretty much it.
So the next semester as a sophomore, I discovered as I signed up for most of my classes I had almost all Tuesday‑Thursday classes. I needed one more class from 11:15 to 1:00 on Tuesday‑Thursday, and I'd have a four‑day weekend. So I went through the entire catalog, and the only class I found was in evidence. And I liked Perry Mason, so I thought, well, this will be good.
So I signed up and I go in, and there's this woman lawyer teaching it, and she says, well, how many seniors are in here? And almost everybody raises their hand. And she said, well, how many juniors. Well, two or three raised their hands, and she said, yeah, I know you guys. And we don't have any sophomores, do we? And I raised my hand. And she said, well, I'll see you after class.
So I went in and she said, you're dropping this class. And I said, well, how come? She said, well, this is the criminal justice major, this is the seminal course in this major, and as you can see, virtually no one takes it until they are a senior, and juniors if I know them. And you're not going to make it through this class.
Well, I couldn't exactly say I need a Tuesday‑Thursday 11:15 to 1:00, so I said, well, I'm a pretty good student, I think I could do this. And she says, well, look. The midterm is 40 percent of the grade, and it's after the add‑drop deadline, so when you fail the midterm, don't come in here and ask me to let you out of this class.
And so I studied the heck out of that class, and she and I were always ‑‑ it was sort of a Socratic Method, and we were always arguing back and forth in class. And midterm came and she handed them out and she handed me mine, and I looked at it and I got an 86. And I thought, well, that's not too bad. And she says, well, want to see you after class.
So I went in and she says, did you look at your midterm? I said, well, yeah, I got an 86, I thought that was pretty good. She said, yeah, the next highest grade was a 74. And so she says, so what are you doing with the rest of your life? I said, well, funny you should ask because the chemistry thing is not really working for me.
And she says, well, would you like to be a lawyer? You'd make a great lawyer, we'll change your major, we'll get you through here, I'll get you into law school, you'd make a great lawyer. And so that's how I ended up getting into the law was trying to get a four‑day weekend.
Section 2: So I graduated from Sac State and went to UC Davis, right outside of Sacramento. Martin Luther King, Jr., Hall. Interesting experience. White males were the smallest demographic group in the school. It was set up as a University of California's Affirmative Action law school. My class was more than 50 percent minority and more than 50 percent women. So I went to law school for three years there.
And was going to go into juvenile justice, and started out as a juvenile public defender and found that to be very frustrating. Pretty much you were grinding the wheels of the juvenile justice system. Kids would come in and virtually all of them had family issues that had led them to, you know, have lots of issues and problems and troubles, and you couldn't really do much for them because you didn't have the time.
You had so many cases and clients that you're just moving them through. There were a couple that we were successful at sort of getting back on track. I had a 14‑year‑old girl who was a burglary mastermind. She was gifted and she had recruited the smaller kids in her affluent suburb to steal, you know, burglarize houses.
And so she burglarized a whole bunch of houses with these kids, and made the newspaper because it was a big, you know, rash of these high‑end burglaries. And they discovered her when her father went under the house to try to fix his antenna to watch the football game and found it stuffed with all this loot. Cause she had no idea how to fence it.
And she had kept everything under the house. And so when I compared the inventory of the police reports to her inventory, they didn't match because a third of the victims had falsified their insurance claims. So we turned her state's evidence, and she walked on the burglary charge and got into a gifted program and ended up doing quite well.
Section 3: But I wasn't cut out for that work. And joined VISTA in 1980. And they didn't get a lot of lawyers, so they asked me where I wanted to go. And I said, well, how about Alaska? I had done a lot of backpacking in the Sierras and knew Alaska was a place I always wanted to see but probably couldn't do it in two weeks.
And so they had a job up here in Fairbanks and I knew nothing about Fairbanks. Didn't even do much research about Fairbanks. I got to Anchorage and the VISTA organizer asked me to pick out a parka, and they had a big row of parkas, so I picked one out. And then he handed me an extra, extra large, and I said, what's this for? And he says, well, you're going to Fairbanks, you wear this one over that one. I went, uh‑oh. Tell me more about Fairbanks.
So I came up to Fairbanks in 1980 and worked for ‑‑ at the time it was called Protection and Advocacy For the Developmentally Disabled. And eventually that became now Disability Law Center. And at the time, there was myself, a VISTA lawyer; a three‑quarter time MSW, who was the director; and an alcoholic Ceta secretary, the old Ceta employment program. And we were it. Protection Advocacy Agency.
And I worked part‑time with Alaska Legal Services so I could get waived into the bar. And so then I basically did your basic disability practice, Social Security, landlord tenant; Special Education was a big topic at the time. And did that until I got involved in the Mental Health Lands Trust case.
BILL SCHNEIDER: Let's stay with the VISTA work for a second. What was the organization in Fairbanks at that time, informal organization of parents with children of ‑‑ with disabilities? JEFF JESSEE: Well, of course, there was FRA, and there were a number of parents kind of connected through that. So most of the parents and families were connected through their service provider. And so that was the group that I had the most contact with.
BILL SCHNEIDER: Was Margaret Lowe working at that time in Fairbanks, or had she moved? JEFF JESSEE: I don't think Margaret was in Fairbanks back then. I think she had already gone.
Section 4: BILL SCHNEIDER: Okay. So then what happened after that? JEFF JESSEE: Well, I worked up here for a couple of years, and then the agency got some state money. This was the roaring '80s, so there was plenty of money to be had in Juneau. So we were able to get a state grant. And that meant a real job as opposed to VISTA.
And by the way, I don't think I've ever had more disposable income than when I was with VISTA making almost nothing. I was sleeping on the floor of my office, so I didn't have any rent; and I figured out that you could pretty much go to every conference and convention that came to town and get food for nothing, so I was fat city. I was buying canoes and tents and flying out to the Bush to do rivers and camp, and it was ‑‑ it was a nice time.
So anyway, I did that for, well, almost 15 years. And then about 10 years in, I started hearing about this Mental Health Lands Trust case. And I didn't know very much about it other than it was a big deal. And so I'd see articles about it every once in awhile.
And ‑‑ but in the late '80s, mid to late '80s, the two attorneys that represented the class at the time, Jim Gottstein and David Walker, had decided that the state had taken several groups of beneficiaries out of the trust over the years.
The developmentally disabled had a separate program; the people with Alzheimer's or other dementias were actually in a different department, they were in the Department of Administration back then. You know, the ‑‑ people with alcoholism had their own division within state government.
And Jim and David were promoting the concept that only the mentally ill remained as beneficiaries of the trust. And at the time, the executive director of the Governor's Council on Disabilities and Special Education, Dot Truran who was from Fairbanks, came over and met with me and said, well, you have to intervene in this lawsuit and protect the interests of the developmentally disabled because the current lawyers are about to get them thrown out of the case.
Well, on a good day I could find the courthouse. I mean, my practice was not a litigation‑oriented practice, it was primarily negotiation. Unlike traditional lawsuit ‑‑ or legal work, you know, it wasn't a case where you sued somebody and you got a money judgment and the check changed hands and then everyone went away.
My clients all had ongoing relationships with the other side. You know, either it was Special Ed and it was the school, or landlord‑tenant and it was the landlord, and so there was a premium on negotiating some kind of a win‑win scenario. So despite having practiced law for 10 years, I'd only filed three or four lawsuits of any kind. And so here Dot was telling me that I was supposed to intervene in this billion dollar legal case.
So I went over to the law library, and I knew the librarian a little bit, and I said, well, do you have any books on class actions? And she says, oh, yeah, yeah, we've got some stuff. So we started back. And she says, so are you thinking of filing a class action? I mean, she knew where I worked. I said, no, but I'm going to have to get involved in this Mental Health Lands Trust case. And she just laughed.
She says, I'm sorry, I don't mean to laugh, but that's pretty different than the work that you do. I go, yeah. I'm not sure how this is going to work out. And so I got a bunch of books and went back to my office and started looking at all the rules about class actions and intervening, and it was ‑‑ just seemed totally ridiculous that I would be able to do this.
Section 5: And then I heard through kind of the grapevine that an organization out in the Valley, Mat‑Su Valley, Nugen's Ranch, that provided services for people that were alcoholics, was also thinking of intervening. And they had a private attorney who had done some work for them, sort of just organizational legal work, and he was thinking about filing an intervention on behalf of the alcoholics. And his name was Philip Volland.
And, well, I knew the name Philip Volland because I had heard a little bit about the Cleary class‑action suit involving the Department of Corrections where Philip had successfully sued the state over conditions in the prison system and been successful in getting a master to oversee some pretty significant changes in the Department of Corrections. And so I thought, well, you know, I should call this other lawyer up and, you know, find out what he's thinking.
So I called up Philip and I said, you know, my name is Jeff Jessee, I work for this little nonprofit, and I gather you've heard what I've heard, that the attorneys in this case are trying to limit the beneficiaries. And Philip said, yeah, I'm thinking of intervening, he says, but I'm not really comfortable with the beneficiaries because I don't know much about mental health services and those things.
And I said, well, I do, but I couldn't litigate my way out of a paper bag. And Philip said, well, I think we're going to make a good team. I'll handle the litigation and you work on the program side of it.
And so Philip and I filed our interventions and were successful at intervening because the Court, obviously, rightfully so in our opinion, found that, no, the trust was created for all the types of people that went to Morningside, and that the state could not remove people from the trust; they could add but they couldn't remove anyone from the trust. And at that point, we were in.
Section 6: BILL SCHNEIDER: And Gottstein was still active in promoting the other beneficiaries? JEFF JESSEE: Oh, yeah. And that's kind of how it broke out is ‑‑ is Philip represented the alcoholics, I was representing people with developmental disabilities, and Jim was focused more on people with mental illness.
And then David Walker was still sort of the class attorney, he had inherited the case a couple steps removed from Steve Cowper. And so he had kind of the overarching umbrella responsibility for the class as a whole. BILL SCHNEIDER: And how did all of you interact?
JEFF JESSEE: Well, not very pleasantly from time to time. My very first meeting with Jim and David was Philip and I had flown down to Juneau and met them in David's office. And Phillip's position was that either they changed course or he would seek to have them removed as attorneys for the class. And that tends to make for an uncomfortable afternoon.
And over the next years, working on the case, our relationship ebbed and flowed, based upon how negotiations were going with the legislature, you know, what was happening in terms of mental health services. Jim and David, in our view, tended to view the case primarily as an asset issue.
In other words, the state had taken this land and they needed to pay for it or give it back. Jim was interested in some of the program issues, but the prime focus they had was on the assets.
And most of the settlement frameworks that were developed over the next 7 or 8 years were driven primarily by the asset side, and their belief that their duty to the class and the beneficiaries was to get full value back for what had been taken out of the trust.
Philip and I came over time to have a little bit different slant. We were more concerned about whether any assets that were recovered in the litigation could be brought to bear beneficially for the beneficiaries.
And the big fly in the ointment on that was that under the Enabling Act, the legislature was trustee. And neither Philip nor I felt that in the long run, any legislature, not picking on our particular group, was really suitable for that role.
You know, legislatures have a larger public trust responsibility, and asking them to restrict their duty of loyalty to a select group around a particular set of assets seemed inherently flawed.
And so over time, we looked for opportunity to shift the emphasis in the litigation from primarily asset based to primarily what we would consider program based. And that opportunity didn't arise until the last major settlement negotiated by Jim and David was rejected by the Court.
Section 7: BILL SCHNEIDER: Tell us about that rejection. JEFF JESSEE: Well, the ‑‑ Jim and David had tried a lot of different settlement scenarios, and finally when Charlie Cole and Harold Heinze ‑‑ Charlie was the Attorney General, and Harold was the Commissioner of DNR ‑‑ started a phase of negotiation with Jim and David that worked like this.
There were about 5,000 parcels that had been taken out of the trust that we couldn't get back without major disruption to the individuals who built houses on them or the eagles that were living in it or Usibelli who was mining in it, and so the concept made sense at one level.
What we would do is we would take each of these 5,000 parcels, and the plaintiffs would identify another parcel of state land that was as much like that original parcel as you could find, and then we would exchange them.
And ‑‑ and in the end, we might have more or less than a million acres, but in theory, we would have a land base that would generate as much revenue as the original million acres.
And I had originally signed on to this settlement, and it was actually Jim, David, and myself that signed on to it; Philip never did. And I, at the time, felt that this would pretty much destroy any opportunity to benefit the beneficiaries because it was clear at that point in the litigation that the mental health program cost the state roughly $120 million.
This is in the early '90s. And that the state could use the income from this resulting land base to cover some of those expenses. So unless the land produced more than $120 million, it wouldn't result in any net gain.
Let's say the land optimistically made 20 million or 30 million. Well, the state would just spend that 30 or 40 million and then only have to put in 80 or 90 million of general funds.
And I remember sitting in the room when we signed this settlement agreement, and I mean, everybody was there, all the AG lawyers and the commissioner and Charlie and Jim and David and the Governor's office and the leaders of the legislature. And I had to leave because I was tearing up.
Because as far as I could tell, this just was the end of the trust as far as doing anything for the beneficiaries. On the surface, it was eminently fair. I mean, if we got back what we lost, how could anyone, you know, really complain. So it was a difficult time.
Section 8: But then the devil was in the details. And it kind of worked like this. Let's say you have a parcel X, and you identify, which the plaintiffs did, another parcel Y that looked like X. Well, now, it's going to take awhile to sort of do an assessment of are they really similar, do they have similar revenue‑generating abilities, and you know, is it a little too much land, a little ‑‑ not enough land to be equal in value.
Well, now, while you're having that discussion, you can't let people keep fooling with this nominated replacement land. Well, if you remember, there was a land freeze on the original million acres.
You know, nobody could do anything with it because it was subject to this litigation. Well, now, the million‑acre land freeze got bigger, not smaller, because now all the nominated parcels were out of play.
Oh, it got worse. Because now, whenever anyone found a piece of general state land that might have a value, well, Jim would nominate it and it would be frozen. So a million‑acre land freeze had almost overnight become a hundred‑million‑acre land freeze, for all practical purposes.
And the final sort of insult was when Jim ran out of other state parcels that looked like original trust lands and nominated the Cook Inlet oil and gas field, which was not something that Charlie Cole and Harold Heinze had contemplated.
And I would say tensions rose between Charlie and Harold and Jim and David over how this was working out or not. Well, people got concerned that this settlement was not a settlement; that the situation had actually gotten much worse as opposed to have gotten better.
But Charlie Cole was determined that he had given his word and that, by gosh, you know, he would persevere. And even though there were issues with the plaintiffs' attorneys, he was going to stay the course; and kept telling Governor Hickel, no, no, we've got to stay the course; no matter what people are telling you, we've got to stay the course.
Well, about this time I went back to Philip and said, okay, you were right, this is not working. This is not going to work. We've exchanged one piece of litigation for 5,000 litigations that is a good thing if you're collecting attorney's fees, but not such a good thing if you're a beneficiary looking for services.
And so I pulled out of the settlement and sent Charlie a letter and said that, you know, I appreciated his attempt at trying to resolve this but I didn't see how this was going to work, and so I was withdrawing my support from the settlement and would be opposing the settlement in Court.
And I have to say, Charlie Cole, you know, handled that with such sensitivity. You know, I expected him to be very angry at me, and certainly, he wasn't happy with me, but Charlie was very good about saying, Jeff, you know, you have to do what you have to do. He says, now we're going to succeed in this settlement, but you know, I understand why, you know, you're doing what you're doing. I don't agree with you.
But ‑‑ and of course, things kept getting worse and worse. And in fact, I remember that as Philip and I would come up with alternative ideas for how to resolve this, I would go to Charlie's office in Juneau and I would sit in this ‑‑ on this wooden bench outside his office, and I did this probably four or five times, and I would have a ‑‑ a ‑‑ one of those flip charts and an easel, and Charlie would come by and he'd say, oh, you're here with another idea.
I said, yep, I got another idea. And he'd say, come on in. And I'd go into his office and set up my easel and get out my flip chart and I described the latest brainstorm that Philip and I had about how we could settle this case and, you know, actually get over the hump if Charlie would just abandon this land exchange idea.
And he always treated me very courteously and tolerantly, and then he'd say, but I'm not getting off of this settlement, we're going to succeed in court. And thanks for coming in. And I'd thank him, shake his hand, gather up my easel and flip chart, and off I'd go.
Section 9: But eventually, we ended up in court. And by that point in time, it was evident to many people, certainly the development community and others, legislators, that this approach to settlement was not going to succeed.
And eventually, the Court rejected it, as well, basically on those grounds that one piece of litigation had now multiplied into 5,000 pieces of litigation with no clear idea of how in the end this is going to benefit the beneficiaries anyway.
Now, towards the end of that process, as Charlie was continuing to tell the Governor, this is going to work, this is going to work, Harold Heinze was terminated as Commissioner of DNR. And Harry Noah came in as Commissioner.
And Harry immediately recognized, as well, that this settlement was not going to work, but it was Charlie's settlement. And so Harry, I think, was pretty clear with the Governor that he didn't think it was going to work, but the Governor was willing to keep going with Charlie because Charlie was his Attorney General, and so the Governor kept saying, yeah, we're going to persevere here and, you know, Charlie tells me this is going to work.
And there was a lot of pressure on the Governor. I mean, by this point, the coal miners and other development people were on the Governor's case about this because their business was being negatively impacted substantially.
In fact, there's a great story that Bob Stiles who worked on developing a coal mine across the inlet from Anchorage told about a friend of his from Montana that called him up one day and ‑‑ and said, you know, I was just in Salt Lake City talking to some Korean power companies, and the first thing they asked me is do you have mental health coal in Montana?
And I had to assure them that, no, no, we had no mental health coal in Montana. And that's how bad this had gotten. It had now an international reputation that we didn't want to have anything to do with mental health coal.
So Harry saw this ‑‑ Harry Noah saw this as an issue and was telling the Governor that this needed to be settled another way. Well, when the Court rejected the settlement, Harry called Philip and I up and said, your turn, basically.
These other guys have had this case for a long time and it hasn't settled, and I want to sit down with you two and talk about how we might settle this. And of course, we were more than willing to sit down with him.
And apparently, he sent Charlie an e‑mail that said, I'm meeting with these other plaintiffs' attorneys in a few days to talk about settlement, you're welcome to attend. That didn't go over well.
And there was plenty of rumors about just how unwell it went. But be that as it may, at the end of the day, Charlie was gone as Attorney General, and Harry was in charge of trying to settle this thing.