Legislature(2005 - 2006)BUTROVICH 205
02/22/2006 08:30 AM Senate JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| SB301 | |
| SB222 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 301 | TELECONFERENCED | |
| + | SB 222 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 301-CHANGE OF VENUE IN CIVIL CASES
9:20:06 AM
CHAIR RALPH SEEKINS announced SB 301 to be up for consideration.
He informed the committee that the Department of Law (DOL) would
testify on the bill at a later date. He opted to hear public
testimony first.
Senator Charlie Huggins joined the meeting.
9:21:44 AM
BOB HAJOUKOVICH, President of Frontier Flying Service, testified
in support of SB 301. He said liability insurance was a major
cost component for his company. It has been his experience that
judgments in lawsuits are heavily weighted on the plaintiff
side. He cited an incident in Bethel in 2000, where the power
steering component on an aircraft failed, causing the aircraft
to run off the runway. Seventeen passengers were onboard and
there were no injuries. An attorney representing six of the
passengers wrote a demand letter asking for an early settlement
of $75,000 each. The attorney indicated that Bethel juries were
famous for awarding large settlements to the plaintiffs and
that, if the case goes to trial they could easily award the
plaintiffs six figures each. The claim ultimately settled out of
court for $300,000.
9:24:21 AM
MR. HAJOUKOVICH said last year there were zero fatalities in
Part 135 and Part 121 operations. The public would be served by
the reduction of costly litigation.
9:25:08 AM
CHAIR SEEKINS asked Mr. Hajoukovich to repeat the attorney's
description of the Bethel jury system.
MR. HAJOUKOVICH read from the attorney's demand letter:
As you may be aware, Bethel is a town whose jurists
are used to awarding a lot of money for pain and
suffering. For example, moved by subjective complaints
of pain that allegedly disrupted their lives, a Bethel
jury recently awarded five ladies $75,000 each
following an accident where a cab driver tapped the
ladies' vehicle at under 5 miles an hour. None of the
ladies sought or received any medical treatment
whatsoever, had no lost income, and were not claiming
emotional distress. One of our attorneys is a pilot
himself and has been successfully litigating airplane
crashes for 22 years. He estimates that a Bethel jury
would award six figures each to those passengers for
the emotional distress damages alone. However, in the
interest of compromise and early settlement, the
passengers listed above would be willing to settle all
claims for $75,000 each.
9:27:41 AM
PETER KELLEY, insurance broker and president of Kelley Insurance
Associates, testified in support of SB 301. He believes there is
a precedent that places the plaintiff at an unfair advantage. He
has seen where plaintiff's attorneys have sent insurance company
adjusters demand letters with copies of very large jury awards
for simple soft tissue cases in an attempt to strong-arm the
company into settlements, which he feels is legal extortion.
He cited a case where, on final approach, passengers experienced
turbulence but the aircraft landed without incident. Some
passengers filed a suit alleging that they feared for their life
and suffered emotional distress. The insurance company settled
for $7,500 for each passenger. He said underwriters are
currently afraid to do business in Alaska and some refuse to do
business in rural Alaska due to the potential high jury awards.
9:30:29 AM
MR. KELLEY said SB 301 would level the playing field and attract
new underwriters to the state.
CHAIR SEEKINS said a rural newspaper reported that the problem
was due to insurance companies sending poorly prepared young
attorneys to handle the lawsuits. A Bethel attorney was quoted
as saying the disparity in awards was due to ineptness, arrogant
attitudes, or unprepared attorneys. He asked for the gentlemen
to comment.
MR. KELLEY said he has not witnessed that.
MR. HAJOUKOVICH said he has seen the opposite. Insurance
companies tend to send the best attorneys to handle the suits.
9:33:37 AM
BRUCE MCGLASSEN, President of Grant Aviation, testified in
support of SB 301. He has received threatening letters from
attorneys in Bethel in particular; letters that threaten
outrageous jury awards. Insurance companies have expressed an
unwillingness to go to trial in Bethel despite the lack of merit
for the plaintiff's cases and the history of awards made there.
9:35:54 AM
MR. MCGLASSEN said a change of venue to the corporate
headquarters in Anchorage would more likely result in a fair
trial.
9:36:31 AM
RICHARD HARDING, Senior Vice President, Peninsula Airways, Inc.
(PenAir), testified in support of SB 301. He advised the
committee that the cost of a large settlement would be
devastating to PenAir and would have reverberations throughout
the state. PenAir employs over 500 Alaskans and serves 36
locations with passenger and freight services. Several years ago
PenAir withdrew service from Bethel primarily due to the
inequity in the judicial system. PenAir transports almost
200,000 passengers each year and could now get sued for minor
incidents due to the precedents set by the rural jury system.
MR. HARDING continued the cost of settling claims in rural
communities is significant and unnecessary. A corporation with
headquarters in Point Barrow should not have to travel to
Anchorage anymore than a corporation in Anchorage should have to
travel to Point Barrow to defend itself. Federal law allows a
corporate defendant to change the venue to their place of
business and Alaska should do the same, he stated.
9:39:34 AM
KAREN CASANOVAS, Executive Director, Alaska Air Carriers
Association, testified in support of SB 301. She said the
Association represents over 160 businesses including insurance
companies, avionic suppliers, maintenance workers, aircraft
manufacturers, consultants, attorneys, and airlines. SB 301
seeks to rectify the problems of the current system and would
create an even playing field by allowing defendants the right to
move the case to a different venue. Many companies around the
state refuse to do business in remote jurisdictions due to
potential expensive litigation.
When an airline gets sued due to equipment malfunction, avionic
suppliers get dragged into the litigation and that cost of doing
business gets passed down to the flying public or shippers. Many
insurance underwriters refuse to do business in Alaska due to
the added expenses.
9:41:44 AM
MS. CASANOVAS said the current system allows the plaintiff to
choose the venue. SB 301 is neutral and would work to lower
litigation costs and allow for cheaper, easier settling of
cases.
9:43:29 AM
MIKE HAGLAND, Secretary and Treasurer of Hagland Aviation
Services, testified in support of SB 301. Hagland Aviation has
been doing business in Western Alaska for 25 years and the
company feels Alaska citizens are becoming more litigious due to
the large awards handed down by rural juries. He agreed that
people should be taken care of in the event of an accident but
not for minor things such as fear during turbulence. He
expressed support for being able to move the venue in pursuit of
getting a fair trial.
9:45:12 AM
KNEELAND TAYLOR, introduced himself as an attorney with a broad-
based civil practice. He spoke about unintended consequences of
the bill. He gave an example of a couple that lived together
unmarried but financially linked. The couple's relationship
ended and the woman had to file claims for stolen furniture,
family heirlooms, handicrafts and for injuries sustained by the
man. The bill exempts divorce, dissolution and custody cases but
does not cover unmarried, financially linked couples. The bill
would give the man absolute right to venue and require that the
woman bring her claims to the city where the man now lives.
9:48:17 AM
MR. TAYLOR cited an example involving a real estate deal gone
sour in the MatSu Valley. One party sued another and the
defendant subsequently filed a fraudulent claim in Nome. The
third party defendant, under SB 301, could move the venue to
Nome, and force the remaining parties to travel to Nome for the
case trial. He said there are huge, unintended consequences of
the bill and requested the that committee oppose it.
9:50:07 AM
SENATOR THERRIAULT asked Mr. Taylor whether he has experienced
any problems in the Bethel court system.
MR. TAYLOR responded he handled a case in Bethel and the bill
brings up a good point yet it would bring disaster to the civil
system in many areas. He suggested the only people who are aware
of the bill were people involved in the aviation industry. He
agreed that insurance companies sometimes send arrogant "big-
city lawyers" to small communities and juries tend to side with
the hometown lawyer.
9:51:55 AM
MR. TAYLOR added he is not disputing the appearance of disparity
between Bethel juries and Anchorage jury verdicts.
CHRIS SCHLUSS, attorney, testified against the bill. She
informed the committee that the Alaska Action Trust wrote a
position paper on the bill dealing largely with what they see as
constitutional infirmities. She pointed out the committee was
considering an enormous fix for a very limited problem. She said
the federal system, as well as every state in the country,
operates the same way as Alaska operates today and does not
allow a defendant an absolute right to change venue. She gave
many examples of unintended consequences of the bill, which
would give any defendant the power to force plaintiffs to travel
far out of the area where the situation occurred. She said under
SB 301 a drunk driver who was in town for a meeting could injure
a person in Fairbanks and that injured person could have to
travel to Naknek to have their case heard.
9:55:17 AM
MS. SCHLUSS said she represents women and children who are
victims of rape and molestation. Under the current system, she
is often successful in suing the offender and is able to do so
because of the law that states criminals are not allowed to keep
their personal property exempt. She said she is allowed to
pursue this because she can keep the costs of litigation fairly
well affordable. SB 301 would force she and her clients to
travel extensively to a location chosen by the offender to have
their day in court. She asked the committee to think about the
issues in a broader manner.
9:57:51 AM
MEG SIMONIAN, introduced herself as an attorney for a firm that
does contract work, personal injury work, and business law
contract work. She said SB 301 would change the current law,
which says the claim should be brought at the place it arose.
Judges have the ability to change a venue if impartiality is
proved or when the interest of justice requires it. SB 301 would
remove the ability of the judge to do that and put the power
entirely with the defendant. She estimated that lawyers would
find ways to make things extremely inconvenient for plaintiffs
to get to court. She maintained that the bill could cause
enormous impacts across spectrums of litigation, would increase
litigation, and bog the courts.
10:00:36 AM
MS. SIMONIAN asserted not all claims in Bethel result in
plaintiff's verdicts. She agreed that an out-of-town lawyer is
always at a disadvantage but SB 301 wouldn't necessarily fix
that because it would just shift the disadvantage. She asked the
committee members to think about the broad-based impact the bill
would have.
10:02:21 AM
CHAIR SEEKINS asked Ms. Simonian whether a provider or seller
could limit venue for any civil action that is brought against
them as part of the contract.
MS. SIMONIAN said yes.
CHAIR SEEKINS asked her whether a small airline, as condition of
purchase of the ticket, is able to do so under contract law.
MS. SIMONIAN said it is possible but there would be obstacles.
There would be questions of adhesion where the person signing
the contract would be aware that they were signing away certain
rights.
CHAIR SEEKINS commented he has seen sales contracts where venue
is prescribed as a condition of the contract. He asked her to
comment.
MS. SIMONIAN said she was discussing that topic with colleagues
earlier and is not sure of the restrictions on passenger
adhesion contracts. She said it seems to be within the realm of
a potential solution for what appears to be a special interest
problem in limited areas of the state.
10:04:16 AM
CHAIR SEEKINS asked Ms. Simonian whether the personal injury
snow machine case in Bethel last week was brought against a
Bethel business.
MS. SIMONIAN said she understood it to be brought against a
Bethel business. She said currently the court is the impartial
arbitrator and maintained that SB 301 would bring about a battle
between parties over venue.
10:06:14 AM
SKIP DOOMERSHINE, electrician, testified that he was recently
involved in a lawsuit that went to arbitration. The judge
reviewed the facts of the case and stated the case, if tried in
Anchorage, would have a value of zero dollars because the case
lacked merit. Later during arbitration the judge insisted they
settle for a six-figure amount. He feels there is something
wrong with the rural judicial system. Threatening letters were
received listing awards given in other cases and since he was
personally named in the lawsuit, it was a frightening
experience. His employer has ceased bidding for work in rural
areas because of the risk of frivolous lawsuits.
10:09:01 AM
MR. DOOMERSHINE said his specialty is doing bush runway lighting
and so the decision by his employer personally affects him but
it also affects residents and businesses that depend on good
runway lighting.
10:09:31 AM
SENATOR GUESS asked Mr. Doomershine the reason the arbiter
recommended settlement.
MR. DOOMERSHINE said the arbitrator was a retired superior court
judge and she simply advised his employer that a rural community
would probably award a tremendous amount of money.
SENATOR GUESS asked Mr. Doomershine whether he or his employer
tried to change the venue citing lack of impartial jury.
MR. DOOMERSHINE said his employer went to great lengths to
attempt to change the venue to Fairbanks but it was denied.
10:11:36 AM
Senator French joined the meeting.
PAUL LANTZ, General Manager of Dimond Electric, testified in
support of SB 301. He said his company has been building
infrastructure in Western Alaska for over 20 years through
weather, logistics, and cultural challenges. They have chosen to
draw the line at legal challenges. The company was taken to
court in Bethel for a case that would never have seen the light
of day anywhere else in Alaska, he stated. This issue presents a
direct effect on economic development in the region surrounding
Bethel. Infrastructure projects, improved communications, and
improved transportation would provide many opportunities to the
people in the region but contractors are shying away from
accepting contracts in rural Alaska and Dimond Electric is one
of them.
10:14:34 AM
RUSS WINNER, Attorney, testified against the bill on behalf of
Alaska Action Trust. SB 301 would allow defendants to
automatically transfer venue to their home court. Virtually
every state in the nation tries the case in the vicinity of
where the harm has been done. It is an over-broad measure to
address the legitimate concerns of the air carriers yet would
have unintended consequences. He gave an example:
If a Fairbanks resident is in an auto accident and is
hit by a person from out of town, perhaps a village in
Western Alaska, under this bill, if that Fairbanks
resident filed suit in a Fairbanks court against that
out of town defendant, the defendant would have the
automatic right to transfer the case out of Fairbanks
into a rural court.
10:19:50 AM
MR. WINNER continued that he has tried cases in Bethel and knows
most of the attorneys who practice there. He claimed that the
defendants who find themselves in Bethel court hire lawyers who
are out of tune to the differences between Bethel juries and
other juries. In reference to previous testimony regarding
threatening letters sent to defendants, he said, lawyers write
those letters all the time.
10:22:31 AM
MR. WINNER alerted committee members to a position paper that he
faxed to Senator Seekins' office and wrapped up his testimony by
stating SB 301 was unconstitutional and that defendants should
be hiring local Bethel lawyers.
10:25:26 AM
JERRY ROCK, President, Evergreen Aviation, testified in support
of the bill. He cited a medical evacuation (med-evac) case in
Kotzebue where a contractor was working on a road and a village
elder was run over by a front-end loader as he was driving a
four-wheeler through the construction site. The elder died
during the med-evac flight. The family sued Evergreen Aviation
for the death and the lawyer for the family told him that a
Kotzebue jury would rule against the airline. The lawyer advised
him to settle with the family.
MR. ROCK said the bill would bring jury awards down and in turn
help bring insurance costs down for contractors and air carriers
as well.
10:28:46 AM
SENATOR GUESS asked Mr. Rock whether he or his insurance company
tried to change the venue citing lack of impartial jury.
MR. ROCK said they settled out of court on both of the rural
cases that they had.
10:29:22 AM
CHAIR SEEKINS held SB 301 in committee.
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