Legislature(2005 - 2006)CAPITOL 120
02/24/2006 02:00 PM JUDICIARY
Download Mp3. <- Right click and save file as
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 446 - PENALTY FOR UNLAWFUL TRADE PRACTICE 2:23:54 PM CHAIR McGUIRE announced that the next order of business would be HOUSE BILL NO. 446, "An Act relating to the amount of a civil penalty for an unlawful act or practice in the conduct of trade or commerce." CHAIR McGUIRE, speaking as the sponsor, noted that Alaska continues to top the nation in fraud complaints, and relayed that HB 446 attempts to tighten up Alaska's consumer protection laws and send a strong message that fraud will not be tolerated in Alaska. 2:24:57 PM TED POPELY, Legislative Council Legal Office, Alaska State Legislature, relayed that HB 446 simply increases the civil penalties that the Department of Law (DOL) may avail itself of under the [Alaska Unfair Trade Practices and Consumer Protection Act], civil penalties that are used as a tool to enforce the Act against companies that may defraud Alaskan consumers. Currently the law permits civil penalties to be sought by the DOL and the attorney general in cases of consumer fraud, consumer deception, and other acts forbidden under the Act. The current civil penalties have been in place since the Act was originally enacted in 1970, and they are rather low in comparison to other states, particularly given the rate of inflation. MR. POPELY explained that HB 446 proposes to modify two provisions of current law: AS 45.50.551(a) and AS 45.50.551(b). Proposed AS 45.50.551(a) will increase the civil penalty included therein from "$25,000 per violation" to "$50,000 for each violation", and will apply in situations where a company violates an injunction [or restraining order] pertaining to deceptive practices. Proposed AS 45.50.551(b) will change the civil penalty included therein from "$5,000 per violation" to "not less than $1,000 and not more than $25,000 for each violation", and will apply in situations where one violates a provision of the [Alaska Unfair Trade Practices and Consumer Protection Act]. 2:27:58 PM REPRESENTATIVE GRUENBERG referred to Section 1 of the bill, specifically the language in current law that says in part, "the cause shall be continued". He characterized this phrase as "ancient language," and asked whether it would be sufficient to simply say that the court retains jurisdiction. CYNTHIA DRINKWATER, Assistant Attorney General, Commercial/Fair Business Section, Civil Division (Anchorage), Department of Law (DOL), agreed that the phrase, "the cause shall be continued", is probably unnecessary. REPRESENTATIVE GRUENBERG suggested that the same could be said of the phrase, "the attorney general acting in the name of the state may petition for recovery of the penalties", in that it seems to be requiring the attorney general to petition the court in a situation where only a writ of execution needs to be obtained. MS. DRINKWATER pointed out, however, that the way the DOL requests civil penalties is initially via the complaint itself. Then, once a case is at the point where a final judgment is sought, the DOL asks for civil penalties via a motion for civil penalties. Therefore, according to her understanding, she remarked, the word "petition" is a bit broader than what Representative Gruenberg is suggesting. REPRESENTATIVE GRUENBERG surmised, then, that the language is referring to the motion for civil penalties rather than a writ of execution. MS. DRINKWATER concurred. In response to questions, she relayed that she doesn't see a problem with the way the current language in AS 45.50.551(a) is drafted. REPRESENTATIVE GRUENBERG said he's wondering whether Section 3, the applicability provision of the bill, will cause an ex post facto problem from a constitutional standpoint. He noted that a memorandum he'd received from Legislative Legal and Research Services, written by Dennis C. Bailey, raises this issue and states in part: In conclusion, I do not know how this issue would be resolved by a court. However, the applicability section you propose changes the penalty for events that have already occurred. The fines are designated as a penalty. It would be difficult to argue that the fines are compensatory rather than punitive. This seems to run afoul of the ex post facto prohibition. REPRESENTATIVE GRUENBERG said it seems to him that the committee has three choices: leave the language as is and allow the court to decide; strike Section 3; or insert other language. He asked Ms. Drinkwater whether [the DOL] would be prepared to defend the current language if the committee left it as is. MS. DRINKWATER suggested that perhaps Mr. Popely could better address that issue, but pointed out that Clyde (Ed) Sniffen, Jr. - Assistant Attorney General, Commercial/Fair Business Section, Civil Division (Anchorage), Department of Law (DOL) - had conducted an analysis of that issue and had come to a different conclusion. 2:34:10 PM MR. POPELY concurred with Ms. Drinkwater regarding Mr. Sniffen's opinion. Anytime there is an applicability section containing a date other than the effective date of the Act, it will raise a potential ex post facto issue, Mr. Popely remarked, but added that according to conversations he'd had with Mr. Sniffen, Mr. Sniffen doesn't think Section 3 will cause an ex post facto problem for several reasons: generally ex post facto challenges are directed at purely punitive actions, and the civil penalties in the bill are a hybrid of punitive and compensatory action; ex post facto challenges are generally most successful when they pertain to purely criminal acts and criminal violations, and the [Alaska Unfair Trade Practices and Consumer Protection Act] is not a criminal statute; the conduct referred to in the bill will have been illegal at the time the penalties are assessed and the bill doesn't create any new civil or criminal liability - instead the amount of liability is simply altered; and no substantive rights are being denied via the proposed increases. MR. POPELY said that these are all points that the court looks at in making an ex post facto analysis. Mr. Popely offered his understanding that there are only a handful of pending cases that would be impacted by the proposed applicability provision as it is currently written, and that any new cases that [are filed] after the effective date of the bill won't be affected by the applicability provision. REPRESENTATIVE GRUENBERG posited that that won't necessarily be the case, and offered an example wherein an action is brought within the statute of limitations against a company that committed fraud in the past but no one knew about it. MR. POPELY concurred with that point. CHAIR McGUIRE suggested that they ought to provide the state with the option of seeking the aforementioned civil penalties if it is willing to pursue them. REPRESENTATIVE GRUENBERG concurred. MR. POPELY also concurred. 2:38:48 PM STEVE CLEARY, Executive Director, Alaska Public Interest Research Group (AkPIRG), indicated that he concurs with the comments in favor of HB 446, characterizing the bill as a great way to modernize consumer protection in Alaska. It's good to know that the consumer protection laws are about to be updated, he remarked, adding that those updates, along with other legislation currently moving through the process are things that the DOL will be able to make use of. He concluded by indicating that [AkPIRG] is in full support [of the bill]. CHAIR McGUIRE, after ascertaining that no one else wished to testify, closed public testimony on HB 446. REPRESENTATIVE GRUENBERG made a motion to adopt Amendment 1, to delete the phrase, "and the cause shall be continued," from page 1, lines 8-9. REPRESENTATIVE ANDERSON objected for the purpose of discussion. CHAIR McGUIRE said she is assuming that if Mr. Sniffen had had concerns about the phrase that Amendment 1 proposes to delete, he would have brought those concerns to the committee's attention. REPRESENTATIVE GRUENBERG, in response to a question, offered that the aforementioned phrase is not modern terminology. He indicated that he is amenable to having the language reinserted later if Mr. Sniffen objects to its removal. REPRESENTATIVE COGHILL offered his understanding that by retaining jurisdiction, a district would be able to continue an action. REPRESENTATIVE GRUENBERG concurred. REPRESENTATIVE ANDERSON removed his objection. CHAIR McGUIRE asked whether there were any further objections to Amendment 1. There being none, Amendment 1 was adopted. 2:42:37 PM REPRESENTATIVE COGHILL moved to report HB 446, as amended, out of committee with individual recommendations and the accompanying zero fiscal notes. There being no objection, CSHB 446(JUD) was reported from the House Judiciary Standing Committee.