Legislature(2011 - 2012)CAPITOL 120
04/13/2011 01:00 PM JUDICIARY
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SB 78 - LIABILITY RELATED TO ALCOHOL 2:10:29 PM CHAIR GATTO announced that the final order of business would be CS FOR SENATE BILL NO. 78(JUD), "An Act relating to liability of certain limited liability organizations holding liquor licenses; and relating to accidents involving the vehicle of a person under the influence of alcoholic beverages." 2:11:40 PM ESTHER TEMPEL, Staff, Senator Lesil McGuire, Alaska State Legislature, on behalf of Senator McGuire, the sponsor by request, explained that in order to provide the same limited liability to limited liability companies (LLCs) that hold a liquor license [as is currently provided to corporations that hold a liquor license], Section 1 of SB 78 would add to AS 04.21.035 specific references to limited liability partnerships (LLPs) and foreign LLPs and to the partners of such LLPs, and would delete the reference to AS 10.50, which addresses LLCs specifically. Section 2 of the bill, by adding a new section 315 to AS 09.65, would limit the liability of taxi/limousine drivers who get in an accident while driving an intoxicated person's vehicle from a licensed premise. MS. TEMPEL indicated that these days, LLCs are often used as alternatives to corporations, but the statutes related to alcoholic beverages don't currently provide the members of an LLC with the same protection against liability as is provided to the owners of a corporation. With regard to limiting the liability of taxi/limousine drivers who drive an intoxicated person's vehicle from a licensed premise, the initial legislation authorizing this liability-limitation passed in 2004 and included a sunset date of 2007, which was subsequently overlooked. Section 2 of the bill contains language similar to that of the initial, authorizing legislation, which was intended to provide a deterrent to driving under the influence (DUI), and would give taxi/limousine companies - except in the case of recklessness, gross negligence, or intentional misconduct - some legal immunity in the event that an accident occurs while the taxi/limousine driver is driving the inebriated person's car. 2:15:14 PM MS. TEMPEL indicated that without passage of SB 78, a lot of the transportation companies [that had been participating in a program established after passage of the initial legislation aren't going to participate anymore] due to concerns about liability. In response to a question, she mentioned that Section 2's proposed AS 09.65.315(d) specifies what constitutes consent by a motor vehicle owner. She surmised, therefore, that if a person has his/her car keys taken away because he/she has had too much to drink, that that in itself would constitute consent under the bill. REPRESENTATIVE GRUENBERG questioned whether Section 1's proposed changes are necessary. MS. TEMPEL offered her understanding that liquor licenses aren't generally held by LLPs, and that without passage of Section 1, in order to ensure that there is a limitation on its liability, an LLC that wishes to hold a liquor license must first create a shell corporation for that specific purpose. 2:22:53 PM RICHARD M. ROSSTON, Attorney at Law, Dorsey & Whitney LLP, concurred that LLPs aren't generally formed for the purpose of holding a liquor license; ventured that the proposed changes to AS 04.21.035 are necessary in order to provide LLCs that hold a liquor license with the same limited liability as is currently provided to corporations that hold a liquor license; and surmised that back when the aforementioned initial legislation was enacted, it wasn't widely known that in the business world, LLCs are treated more like corporations than partnerships, and so Section 1 of SB 78 is merely proposing to correct the initial legislation's error in not also providing similar limited liability for LLCs. Under current law, LLCs that wish to hold a liquor license and still have limited liability must form a separate corporation, and this has proven to be inefficient and cumbersome. 2:26:39 PM SILVIA VILLAMIDES, Director, Anchorage Cabaret, Hotel, Restaurant & Retailers Association (Anchorage CHARR), mentioned that she would be addressing Section 2 of SB 78, the proposed limit on liability for taxi/limousine drivers who get in an accident while driving an intoxicated person's vehicle from a licensed premise. She then referred to and provided information about a program started after passage of the initial legislation - the "Off the Road" program, in which an inebriated person at a participating establishment can request a free ride home and have his/her vehicle driven home as well - and indicated favor with having the limitation on liability for taxi/limousine drivers reinstated in statute. In conclusion, she mentioned that a survey conducted in 2002-2003 indicated that for a variety of reasons, the majority of patrons were very reluctant to leave their vehicles at a licensed premise overnight, thereby illustrating the need for legislation such as SB 78, passage of which would encourage participation by liquor-license holders in the aforementioned program. 2:28:30 PM BOB KLEIN, Chairman, Alcoholic Beverage Control Board ("ABC Board"), Department of Public Safety (DPS); Member, Board of Directors, Alaska Cabaret, Hotel, Restaurant and Retailer's Association, Inc. (Alaska CHARR); Director, Sales and Marketing (ph), Brown Jug, ventured that SB 78 is intended to fix the problem that resulted from the initial, authorizing legislation having contained a sunset provision that was subsequently overlooked. He characterized the aforementioned "Off the Road" program as a wonderful program, noting that it's nationally recognized and has done well in the cities that have used it. In response to a question, he clarified that because no one realized at the time that the initial, authorizing legislation had sunset, many participating establishments simply kept using the program, and so now entities have been scrambling to find adequate insurance, which is very expensive. On the issue of LLCs and AS 04.21.35, Mr. Klein relayed that he concurs with Mr. Rosston's summation, adding his belief that with the initial, authorizing legislation, it was no one's intention to remove "corporate-type protections" [from LLCs that hold a liquor license]. In conclusion, he encouraged passage of SB 78. 2:31:45 PM J. RANDALL CALL, General Counsel, Alyeska Resort; President, Alyeska Resort Development L.L.C., offering some of Alyeska Resort's acquisition history - as it related to LLCs, corporations, and liability - as an example of the problem warranting the changes proposed by Section 1, indicated that passage of SB 78 is important for encouraging out-of-state investors to participate in Alaska's business opportunities. CHAIR GATTO, after ascertaining that no one else wished to testify, closed public testimony on SB 78. REPRESENTATIVE THOMPSON observed: "The language in Senate Bill 78 does not prohibit or limit an injured driver or passenger ... from pursuing damages from any other automobile policy which may be available to them under the uninsured or underinsured policy coverage under normal procedures of stacking automobile insurance under AS 28.22.221." MS. TEMPLE and REPRESENTATIVE GRUENBERG concurred. 2:35:38 PM REPRESENTATIVE THOMPSON moved to report CSSB 78(JUD) out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSSB 78(JUD) was reported from the House Judiciary Standing Committee.