Legislature(2015 - 2016)CAPITOL 120
02/20/2015 01:00 PM JUDICIARY
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HB 83-JUDICIAL COUNCIL: CIVIL LITIGATION INFO 1:06:10 PM CHAIR LEDOUX announced that the first order of business would be HOUSE BILL NO. 83 "An Act relating to collecting information about civil litigation by the Alaska Judicial Council; repealing Rule 41(a)(3), Alaska Rules of Civil Procedure, and Rules 511(c) and (e), Alaska Rules of Appellate Procedure; and providing for an effective date." 1:06:28 PM The committee took a brief at ease. CHAIR LEDOUX passed the gavel to Vice Chair Keller for the hearing on HB 83. 1:06:50 PM CLARK BICKFORD, Staff, Representative Gabrielle LeDoux, Alaska State Legislature, offered that the bill repeals a 1997 law relating to the collection of information regarding civil litigation by the Alaska Judicial Council, which is a widely forgotten and ignored practice amongst the legal community. For instance, he explained, from 2001-2010 only 13 percent of litigation reports have been filed. He offered that the majority of the legal community and the Alaska Judicial Council (AHC) is in favor of this repeal and urged support for the bill. REPRESENTATIVE CLAMAN asked whether there was a time of greater compliance. MR. BICKFORD, in response to Representative Claman, stated there was more compliance from the legal community at the time of passage, and gradually that compliance dropped dramatically. He pointed out that during the above-mentioned nine years only 20,000 of the 177,000 open civil cases were reported. 1:09:23 PM VICE CHAIR KELLER assumed there was legislative intent for the original bill and asked for the legislative history. 1:09:50 PM MR. BICKFORD said the difficulty of lawyers not was unforeseen, and the AJC does not have resources to [encourage attorneys] to report every 177,000 cases. 1:10:50 PM VICE CHAIR KELLER questioned why years have passed without data, as it is a law. 1:11:11 PM SUZANNE DIPIETRO, Executive Director, Alaska Judicial System, Alaska Court System, advised that the law was passed as part of tort reform legislation in 1997. The items in the legislation were recommended by the Governor's Advisory Task Force on Civil Justice Reform and, she noted, this task force was formed after Governor Tony Knowles vetoed tort reform legislation that had passed in 1995-1996. The task force made recommendations to improve the efficiency and fairness of civil litigation. She remarked that during the course of deliberation it became clear to the task force there was no data regarding the size and amount of an average jury verdict, average settlement, or the percentage of times a plaintiff won versus a defendant. When the legislation passed, the provision intended that the Alaska Judicial Council (AJC) would collect information and provide reports to the legislature so it could monitor the effects of what it had done in the tort reform legislation, she explained. The AJC issued three reports, a preliminary report soon after the statute was passed with some information, and when information was rolling it issued the 2001 report which included the amount of the average settlement, and civil litigation data information. Unfortunately, she related, due to the difficulty in obtaining data, the AJC reviewed court case files and pulled the numbers of the cases it should have received reports. 1:13:39 PM MS. DIPIETRO stated that AJC realized only a fraction of reports had been filed and sent letters to all of the parties that should have filed information. Through that laborious process the AJC was able to achieve approximately a 50 percent response rate. She described it as the highest response rate it had received and, she opined, it was enough information to put out a report that was not misleading. In subsequent years, she noted, the reporting rate fell and for example, in FY13 court system data showed 6,113 cases that should have received a settlement report and received 1,086 reports, only 18 percent. She opined that it would not have been responsible to publish a report at 18 percent data. 1:16:10 PM VICE CHAIR KELLER remarked that he just received the 2001 Alaska Judicial Council report and has not had an opportunity to evaluate the data. He questioned whether there is a valid reason to "get rid of" a law wherein compliance is difficult. MS. DIPIETRO offered that the AJC has a constitutional responsibility to conduct studies to improve the administration of justice for the legislature. She advised she is ready to conduct any study the legislature would like conducted, such as the civil case data information. 1:17:51 PM VICE CHAIR KELLER pointed to the implication that the data is not valuable as the AJC is bringing this bill forward and supporting it. He opined that his first impression is the information is very valuable and offered concern that the lack of information to the legislature is due to non-compliance. MS. DIPIETRO responded in the affirmative, that the AJC has only received 18 percent with a lot of information outstanding. "As a representative of the AJC, I'm not really taking a position one way or the other," she said, and that she is testifying to advise of the difficulties, and for the committee to direct the AJC. 1:19:00 PM CHAIR LEDOUX clarified that this bill was not put forth through the Alaska Judicial Council but was suggested to her by a number of individuals from the private bar. She questioned the amount of money would be necessary to put teeth into the law requiring parties to report. 1:19:48 PM MS. DIPIETRO responded that she could work something up, and reiterated that the 2001 report required quite a bit of time and effort in collecting the data. 1:20:17 PM CHAIR LEDOUX surmised that the AJC went through the records [in order to prepare the 2001 report] because attorneys were not submitting the data. She questioned what it would take in the way of law, or a budget, to enforce the attorneys to submit data. She also questioned who would be in charge of [enforcement]. 1:20:42 PM MS. DIPIETRO, in response to Chair LeDoux, stated an issue is that there is no enforcement mechanism in the law. She indicated she did not know what an enforcement mechanism could be, and reiterated that when the AJC sent letters and reminders it only achieved a 50 percent compliance rate. 1:21:11 PM VICE CHAIR KELLER questioned whether the AJC would be able to devise some incentive ideas and actually make money instead of cost money and indicated there was no enforcement suggestion, but rather a suggestion to change the law. 1:21:44 PM REPRESENTATIVE CLAMAN questioned what the data would show regarding the impact of the tort reform legislation. MS. DIPIETRO responded that the AJC performed a study of tort jury verdicts (appendix to the  report) and subsequent to realizing there were not many large tort jury verdicts, it shifted its focus to the idea of settlement. She explained that the hypothesis being that because there are large settlements paid out by insurance companies, this impacts the cost of insurance and causes the cost of insurance to go up and the availability of insurance to go down. The Department of Commerce, Community, and Economic Development, Division of Insurance, and the AJC attempted to answer what effect, if any, the settlement of civil cases is having on the availability and cost of insurance. 1:23:41 PM REPRESENTATIVE CLAMAN asked what the studies revealed. MS. DIPIETRO offered that the Division of Insurance issued a couple of reports in its effort to comply with that request and was unable to conclude one way or the other. REPRESENTATIVE CLAMAN surmised that the theory of tort reform was that there were jury verdicts in the millions of dollars driving up insurance costs, but the studies of jury verdicts in Alaska actually showed there were not huge jury verdicts. MS. DIPIETRO answered "that is correct, in the memo and the report, yes." 1:24:26 PM REPRESENTATIVE CLAMAN further questioned what the research performed in the years following tort reform revealed regarding settlements. MS. DIPIETRO explained that the 2001 report contains the most complete information on settlements which revealed "not all that many large settlements." REPRESENTATIVE CLAMAN asked whether settlements were higher or lower than jury verdicts. MS. DIPIETRO responded that she could not recall, and reiterated that the data was only 50 percent of the cases. 1:25:33 PM VICE CHAIR KELLER noted that the description of the settlement or judgment is only one aspect of the information to be reported. He related that the other things erased, should the law be repealed, is information regarding the court civil justice processes, case processing information, and characteristics of the litigation and parties. For example, he said he would be interested in how many civil cases were frivolous, how much court time is taken up in civil litigation, what percentage, and what the information is based upon without the [other 50 percent] data. 1:26:31 PM REPRESENTATIVE GRUENBERG moved to adopt proposed committee substitute (CS) for HB 83, Version 29-LS0414\H, Wallace, 2/5/15, as the working document. There being no objection, Version H was before the committee for discussion. REPRESENTATIVE GRUENBERG surmised that the enforcement mechanism could be grounds for discipline such as an individual violating a civil rule in statute. MS. DIPIETRO clarified that it would be discipline for the attorneys through the Alaska Bar Association, but this law also applies to unrepresented litigants. 1:28:14 PM REPRESENTATIVE GRUENBERG, in reference to the Mr. Jacobus supporting letter in each member's packet, said it reads that this law costs attorney time and that most plaintiff lawyers work on a contingency basis. The defense bar is generally on an hourly basis, so the clock would run for the clients in preparation of these reports, he remarked. MS. DIPIETRO replied "correct." 1:28:43 PM REPRESENTATIVE GRUENBERG requested an estimate of the amount of time spent filling out a report with the hourly rate. MS. DIPIETRO replied that the form was streamlined to make it as easy as possible in order to evaluate the minimum amount of information in the best manner possible. She offered that she had received an email from a law firm suggesting it was a burden. REPRESENTATIVE GRUENBERG pointed out that the bill repeals certain rules of court. He opined the protocol in matters of comity ... when dealing with a change of a court rule would be to request the court system to repeal its rule. MS. DIPIETRO advised she could not respond to the protocol, but the rules require an attorney to certify they submitted the information to the AJC, or promulgated as a way to implement the statute. She deferred the response to Ms. Nancy Meade. 1:31:08 PM CHAIR LEDOUX asked whether the law requiring reporting was enacted after tort reform legislation. MS. DIPIETRO responded "that is correct." CHAIR LEDOUX questioned how a study would be performed when the information is available after [the law was enacted]. 1:31:50 PM MS. DIPIETRO articulated that the AJC does not have base line data so it could not determine whether prior to tort reform settlements were a certain amount or after tort reform settlements were a certain amount. She said the thought was that the AJC could report that immediately after tort reform things were a certain way, and five years later had changed, and ten years later had changed again. She remarked it would not be the type of analysis to prove a causation as it would just be a correlation. 1:32:30 PM VICE CHAIR KELLER said that part of the AJC's responsibility is offering recommendations to judges, and he asked whether any of the non-compliant attorneys became judges and asked Ms. DiPietro to report back. MS. DIPIETRO replied "I actually do not know the answer to that question." 1:33:03 PM REPRESENTATIVE CLAMAN noted that part of the rule was amending either the court rules or attorney rules relating to attorney client privilege and whether or not disclosing this information violated the attorney client privilege, particularly relating to settlements. He asked whether anyone tested that question in court, whether lawyers were unwilling to report because they believe it is an attorney-client violation. MS. DIPIETRO responded that her knowledge no one has ever challenged that issue in court. She said she has heard that some attorneys object to the idea of disclosing the information on that ground, but described her statement as hearsay. 1:34:25 PM REPRESENTATIVE CLAMAN referred to Representative Keller's question of sitting judges who, when in practice, had complied every time, sometimes, or never. MS. DIPIETRO advised the AJC would have to go back to the court and obtain the list of cases that had been dismissed or settled and determine who the attorneys were and whether a report was submitted. "That would be quite the tricky research project." VICE CHAIR KELLER advised Representative Claman that he could work it out whether he wanted the information, but his question was "rhetorical" because he believes it was ignored. REPRESENTATIVE GRUENBERG called the committee's attention to AS 09.68.130(b), which is the statute that will be repealed under the bill, which read: (b) The information received by the council under (a) of this section is confidential. This restriction does not prevent the disclosure of summaries and statistics in a manner that does not allow the identification of particular cases or parties. REPRESENTATIVE GRUENBERG offered that many settled civil cases are confidential, but are not confidential as to statistics. 1:36:50 PM NANCY MEADE, General Counsel, Central Office, Office of the Administrative Director, Alaska Court System, responded to Representative Gruenberg that the legislature does have the right to change court rules of practice and procedure constitutionally, and that it takes place several times per session. She opined it is an appropriate exercise of the legislature's authority, and in this instance, those rules are in the Alaska Rules of Court solely due to the passage of the statute. In the event the statute and court rules are repealed it would not be problematic from the court's point of view to also repeal the court rules, she explained. REPRESENTATIVE GRUENBERG opined that if the legislature changed it to a request of court, it would not be a rule change and would not require two-thirds vote. MS. MEADE responded that Legislative Legal and Research Services, who deals with statutory changes, always checks to determine whether there would at least be an indirect rule amendment, if not a direct one. She stated it is their call as to whether statutory changes do impact rules. VICE CHAIR KELLER opened public testimony. 1:39:24 PM BREWSTER JAMIESON, Attorney, Lane Powell LLC, said he has been practicing civil litigation for 31 years in Alaska and noted that the law does not accomplish much in the way of useful information, but it does place a burden on practitioners. In terms of settlement information, the data is of cases in the court system, not cases that are settled before they go to court. He opined that tort reform accomplished much of what it set out to accomplish and has had a significant impact on his practice in terms of the certainty it brought in areas that were uncertain before passage. He said that tort reform made it easier to resolve and settle cases and predict outcomes. He highlighted that there are factors determining the dollar amount cases settle for, and what juries award in the way of verdicts. It is expensive and difficult to collect data that doesn't tell much about the cases, or whether tort reform was or was not good, should or should not continue, or is fair or unfair, he explained. He remarked he fully supports the repeal of this provision and the bill. 1:45:20 PM KEN JACOBUS, Attorney, Law Offices of Kenneth P. Jacobus, paraphrased the following statement [original punctuation provided]: As Chairman of the Judiciary Committee, you should be able to do something about this abomination that continues to exist in the Alaska Statutes. I have enclosed the most recent Resolution of the Anchorage Bar Association directed at this matter. Every year since 2003 through 2010, similar resolutions were adopted by the Anchorage Bar Association and the Alaska Bar Association. The Legislature has continued to ignore this request, so we finally gave up. The enclosed resolution lists a lot of the reasons that the statute is bad. At the present time, these reports must be made. Many of the attorneys do not follow this law. I think that a lot of them don't even know about it. Those that do bill their clients or absorb the cost as an administrative cost. Nothing is done with the reports by the State because it has no need of the information. I have enclosed some additional information. In 2001, the Judicial Council itself recommended the elimination of the automatic reporting requirement. It desired to retain the right to collect information if it needed to do so in the future. It prepared a draft of a bill that would accomplish this result. Copies of the relevant information is enclosed. My personal preference would be to repeal AS 09.68.130 completely. However, if the Judicial Council wants to retain the right to collect information, I have no real problem. While it has collected information for 15 years since it published its only report, I do not assume that it will collect information in the future unless there is a real purpose in doing so. Repealing this statute would lessen a useless and major burden on Alaskan attorneys and clients If the State wants to collect information in the future, it is free to do so. MR. JACOBUS advised that prior to tort reform there was an assumption that verdicts were too high, and attorneys were paid too much. The AJC study showed there are not a number of large jury verdicts in Alaska, or large settlements, and attorneys are not being paid huge amounts of money. He referred to page 1, lines 6-9, AS 09.68.130(a), which read: (a) Except as provided in (c) of this section, the Alaska Judicial Council shall periodically collect and evaluate information relating to the resolution of civil litigation ... MR. JACOBUS suggested the word "shall" mandatory, should be changed to "may" discretionary. VICE CHAIR KELLER referred to Version H, and explained that it deletes that entire section as the language now reads "AS 09.68.130 is repealed." 1:50:12 PM REPRESENTATIVE CLAMAN noted the committee substitute (CS) does away with the authority to collect any information at all and asked whether Mr. Jacobus was in favor of the CS. MR. JACOBUS advised he is in support of the CS and does not believe the Alaska Bar Association would be very happy being the enforcement mechanism. "It can't deal with thousands of disciplinary complaints because attorneys do not file their required reports," he expressed. 1:51:26 PM SARAH BADTEN, Attorney, Groh, Eggers, LLC, stated she wholeheartedly supports repealing the statute as her practice is in contract law and contract principle where she sues over a lien foreclosure or payment of money. She emphasized that individuals pay the money that is owed and the case is dismissed so it is not reflective of any useful information to the AJC or the legislature. She remarked that she deals with costs that are transferred back to the borrower or owner. She attempts to keep costs down, but it is part of her time and she charges her clients who then pass that cost through to the owner. She said she would like to see the statute repealed as it is archaic and costs unnecessary time and money. VICE CHAIR KELLER closed public testimony after ascertaining no one further wished to testify. 1:54:28 PM The committee took a brief at ease. VICE CHAIR KELLER passed the gavel to Chair LeDoux and the bill was held in committee.