Legislature(2011 - 2012)BARNES 124

04/11/2011 03:15 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 72 ANTITRUST ACTIONS & PENALTIES TELECONFERENCED
Heard & Held
+= SB 23 FILM PRODUCTION TAX CREDIT/AUDITS TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                                                                                                                                
              HB 72-ANTITRUST ACTIONS & PENALTIES                                                                           
3:26:02 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced HOUSE BILL  NO. 72, "An Act authorizing and                                                               
relating to  certain causes  of action for  relief for  direct or                                                               
indirect injuries sustained as a  result of antitrust violations;                                                               
repealing  the provision  limiting  to the  attorney general  the                                                               
recovery  of monetary  relief for  injury directly  or indirectly                                                               
sustained as a result of  an antitrust violation; and relating to                                                               
criminal  and  civil  penalties  for  antitrust  violations."  [A                                                               
motion to  adopt the proposed committee  substitute (CS), Version                                                               
M, for HB 72 was left pending.]                                                                                                 
                                                                                                                                
3:26:13 PM                                                                                                                    
                                                                                                                                
CLYDE  (ED)  SNIFFEN,  JR., Senior  Assistant  Attorney  General,                                                               
Commercial/Fair  Business  Section, Civil  Division  (Anchorage),                                                               
referred to a  flowchart in members' packets.   He explained that                                                               
last  week the  committee  heard HB  72.   He  offered to  answer                                                               
questions and discuss concepts.   He related that the chart shows                                                               
that the  current statute with  respect to  antitrust violations.                                                               
Price fixing happens  when several suppliers conspire  to fix the                                                               
price  of a  component  of  a product.    He  recalled a  current                                                               
attorney  general's   case  on   price  fixing   between  several                                                               
manufacturers  of Dynamic  Random Access  Memory (DRAM)  known as                                                               
computer  memory chips.   He  briefly described  that the  path a                                                               
computer  memory chip  product would  take  from the  time it  is                                                               
imported until  it was  sold to  a consumer.   The chip  would be                                                               
manufactured,  transferred  to   a  distributor  and  wholesaler,                                                               
placed in a product such as  a computer, and subsequently sold to                                                               
a store  such as Best Buy.   When a  component such as a  DRAM is                                                               
artificially  priced, the  consumer  pays slightly  more for  the                                                               
product since a component of the product was "price fixed."                                                                     
                                                                                                                                
3:28:14 PM                                                                                                                    
                                                                                                                                
MR. SNIFFEN  stated that when  Alaskan consumers purchase  such a                                                               
product they are  without a remedy since the consumer  is not the                                                               
direct purchaser  of the  computer memory  chip.   He highlighted                                                               
that when  consumers buy  the product at  Best Buy  they purchase                                                               
the computer and  are not solely purchasing the chip.   Thus, the                                                               
computer  purchase represents  an indirect  purchase of  a "price                                                               
fixed"  product.   The  U.S.  Supreme  Court indicated  that  the                                                               
consumer  is not  in  direct  line with  the  company that  fixed                                                               
prices  so  he/she  does  not  have right  to  sue  for  damages.                                                               
However,  the U.S.  Supreme  Court has  allowed  states to  adopt                                                               
their  own laws  to provide  a remedy  for consumers  to sue  for                                                               
indirect  damages.   In  2006,  Alaska passed  such  a  law.   He                                                               
reported  that  these laws  are  referred  to as  Illinois  Brick                                                               
repealers since the initial case  that did not allow consumers to                                                               
sue  was  a  U.S.  Supreme  Court Case,  Illinois  Brick  Co.  v.                                                             
Illinois,  431  U.S.  720  (1977).     Currently,  Alaska  allows                                                             
consumers to  bring actions against  the suppliers who  engage in                                                               
illegal  conduct.     He   reiterated  indirect   purchasers  are                                                               
purchasers who buy a product that contains a price-fixed item.                                                                  
                                                                                                                                
3:29:40 PM                                                                                                                    
                                                                                                                                
MR.  SNIFFEN related  that in  2006, when  Alaska's initial  bill                                                               
passed  the  legislature  it limited  any  price-fixing  lawsuits                                                               
actions  to the  attorney general.   The  legislation could  have                                                               
allowed both  the attorney  general (AG)  and private  parties to                                                               
bring action  but it did  not do  so.  At  the time, a  number of                                                               
states decided that  it would be appropriate for the  AG to bring                                                               
actions against  the parties.   However, one concern was  that if                                                               
private parties  and the  AG were both  involved in  class action                                                               
lawsuits  that it  could complicate  the process.   In  fact, Mr.                                                               
Sniffen indicated  that he had testified  in favor of an  AG only                                                               
law.   Since  then,  some  issues have  arisen  with  an AG  only                                                               
limitation.   This  bill would  allow private  parties and  class                                                               
action  plaintiffs to  bring cases  against conspirators  in this                                                               
case for  indirect damages.   He  referred to  a map  in members'                                                               
packets that highlights which states  have AG only laws and which                                                               
ones allow  for private indirect  purchaser laws. He  pointed out                                                               
that a majority  of states allow both the AG  and private parties                                                               
to  sue.   A number  of states  have brought  action against  the                                                               
computer chip  supplier and the states  with an AG only  law have                                                               
had a difficult time.   The class action plaintiffs cannot settle                                                               
the case for all consumers since only  the AG can do so in states                                                               
with  an AG  only law,  like Alaska.   Changing  the law  to also                                                               
allow private  individuals to bring  action would  alleviate some                                                               
of the  issues, he said.   He recalled that this  bill contains a                                                               
provision  that would  actually require  anyone bringing  a class                                                               
action lawsuit  for indirect damages  to notify the  AG's office.                                                               
The AG's office would have a  number of days to decide whether it                                                               
would  pursue any  action.   In the  event that  the AG's  office                                                               
declined  to pursue  the  case the  private  parties could  still                                                               
pursue the case.  He commented  when the AG's office had multiple                                                               
lawsuits simultaneously  filed that  conflicts could arise  as to                                                               
evidence  and prosecution.   He  concluded that  this bill  would                                                               
change the law  to allow private parties to bring  these types of                                                               
actions as opposed to limiting it to the AG.                                                                                    
                                                                                                                                
3:33:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER asked  whether the  AG would  relieve the                                                               
private party or  if it would work in conjunction  with the AG in                                                               
cases in which the private party notifies the AG.                                                                               
                                                                                                                                
MR. SNIFFEN  responded that the  AG could determine to  bring the                                                               
action  or may  decide it  would be  an opportunity  for a  joint                                                               
effort.   The  AG  could also  join the  case  simply to  recover                                                               
penalties but  it could  allow the class  action case  handle any                                                               
penalties.                                                                                                                      
                                                                                                                                
3:34:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER asked whether fines could be assessed.                                                                   
                                                                                                                                
MR. SNIFFEN answered  that under current statute  the state could                                                               
assess  penalties  of  up  to   $25,000  for  every  price-fixing                                                               
violation.  He  mentioned another bill is pending  this year that                                                               
could   strengthen   the   penalty   provisions   for   antitrust                                                               
violations.                                                                                                                     
                                                                                                                                
3:34:40 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  reported that  the specified bill  is moving  in the                                                               
other body.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CHENAULT asked  whether the  work draft  had been                                                               
adopted.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  SADDLER removed  his  objection.   Version M  was                                                               
before the committee.                                                                                                           
                                                                                                                                
3:36:02 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  asked for clarification  on the  effect of HB  72 on                                                               
foreign corporations.                                                                                                           
                                                                                                                                
MR. SNIFFEN  related his  understanding that  one issue  has been                                                               
whether  the  state  could enforce  price  fixing  cases  against                                                               
foreign  corporations  doing business  in  Alaska.   He  answered                                                               
probably yes.   Most foreign corporations  have subsidiaries that                                                               
operate in  Alaska such  as BP Alaska  whose main  corporation is                                                               
domiciled in London.  Many  bigger companies have subsidiaries in                                                               
Alaska  that operate  under an  Alaska name  and are  most likely                                                               
registered with the Department of  Commerce, Community & Economic                                                               
Development  (DCCED)  Division  of  Corporations,  Business,  and                                                               
Professional  Licensing.   He  added  that  the AG's  office  can                                                               
prosecute foreign companies doing business in Alaska.                                                                           
                                                                                                                                
3:36:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER reiterated  he has  removed objection  to                                                               
the work draft labeled 27-LS0381/M,  Bannister, 3/22/11.  Version                                                               
M was before the committee.                                                                                                     
                                                                                                                                
CHAIR OLSON asked for clarification  on the repealers in proposed                                                               
Section 14 of Version M.                                                                                                        
                                                                                                                                
MR.  SNIFFEN  explained  the sections  being  repealed  refer  to                                                               
sections that  limit the type  of recovery to  only the AG.   The                                                               
modifications to  other sections  would allow private  parties or                                                               
the AG to bring these actions, he said.                                                                                         
                                                                                                                                
3:37:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON  asked for  an estimate  of the  number of                                                               
cases that  might be  filed if  this bill  passed and  whether it                                                               
would be 1,000 or if it would be 1 case.                                                                                        
                                                                                                                                
MR. SNIFFEN  predicted it would  not be 1,000 but  probably would                                                               
be more  than 1.   He explained  that in the  past ten  years the                                                               
AG's office  has had  about a dozen  multi-state cases  that have                                                               
implicated this statute  in one way or another.   The AG's office                                                               
has  been unable  to  pursue claims  since it  did  not have  the                                                               
statutory  authority  early  on.    Now  that  it  has  statutory                                                               
authority, the  state can  join other  cases to  recover damages.                                                               
The  computer chip  case mentioned  earlier is  one case  and two                                                               
years  ago  the  state  took   action  against  a  pharmaceutical                                                               
company,  Warner Chilcott  Corporation, for  price-fixing a  drug                                                               
called  Ovcon.   At  the  time  the  state could  have  recovered                                                               
additional damages  had the  changes contained in  HB 72  been in                                                               
place.  He offered his belief  that a number of patent challenges                                                               
for  generic drugs  have implicated  indirect purchaser  damages.                                                               
He recalled the state did not  pursue a few other cases that this                                                               
bill may  or may not  have affected.   He offered his  belief the                                                               
the bill would  assist the AG in cases with  broader price fixing                                                               
conduct  in   the  U.S.  which   also  affected  Alaskans.     He                                                               
acknowledged that it really is hard to predict.                                                                                 
                                                                                                                                
3:39:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   JOHNSON  asked   whether  Alaska   is  currently                                                               
prohibited from  taking action in  federal cases on  class action                                                               
suits.                                                                                                                          
                                                                                                                                
MR.  SNIFFEN   answered  no.     He  agreed  that   Alaska  could                                                               
participate  relating  that  federal  anti-trust  law  gives  all                                                               
states the jurisdiction to enforce  federal law in federal court.                                                               
Federal  law  restricts  the  collection  of  indirect  purchaser                                                               
damages  under the  "Illinois Brick"  rule previously  mentioned.                                                               
The  federal law  has  not  been repealed  so  the Alaska  cannot                                                               
pursue indirect damages in those cases.                                                                                         
                                                                                                                                
3:39:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON asked  whether  the state  is limited  to                                                               
indirect damages in state court.                                                                                                
                                                                                                                                
MR. SNIFFEN clarified  the state could pursue  state court claims                                                               
in  federal court,  referred to  as pendent  jurisdiction claims,                                                               
that   follow  along   with  federal   court  action.     Pendent                                                               
jurisdiction  refers  to  the  court's  authority  to  adjudicate                                                               
claims  it could  not  otherwise hear.   The  state  has had  the                                                               
authority to  pursue pendent jurisdiction claims  since 2006 when                                                               
the price-fixing law passed.                                                                                                    
                                                                                                                                
3:40:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON  asked  for further  clarification.    He                                                               
related his  understanding that the  state can bring  action even                                                               
though  the federal  law  prohibits  individuals from  initiating                                                               
claims.                                                                                                                         
                                                                                                                                
MR. SNIFFEN  acknowledged that  this is a  little confusing.   He                                                               
referred  to  the  DRAM  computer  chip case  which  was  a  case                                                               
initiated in  a California Federal  District Court  as previously                                                               
mentioned.   In that case  Alaska and  30 other states  joined in                                                               
the  lawsuit.   When  Alaska  joined  the  lawsuit, it  filed  an                                                               
amended  complaint that  included  a section  that contained  all                                                               
Alaskan  claims.   In that  case, the  conduct occurred  prior to                                                               
enactment  of  the  Alaska  "Illinois  Brick"  repealer  statute.                                                               
Therefore, Alaska  was not  allowed to  join the  federal lawsuit                                                               
since it  could not  pursue damages on  behalf of  the consumers.                                                               
He  reported  that  prior  to  the  state  being  precluded  from                                                               
participating  in the  federal antitrust  case the  state settled                                                               
some claims  on behalf of consumers  and is still in  the process                                                               
of  recovering  those settlement  amounts.    However, all  other                                                               
states with "Illinois Brick" repealers  were able to assert their                                                               
claims.  In  those instances the federal court  has been applying                                                               
state law in federal court, he said.                                                                                            
                                                                                                                                
3:41:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON  related  his understanding  that  Alaska                                                               
needs this authority.                                                                                                           
                                                                                                                                
MR. SNIFFEN  responded that it would  help in cases in  which the                                                               
state decided not  to pursue claims and for  global settlement in                                                               
cases with private class action  lawsuits that have joined in the                                                               
case.   Currently,  the AG  cannot  settle those  types of  cases                                                               
since only the  AG can represent the individual, he  said.  Given                                                               
that the  AG often represents  state agencies, the  AG frequently                                                               
leaves it  to the class  action lawsuits to  represent individual                                                               
consumers.   He thought the  authority would help in  some cases,                                                               
but would be  curious to see if more consumers  filed lawsuits if                                                               
they were allowed to do so.                                                                                                     
                                                                                                                                
3:43:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER referred  to page  4  of Version  M.   He                                                               
asked whether  other states with the  "Illinois Brick" provisions                                                               
use  statistical  sampling  as   a  means  to  recover  aggregate                                                               
damages.   He  also referred  to  the chart  in members'  packets                                                               
titled "Explicit Indirect Purchaser  Antitrust Claim Statutes" to                                                               
the states  listed in red.   He further asked  whether revocation                                                               
of business charter  or license provision in  proposed Section 12                                                               
are  common  elements  of  those  states  with  private  indirect                                                               
purchaser actions authorized.                                                                                                   
                                                                                                                                
MR. SNIFFEN answered yes and no.   He explained that the proposed                                                               
Section 12  enforcement provision which authorize  the forfeiture                                                               
or suspension  of a business  license is  unique in Alaska.   The                                                               
aggregate  damages in  proposed  Section 10  are  common in  most                                                               
repealers  since it  makes calculating  damages a  lot easier  by                                                               
using aggregate  sampling.  The  state can take a  certain number                                                               
of sales and calculate the  average harm to each consumer instead                                                               
of  having to  determine how  much each  person paid  for his/her                                                               
computer, he said.                                                                                                              
                                                                                                                                
3:45:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHENAULT asked for the  average cost for the state                                                               
to intercede in these cases.                                                                                                    
                                                                                                                                
MR. SNIFFEN answered that he was  unsure.  He agreed that it uses                                                               
Department of  Law's resources  to intercede  on behalf  of state                                                               
agencies   in  instances   when   the   AG's  office   determines                                                               
significant harm  to the state  has occurred.  He  considered the                                                               
effort  as  effort  to  recover   damages  the  state  would  not                                                               
otherwise recover.  He reiterated that  he was unsure if it would                                                               
cost  less if  private parties  were  involved.   He thought  the                                                               
state  may  have  decided  to  pursue cases  anyway,  but  it  is                                                               
possible the  state may allow  the private parties to  pursue the                                                               
claim if  the state thought it  was an effective way  to stop the                                                               
conduct and still obtain recovery for consumers.                                                                                
                                                                                                                                
3:46:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON asked  whether this bill would  add to the                                                               
case load of the court system.                                                                                                  
                                                                                                                                
MR. SNIFFEN  answered that  it is  hard to  predict.   He thought                                                               
allowing private  parties may add  a few  case but the  number of                                                               
cases would be fairly limited.                                                                                                  
                                                                                                                                
REPRESENTATIVE  JOHNSON asked  whether  people would  be more  or                                                               
less likely to settle when fines are increased.                                                                                 
                                                                                                                                
MR.  SNIFFEN  responded  that  this bill  does  not  address  the                                                               
penalty  provisions.   He agreed  a  balance exists  in terms  of                                                               
litigation  and  settlement.   Thus,  exposure  to penalties  and                                                               
fines could  act as  an incentive to  either settle  or litigate.                                                               
He suggested  the outcome  depends on  many things  including the                                                               
size of company,  the issues, and the level of  importance to set                                                               
precedent for  other cases.   He related  that in  his experience                                                               
states  with  stronger  enforcement  tools seem  to  settle  more                                                               
quickly and favorably.                                                                                                          
                                                                                                                                
3:48:09 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON  referred to  page  4,  to  proposed Section  12  of                                                               
Version M.   He  asked whether this  sampling indicated  would be                                                               
similar  to  the federal  Medicare  reimbursement  sampling.   He                                                               
recalled that  the sampling may  determine 3 of 100  billings are                                                               
not accurate but  the formula assumes the  remaining billings are                                                               
in line with sampling.                                                                                                          
                                                                                                                                
MR. SNIFFEN answered yes, the process would be similar.                                                                         
                                                                                                                                
3:49:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHENAULT  asked him  to predict whether  this bill                                                               
might  add  to  additional  individual  lawsuits.    He  recalled                                                               
watching  late night  television advertising  in which  attorneys                                                               
offered to  represent clients who  had suffered from  exposure to                                                               
various chemicals or  products.  He expressed concern  that if HB                                                               
72 passed  it could create burgeoning  class-action lawsuits that                                                               
might  ensue at  the  state level  and its  impact  on the  court                                                               
system.  He referred to the  zero fiscal note in members' packets                                                               
and reiterated his concern of the costs to the court system.                                                                    
                                                                                                                                
MR. SNIFFEN responded that he did  not think HB 72 would increase                                                               
the number  of lawsuits the AG's  office would file.   He offered                                                               
his belief that late night  advertising by attorneys would happen                                                               
anyway  but currently  these  lawyers  cannot represent  Alaskans                                                               
whereas under the bill they could  do so.  In further response to                                                               
Representative Chenault, he  said he was unsure  if more lawsuits                                                               
would be  filed in Alaska.   He thought  it was more  likely that                                                               
the  lawsuits  would  be  filed elsewhere  and  the  court  would                                                               
certify  the   class  that  includes  Alaska's   consumers.    He                                                               
suspected  it  would not  substantially  increase  the number  of                                                               
cases.                                                                                                                          
                                                                                                                                
REPRESENTATIVE CHENAULT  remarked that  anytime the  court system                                                               
is involved it costs money.                                                                                                     
                                                                                                                                
3:52:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON  expressed concern  that price  fixing may                                                               
have  happened with  respect to  gasoline  costs in  Alaska.   He                                                               
asked whether  individual citizens could  join in a lawsuit  on a                                                               
"witch hunt."  He pointed out  the state has three oil producers.                                                               
He asked  whether 20  people could  file a  lawsuit in  which gas                                                               
stations or refineries would be affected.                                                                                       
                                                                                                                                
MR. SNIFFEN answered yes.  He  agreed this could represent a risk                                                               
since  consumers buy  gasoline.   If  one of  the refineries  was                                                               
engaging  in price-fixing  conduct and  had conspired  with other                                                               
refineries or  suppliers to fix  prices.  He said  the additional                                                               
costs would be  passed on through the  distributors, the jobbers,                                                               
and the  retail stations  to consumers.   The consumers  would be                                                               
the  recipient of  the  price-fixed product  and  as an  indirect                                                               
purchaser.  He  related that it would be  difficult for consumers                                                               
to  pursue cases  against the  producers since  they do  not have                                                               
direct dealings  with them.  He  pointed out that the  gas itself                                                               
does not change.  This bill  would clearly remove any barrier and                                                               
allow consumers in most cases to pursue price-fixing claims.                                                                    
                                                                                                                                
3:55:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON asked  whether  consumers  could sue  the                                                               
State of  Alaska (SOA) since  it sells  royalty oil to  the North                                                               
Pole refinery in the event of allegations of price fixing.                                                                      
                                                                                                                                
MR. SNIFFEN  answered that he  was unsure since that  issue would                                                               
be more  complicated to sort through.   He said he  did not think                                                               
it would  happen since  the SOA  enjoys immunity.   Even  so, the                                                               
parties  would not  likely  be  successful if  they  did sue  the                                                               
state.   He  offered his  belief  that merely  supplying the  oil                                                               
would not generate  a cause of action so consumers  would have to                                                               
find  some other  problem.   He reiterated  that the  state would                                                               
likely  have immunity.   In  response to  Representative Johnson,                                                               
reducing the cost of fuel  to Fairbanks residents would not apply                                                               
to  this bill.    This  bill would  merely  allow  for a  private                                                               
individual to bring claims in addition to the AG.                                                                               
                                                                                                                                
3:57:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON asked  for further  clarification on  the                                                               
scenario since  he viewed  the SOA selling  royalty oil  for less                                                               
than fair value would represent grounds  for a lawsuit.  He added                                                               
that  his scenario  would also  include a  Tesoro station  buying                                                               
from an  independent oil  refinery.  He  asked whether  the state                                                               
would be  subject to  numerous lawsuits filed  by people  who are                                                               
inclined  to think  that price  fixing is  involved since  Alaska                                                               
only has one refinery.                                                                                                          
                                                                                                                                
MR.  SNIFFEN said  he was  unsure.   He acknowledged  that HB  72                                                               
would provide  a cause  of action that  does not  currently exist                                                               
for  any  consumers  who  suffer indirect  damages.    Under  the                                                               
scenario, just  given if an  antitrust claim of indirect  harm is                                                               
made based on  upstream activity, the AG would be  the only party                                                               
that  could bring  the  claim.   This  bill  would allow  private                                                               
individuals  an  opportunity  to  bring  the  claim  if  indirect                                                               
damages resulted from  upstream conduct.  In  further response to                                                               
Representative Johnson,  he answered  that it  would be  a policy                                                               
call to determine whether the bill created any undue risk.                                                                      
                                                                                                                                
3:58:57 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON  related  that  about  a year  and  a  half  ago  he                                                               
contacted the AG's  office with respect to a  price gouging bill.                                                               
The  AG's  office  investigated the  matter  including  examining                                                               
activities  of Tesoro  Alaska Company  (Tesoro)  and Flint  Hills                                                               
Resources (Flint Hills) but did not  find any issues.  He further                                                               
recalled  the House  Judiciary Standing  Committee also  reviewed                                                               
Alaska's gasoline  prices.   During this  time the  committee did                                                               
not have an antitrust bill before either committee, he stated.                                                                  
                                                                                                                                
REPRESENTATIVE  JOHNSON remarked  on the  level of  confidence he                                                               
has  with Mr.  Sniffen.   He was  concerned about  expanding this                                                               
beyond the AG's ability to file lawsuits.                                                                                       
                                                                                                                                
4:00:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  asked  whether  the  SOA  is  immune  to                                                               
antitrust violations.                                                                                                           
                                                                                                                                
MR.  SNIFFEN answered  that the  answer is  somewhat complicated.                                                               
He  stated   that  generally  speaking  state   legislatures  can                                                               
authorize  price  fixing  in  some   instances,  which  is  fine.                                                               
However,  if  the  SOA  acts   like  a  competitor  as  a  market                                                               
participant,  the  SOA  would  be   subject  to  antitrust  laws.                                                               
However, when  the SOA actively engages  and authorizes activity,                                                               
that type  of conduct  falls under a  doctrine which  affords the                                                               
state immunity.                                                                                                                 
                                                                                                                                
REPRESENTATIVE JOHNSON asked whether the  SOA would be subject to                                                               
antitrust issues as  a result of tax credits given  to Cook Inlet                                                               
producers.                                                                                                                      
                                                                                                                                
MR. SNIFFEN answered  not to his knowledge.  He  indicated he has                                                               
not studied the  issue but he did not think  any antitrust issues                                                               
were raised.                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON  asked for clarification, noting  that one                                                               
member, Representative Holmes, is shaking her head no.                                                                          
                                                                                                                                
REPRESENTATIVE CHENAULT offered his  belief that tax credits were                                                               
not  exclusively offered  to any  one  company.   He referred  to                                                               
Flint  Hills and  asked  whether the  royalty oil  is  sold at  a                                                               
premium rate.                                                                                                                   
                                                                                                                                
MR.  SNIFFEN agreed  the  cost of  the oil  sold  to Flint  Hills                                                               
Refinery  has been  at a  premium rate  and not  a discount.   In                                                               
further response  to Representative Chenault, he  reiterated that                                                               
royalty oil was sold at a premium rate.                                                                                         
                                                                                                                                
4:03:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON asked  for clarification  on whether  any                                                               
issue would  result if the  SOA sold  its royalty oil  below that                                                               
cost as result of policy decisions.                                                                                             
                                                                                                                                
REPRESENTATIVE  CHENAULT asked  to  state for  the public  record                                                               
that  the Cook  Inlet oil  is  sold at  a  premium and  not at  a                                                               
discount.                                                                                                                       
                                                                                                                                
4:04:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER asked for the  general value of direct and                                                               
indirect damages in antitrust violations.                                                                                       
                                                                                                                                
MR. SNIFFEN  answered that he  did not  have any exact  splits or                                                               
percentages.   He stated  that the  federal courts  pursue direct                                                               
damages.  He was unsure of  the proportion of direct and indirect                                                               
damages,  noting that  the indirect  damages come  primarily from                                                               
states, which he thought were fairly significant.                                                                               
                                                                                                                                
4:05:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MAX GRUENBERG,  Alaska State  Legislature, stated                                                               
that  he did  not recall  any "blue"  states, or  states with  no                                                               
express  statute,  authorized  via  case  law  on  the  chart  in                                                               
members' packets,  titled "Explicit Indirect  Purchaser Antitrust                                                               
Claim Statutes."   He pointed out  that the map indicates  22 red                                                               
states, 8  Brick states, 5 blue  states and 15 gray  states.  The                                                               
previous  chart Mr.  Sniffen referred  to  was a  chart used  for                                                               
prior legislation that gave the  AG the authority to take action.                                                               
This  bill   would  simply  extend  that   authority  to  private                                                               
individuals.  He stated that HB  72 would not cause any new cause                                                               
of action, but  would allow a broader group of  people to be able                                                               
to bring  the same cause of  action.  He offered  his belief that                                                               
this  is  particularly   important  because  the  Commercial/Fair                                                               
Business  Section  or  "consumer protection"  section  is  fairly                                                               
small.  The  result is that in many instances  the cases the AG's                                                               
office pursues  involve national  corporations.  This  bill would                                                               
allow citizens  in any of the  "red" states, such as  Nebraska or                                                               
California  to join  the lawsuit.   The  legend for  "red" states                                                               
reads, "AG & Private Indirect  Purchaser Actions Authorized." The                                                               
other states'  citizens would be  added to any lawsuit  filed but                                                               
the respective state laws would apply.                                                                                          
                                                                                                                                
4:08:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  recapped the process.   Generally these                                                               
cases   are   filed  in   federal   court   based  on   diversity                                                               
jurisdiction.   This rule would  apply in the event  that certain                                                               
thresholds were met  to resolve disputes between  the citizens of                                                               
different  states.   Nevada's citizens  would  proceed under  the                                                               
Nevada law.   Nebraska's citizens  would join the lawsuit.   This                                                               
bill  would allow  the Alaskans  to join  in under  Alaska's law.                                                               
Currently,  Alaska's citizens  are  precluded from  doing so,  he                                                               
said.  Since  computer chips are sold by "Best  Buy" all over the                                                               
country, it seems unfair to Alaskans  when people in the Lower 48                                                               
can sue  and be made whole  but Alaskans cannot.   He offered his                                                               
belief Alaska  should protect  its citizens  and there  isn't any                                                               
reason not to do so.                                                                                                            
                                                                                                                                
4:09:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  answered   a  question  Representative                                                               
Johnson  previously   asked  with  respect  to   the  legislature                                                               
determinations.   He clarified when something  is permitted under                                                               
state  law it  is not  illegal.   The fact  that the  activity is                                                               
permitted  under  the  law  also provides  the  SOA  an  absolute                                                               
defense.   The antitrust law  protects against  illegal collusion                                                               
and allows  parity but is  not designed to create  an impediment.                                                               
He  related  his understanding  this  type  of law  represents  a                                                               
national trend.                                                                                                                 
                                                                                                                                
4:11:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG   related  a  scenario  in   which  two                                                               
companies from  another country  are colluding.   He  recalled an                                                               
earlier question as to whether the  companies can be sued and the                                                               
answer  is yes,  so  long  the action  occurred  in  Alaska.   He                                                               
referred to  Alaska Statutes AS  09 to a  jurisdictional statute,                                                               
which indicates  that when the  legal activity happens  in Alaska                                                               
or affects Alaskan consumers, that  the state has jurisdiction to                                                               
apply state  law if  the case  is filed in  Alaska.   The statute                                                               
allows  Alaska law  and  the courts  of Alaska  to  reach to  the                                                               
maximum extent  constitutionally permissible.   He  recalled that                                                               
California's civil  code simply says  it has jurisdiction  to the                                                               
maximum extent  constitutionally permissible.   He  recalled that                                                               
has   been  how   Alaska's  antitrust   statute  has   also  been                                                               
interpreted.  He  further recalled a question  arose with respect                                                               
to collection  of a  judgment on  a case filed  in Nebraska.   He                                                               
offered his belief that the  consumer would likely obtain a money                                                               
judgment rather than an injunction.                                                                                             
                                                                                                                                
4:13:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  pointed  out  that  the  divesture  of                                                               
business  licenses has  specifically been  modeled after  Idaho's                                                               
law.   He  said was  not aware  of any  instance in  which "we're                                                               
inventing  the wheel."   He  referred to  two statutes  in Alaska                                                               
Statutes that  applies.  He  explained that in  AS 09.30.200-270,                                                               
the Uniform  Enforcement of Foreign  Judgments Act would  allow a                                                               
party to register an Alaska  judgment in another state and obtain                                                               
a  writ  of  execution.    He further  explained  that  this  was                                                               
designed  to domesticate  the judgment  and is  very simple.   He                                                               
related that virtually all states  have adopted this uniform act.                                                               
Secondly,  of  the  action  happens in  a  foreign  country,  the                                                               
Uniform Foreign Money Judgments Recognition  Act would apply.  He                                                               
offered his  belief that  this act would  allow enforcement  of a                                                               
foreign money judgment from another country.                                                                                    
                                                                                                                                
[HB 72 was held over.]                                                                                                          

Document Name Date/Time Subjects
SB23 Draft Proposed CS ver G.pdf HL&C 4/11/2011 3:15:00 PM
SB 23
SB23 Opposing Documents - Email Jerry LaVine with attachment 4-8-2011.pdf HL&C 4/11/2011 3:15:00 PM
SB 23
SB23 Supporting Documents - States With Film Tax Credits.pdf HL&C 4/11/2011 3:15:00 PM
SB 23
HB72 Supporting Documents - Flow Chart AAG Sniffen.pdf HL&C 4/11/2011 3:15:00 PM
HB 72
HB72 Supporting Documments - Illinois Brick Repealer Map.pdf HL&C 4/11/2011 3:15:00 PM
HB 72
SB23 Letter - DCCED to Rep Johnson 4-11-11.pdf HL&C 4/11/2011 3:15:00 PM
SB 23
SB23 Letter - Rep Johnson to Commissioner Bell 4-10-2011.pdf HL&C 4/11/2011 3:15:00 PM
SB 23