Legislature(2003 - 2004)
05/08/2004 09:04 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 56(L&C)
"An Act relating to the award to the state of actual
reasonable attorney fees and costs, including costs of
investigation, in certain court actions relating to unfair
trade practices; and amending Rules 54(d), 79, and 82, Alaska
Rules of Civil Procedure."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated that this bill would allow the State to
recover enforcement, investigation, and court costs when the State
prevails in a Court case against a party that has violated Alaska
Consumer Law. He noted that a Department of Law fiscal note
accompanies the bill.
REPRESENTATIVE LES GARA, sponsor of the bill, informed the
Committee that Alaska, with three half-time attorneys, has the
smallest Consumer Protection Agency in the nation, and that, due to
insufficient funding, the Agency is limited in what it is able to
accomplish. He reminded the Committee that in 1997, Senator Dyson
had filed a bill with the intent of boosting Agency funding without
increasing the demand for additional State funds. Version 23-
LS0300\I of this bill, he stated would further the intentions of
that earlier bill by allowing the State, when it prevails in a
consumer fraud case under the State's consumer protection laws of
the Unfair Trade Practices Act, to collect reasonable attorney
costs as determined by the Court, as well as the investigation
expenses associated with the case.
Representative Gara explained that, currently, beyond the fines
that are levied when the State prevails in a case, the State
receives an average of 20-percent of its attorney expenses and none
of its investigation expenses. Passage of this legislation, he
declared, would assist in offsetting Agency expenses by collecting
funds from individuals who have violated consumers' trust or who
have, through dishonest means, undermined a law abiding business
competitor. These funds, he communicated, would be used to support
and expand the program. Therefore, he concluded that were the bill
adopted, the State would be allowed when it prevailed in a case, to
recoup expenses and thereby demonstrate that the Agency is a cost
effective function. In addition, he attested, that the funds
generated by this legislation could be used to expand staffing in
order to pursue more cases with "no net cost to the State." He
pointed out that the Department of Law's zero fiscal note, Fiscal
Note #1, specifies that the bill would not incur any additional
expenses to the State and could generate an indeterminate amount of
revenue.
Senator Dyson understood that the State currently only prosecutes
cases in which a consumer fraud case involves a pattern of multiple
victims. Continuing, he asked whether any mechanism is in place
through which to protect small businesses from frivolous lawsuits.
Representative Gara affirmed that, due to staffing constraints, the
Agency currently pursues cases in which there is a pattern of abuse
such as a situation involving a senior care facility in which there
are multiple victims as opposed to a single situation in which, for
example, a used car salesman makes untrue statements about a
vehicle he sold someone.
Representative Gara clarified that the components of this bill
would be limited to those situations involving the State rather
than being applicable to business against business lawsuits. He
stated that were the State involved in what might be a frivolous
lawsuit, a determination regarding the merits of the case would be
made. He assured that those administering the State's Unfair Trade
Practices Act do a "pretty good job" in regard to which cases are
processed and that Legislators would "express some outrage" were
the State to undertake a frivolous lawsuit.
CYNTHIA DRINKWATER, Assistant Attorney General, Commercial/Fair
Business Section, Consumer Protection Unit, Department of Law,
spoke in favor of the bill.
Senator Dyson voiced appreciation for the efforts involved in the
bill. He noted that, when similar legislation was proposed in the
past, it proposed to "empower" both the private sector and the
public sector to recover costs were they to prevail in a consumer
fraud lawsuit; however, he noted that the time, that language was
eliminated from the bill. He expressed delight in the fact that
language enabling the State to recoup damages is being pursued
through this legislation.
Co-Chair Wilken asked regarding a suggestion offered by Senator
Ralph Seekins to amend the bill, during its Senate Judiciary
Committee hearing.
Representative Gara explained that Senator Seekins proposed to
amend the bill in a manner similar to a federal anti-trust law that
would hold the State responsible for expenses in a consumer fraud
lawsuit were it to not prevail. He stated that while this might
sound like "a balanced deal," it would serve "to kill the consumer
protection function" in the Department of Law. Continuing, he
stressed that these cases are pursued to address consumer fraud
situations to which "we all abhor," and were the State, with its
limited staff and funding, to lose a case based on a technicality
or due to an unreliable witness, it would serve to create
"hesitancy" on the part of the Agency to take a case and might "set
back the function" of the Agency. Therefore, he urged the Committee
not to further that amendment.
Senator Dyson moved to report the bill from Committee with
individual recommendations and accompanying fiscal notes.
There being no objection, CS HB 56(L&C) was REPORTED from Committee
with indeterminate fiscal note #1, dated April 21, 2003 from the
Department of Law.
| Document Name | Date/Time | Subjects |
|---|