Legislature(1995 - 1996)
02/14/1996 01:07 PM House JUD
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HOUSE JUDICIARY STANDING COMMITTEE
February 14, 1996
1:07 p.m.
MEMBERS PRESENT
Representative Brian Porter, Chairman
Representative Joe Green, Vice Chairman
Representative Con Bunde
Representative Bettye Davis
Representative Al Vezey
Representative Cynthia Toohey
Representative David Finkelstein
MEMBERS ABSENT
None
COMMITTEE CALENDAR
HOUSE BILL NO. 109
TITLE: "An Act relating to telephone directory listings and
solicitations."
- CSHB 109(JUD) PASS OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 109
SHORT TITLE: TELEPHONE DIRECTORY LISTING/SOLICITATIONS
SPONSOR(S): REPRESENTATIVE(S) BROWN,Navarre,B.Davis
JRN-DATE JRN-PG ACTION
01/23/95 115 (H) READ THE FIRST TIME - REFERRAL(S)
01/23/95 116 (H) LABOR & COMMERCE, JUDICIARY
01/26/95 148 (H) COSPONSOR(S): B.DAVIS
04/28/95 (H) L&C AT 3:00 PM CAPITOL 17
04/28/95 (H) MINUTE(L&C)
05/01/95 (H) L&C AT 3:00 PM CAPITOL 17
05/01/95 (H) MINUTE(L&C)
05/04/95 1849 (H) L&C RPT CS(L&C) 5DP 2NR
05/04/95 1849 (H) DP: KOTT, ROKEBERG, KUBINA, PORTER
05/04/95 1849 (H) DP: ELTON
05/04/95 1849 (H) NR: MASEK, SANDERS
05/04/95 1849 (H) ZERO FISCAL NOTE (DCED)
02/12/96 (H) JUD AT 1:00 PM CAPITOL 120
02/14/96 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
DAVEED SCHWARTZ, Assistant Attorney General
Commercial Section
Department of Law
1031 W 4th Avenue, Suite 200
Anchorage, Alaska 99501-1994
Telephone Number: (907) 269-3697
POSITION STATEMENT: Provided information regarding HB 109
ACTION NARRATIVE
TAPE 96-20, SIDE A
Number 000
CHAIRMAN BRIAN PORTER called the House Judiciary committee meeting
to order at 1:07 p.m. Members present at the call to order were
Representatives Green, Bunde, Toohey, Vezey and Finkelstein.
Representative Davis arrived at 1:09 p.m.
HB 109 - TELEPHONE DIRECTORY LISTING/SOLICITATIONS
CHAIRMAN PORTER informed those present that this was a continued
hearing on HB 109 and invited Representative Brown to the table.
He also noted that Daveed Schwartz from the Department of Law,
would provide information from Anchorage by speaker phone.
Number 140
DAVEED SCHWARTZ, Assistant Attorney General, Consumer Protection
Enforcement, testified that part of his responsibilities as
Assistant Attorney General includes enforcing Alaska's telephonic
solicitations statute at AS 45.63.00, which was enacted in 1993.
Since this time, the department has had quite a lot of experience
regulating telemarketers. They've found that the vast majority of
these telemarketers are from outside the state. Alaska is more a
victim state, rather than one which houses telemarketer operations,
in contrast to state's such as Georgia, Nevada, Florida and
California.
MR. SCHWARTZ stated that Alaska has never had their regulations
challenged by out of state telemarketers, either in the area of
jurisdiction which is provided for under a long arm jurisdiction
statute at AS 09.05.015, or on federal pre-emption grounds. He
felt as though HB 109 would attempt to regulate many of the same
telemarketers which the state already regulates under AS 45.63.00,
by imposing a "do not call" provision under the Consumer Protection
Law. Mr. Schwartz also outlined that there were federal laws which
deal with "do not call," provisions, one of which is entitled the
Telephone Consumer Protection Act of 1991. This is enforced by the
Federal Communications Commission. He noted a more recent act
entitled, The Telemarketing and Consumer Fraud and Abuse Prevention
Act, which was enacted in 1994. The provisions of this act are
enforced by the Federal Trade Commission, which just promulgated
regulations that went into effect December 31, 1995. Mr. Schwartz
noted that the "do not call" provisions in each of these laws are
very similar.
MR. SCHWARTZ referred to questions raised in the previous meeting
of the House Judiciary Committee, as to whether or not federal law
would preempt the state of Alaska's regulating their interstate
calls. He felt as though this was grey area at best. In
Congress's most recent pronouncement outlined in The Telemarketing
and Consumer Fraud and Abuse Prevention Act, Congress regulates
through the federal Trade Commission, interstate calls. They do
have a "do not call" provision in this act. Additionally, part of
this federal statute says that, "Nothing contained therein, shall
prohibit an authorized state official from proceeding in state
court on the basis of an alleged violation of any civil or criminal
statute of such state." This is Congress's pronouncement
concerning possible peremption in relation to regulating interstate
calls. Under this particular statute it would be a fair
interpretation to say that states can also enact (indisc.), which
would have an effect of regulating interstate as well as, out-of-
state calls.
Number 430
MR. SCHWARTZ said he was unable to find any cases which indicated
that there was some type of federal pre-emption of a state's
efforts to prohibit telemarketers from calling those individuals
who do not wish to receive calls. Florida, among other states, has
a statute which does much of what CSHB 109 seeks to do. This
Florida law has been on the books since 1991 and was actually
enacted prior to the Federal Telephone Consumer Protection Act.
There has never been a challenge to the Florida law on either
jurisdictional or federal pre-emption grounds. Although, there's
no iron-clad guarantee that Alaska can insulate themselves from a
federal pre-emption attack, he thought that it was fair to say that
this is a grey area in terms of federal pre-emption and an argument
could certainly be paid that Alaska can, like other states, under
their telephonic registration acts, regulate interstate calls for
this purpose. In terms of asserting jurisdiction, as long as the
telemarketer consummates a sale of goods over the phone, there
shouldn't be any problem asserting jurisdiction allowed under AS
09.05.015.
Number 593
REPRESENTATIVE AL VEZEY asked Mr. Schwartz to explain Alaska's
long-arm intervention statute. How does this work and what success
has Alaska had in trying to impose these laws on these non-resident
businesses.
MR. SCHWARTZ answered that the state has had quite a lot of success
in imposing their telephonic solicitation registration requirements
on out-of-state telemarketers. He used an illustration of a San
Diego, California telemarketer who attempted to continue their
efforts without registering with the Alaska Department of Law,
which is required under AS 45.63.00. He went to court against this
company and obtained a permanent injunction against them in March
of last year. They have now challenged a portion of this
injunction in the Alaskan Supreme Court, but in raising the many
other arguments in relation to this suit, they have not raised a
challenge to Alaska's jurisdiction over them. AS 09.05.015 which
relates to personal jurisdiction allows the state to serve an out-
of-state defendant and then bring them into court to answer and
defend against law suits the state might bring. This company was
served in San Diego through the rules of civil procedure. It's a
recognized principle in civil procedure across the nation that if
a state can serve an out-of-state defendant and if this state's
statute permits this assertion of jurisdiction over an out-of-state
defendant to the maximum extent allowed under the due process
clause of the 14th amendment of the U.S. Constitution, which the
Alaska statute does, then jurisdiction is appropriate under these
circumstances.
Number 825
CHAIRMAN PORTER asked where a hearing is required to take place
when the telemarketer is from out-of-state.
MR. SCHWARTZ pointed out that as long as Alaska can establish
service on the out-of-state telemarketer, the hearing would take
place in Alaska, by filing a complaint in state Superior Court.
This is done routinely.
CHAIRMAN PORTER asked how does Alaska then enforce this judgment
after they are able to prevail.
MR. SCHWARTZ said that they obtain an injunction from the court
under the Consumer Protection Act. This injunction usually
prohibits a telemarketer from engaging in telephonic solicitations
to Alaska without first registering with the Department of Law. If
the telemarketer continues to violate this law, as well as the
court's injunction, instead of subjecting itself to a civil penalty
of up to $5,000 per violation, they can subject themselves to a
civil penalty of up to $25,000 per violation of a court injunction.
The court would impose a civil penalty in the form of a judgment
and then the state would be in the position to execute on this
judgment if the telemarketer did not pay the civil penalty. Alaska
is able to do this even if a defendant is located out-of-state.
Number 1111
REPRESENTATIVE VEZEY asked if this San Diego Case was the only case
that he had taken to court.
MR. SCHWARTZ pointed out that the telemarketing law has been on the
books since 1993. This San Diego case was the first and only case
which the state has had to bring because on every other occasion
other telemarketers have relented. Mr. Schwartz has sent over 100
cease and desist, warning letters to telemarketers, all of whom
were located out-of-state and he's obtained more than $430,000 in
refunds for consumers in Alaska in the last 12 months or so from
these telemarketers. The state has filed many assurances of
voluntary compliance documents with the court, in which the
telemarketers agree to do all sorts of things to help consumers as
a result of their violations of the law. This San Diego case is on
appeal at the Alaska Supreme Court, but not related to the issues
of federal pre-emption or personal jurisdiction under Alaska's long
arm statute.
Number 1035
REPRESENTATIVE TOOHEY asked Mr. Schwartz how the state obtained the
names of these telemarketing companies.
MR. SCHWARTZ noted that after the state Attorney General's lost
most of their funding for consumer protection complaint
investigations, they negotiated a complaint referral and
information sharing agreement with the Better Business Bureau of
Alaska in 1991. This agreement is still in effect. The state has
a long standing working relationship with the Better Business
Bureau which handles most of the individual complaints from
consumers in Alaska, they then refer patterns of complaints to the
attorney general's office for enforcement, where the Better
Business Bureau is unable to mediate complaints. The department
immediately acts to send a cease and desist warning letter whenever
they receive a referral from the bureau.
Number 1035
REPRESENTATIVE VEZEY wondered how they are able to get an address
of where these telemarketers are located.
MR. SCHWARTZ said that typically what happens is the people who
complain to the Better Business Bureau are those who have actually
made a purchase or have at least received some literature from the
telemarketer.
Number 1268
REPRESENTATIVE KAY BROWN responded to some concerns from the
previous committee meeting regarding HB 109. She noted the two
pieces of correspondence distributed at this same meeting from ATU
Communications and the Alaska Telephone Association. She offered
amendment number 1, (F3) which would rectify the areas of concerns
outlined by these two firms. These amendments would apply to the
version (F) of HB 109. The language changes outlined in amendment
1 would read as follows:
Page 1, line 12: Delete "uses" and insert, "originates a telephone
call using";
Page 2, line 2, after ".":, insert, "A residential customer who
requests to be so identified shall pay for the cost of the
identification;
Page 3, line 57, after".":, insert, "The local exchange
telecommunications company may impose a reasonable cost for the
list";
Page 2, line 15 after "(1)", insert, ""charitable organization" has
the meaning given in AS 45.68.900."
REPRESENTATIVE BROWN outlined that the first portion of this
amendment dealt with rectifying a situation where a company might
want to insert an advertizement on a recording that a caller could
hear. This legislation's intent is not to regulate businesses from
using their own phones for advertisements, hence the change as
outlined.
REPRESENTATIVE BROWN spoke to the remainder of the changes outlined
in this amendment number 1, and stated the language used was
implicit and certainly has addressed conversations of record all
along. Representative Brown said she did not have a problem
clarifying these issues further. In regards to defining a
charitable organization, she stated for the record that under AS
45.68.900 a charitable organization is a "non-profit organization
that is (a) operated for the relief of poverty, distress or other
condition of public concern in the state, or (b) the Internal
Revenue Service determines to be a tax-exempt organization under 26
USC 501.C3 Internal Revenue Code." She stated that this bill
builds in a prior relationship exception both for the commercial
operations and for the charities. She felt it made sense to pick
up these other non-profits as well, as accomplished by the
reference to this definition of a charitable organization in
statute.
Number 1525
REPRESENTATIVE CON BUNDE made a motion to move amendment number 1,
(F3) as described by the sponsor. Hearing no objection it was so
adopted.
REPRESENTATIVE BROWN pointed out that amendment number 2 was put
forward as a consideration of policy matters. Mr. Schwartz pointed
out that some of these telemarketers might continue to abuse
persons over a long period of time. Representative Brown looked
for a reasonable side-board on this exception. She pointed out
that what these two proposals outlined in amendment number 2 would
accomplish, would add to both the charitable organization exception
and the to the prior commercial relationship exception the
requirement that this prior relationship needs to be made current
in the last 24 months. This language would serve as a further
limitation. This amendment number 2 would read as follows:
Page 2, line 27, after "who," insert, "within the last 24 months,"
and on Page 3, line 3 delete "previously," and insert, ",within the
last 24 months."
REPRESENTATIVE GREEN made a motion to adopt version (F) for CSHB
109 as the working draft of the bill before the committee. Hearing
no objection it was so moved. Representative Bunde moved again
amendment number 1. Hearing no objection it was so moved.
Number 1645
REPRESENTATIVE BUNDE made a motion that amendment number 2 be
moved. Hearing no objection, it was so adopted.
Number 1656
REPRESENTATIVE BROWN stated that amendment number 3 was a letter of
intent at the request of the Alaska Telephone Association. They
would like the record to reflect that the legislature doesn't
intend that any violation of this law would put any liability on
them. She pointed out that it doesn't make sense to put this
language in the statute because it's a non-issue in her opinion.
She used the following illustration to make her point in the
context of this intent, say for example, under a criminal statute
they wouldn't add, "if anybody uses the phone for the commission of
a crime the phone company's not at fault. Even if someone wanted
to bring suit against the phone company, the amount of money they
would have paid would be so small for this exclusion service.
Number 1721
REPRESENTATIVE FINKELSTEIN moved that CSHB 109 (F) be passed from
the Judiciary Committee with individual recommendations and fiscal
notes as attached with amendments. Hearing no objection, it was so
moved.
Number 1752
REPRESENTATIVE DAVIS made a motion to move the letter of intent as
outlined. Hearing no objection, the letter of intent was adopted.
ADJOURNMENT
CHAIRMAN PORTER adjourned the meeting at 1:35 p.m.
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