Legislature(1999 - 2000)
03/17/2000 01:55 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
March 17, 2000
1:55 p.m.
MEMBERS PRESENT
Representative Pete Kott, Chairman
Representative Norman Rokeberg
Representative Jeannette James
Representative Lisa Murkowski
Representative Eric Croft
Representative Beth Kerttula
MEMBERS ABSENT
Representative Joe Green
COMMITTEE CALENDAR
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 42
"An Act relating to civil liability for certain false or improper
allegations in a civil pleading or for certain improper acts
relating to a civil action; amending Rule 82(b), Alaska Rules of
Civil Procedure; and providing for an effective date."
- MOVED CSSSHB 42(JUD) OUT OF COMMITTEE
HOUSE BILL NO. 253
"An Act establishing a school disciplinary and safety program; and
providing for an effective date."
- SCHEDULED BUT NOT HEARD
SENATE JOINT RESOLUTION NO. 27 am
Proposing amendments to the Constitution of the State of Alaska
relating to revisions of the state constitution and providing that
a court may not change language of a proposed constitutional
amendment or revision.
- SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
BILL: HB 42
SHORT TITLE: CIVIL LIABILITY FOR IMPROPER LITIGATION
Jrn-Date Jrn-Page Action
1/19/99 29 (H) PREFILE RELEASED 1/15/99
1/19/99 29 (H) READ THE FIRST TIME - REFERRAL(S)
1/19/99 29 (H) JUD, FIN
2/16/00 2206 (H) SPONSOR SUBSTITUTE INTRODUCED
2/16/00 2206 (H) READ THE FIRST TIME - REFERRALS
2/16/00 2206 (H) JUD, FIN
2/16/00 2206 (H) REFERRED TO JUDICIARY
2/28/00 (H) JUD AT 1:00 PM CAPITOL 120
2/28/00 (H) Heard & Held
2/28/00 (H) MINUTE(JUD)
3/01/00 (H) JUD AT 1:00 PM CAPITOL 120
3/01/00 (H) Heard & Held
3/01/00 (H) MINUTE(JUD)
3/17/00 (H) JUD AT 1:30 PM CAPITOL 120
WITNESS REGISTER
REPRESENTATIVE ELDON MULDER
Alaska State Legislature
Capitol Building, Room 507
Juneau, Alaska 99801
POSITION STATEMENT: As sponsor of SSHB 42, explained reasons for
changes in Version H and answered questions.
MICHAEL LESSMEIER, Attorney at Law
Lessmeier & Winters, and Lobbyist
for State Farm Insurance Company
431 North Franklin Street, Number 400
Juneau, Alaska 99801
POSITION STATEMENT: Answered questions about SSHB 42, Version H.
ANNE ADASIAK-ANDREW, Acting Executive Director
Alaska Visitors Association
2525 C Street, Suite 400
Anchorage, Alaska 99503
POSITION STATEMENT: Testified in support of HB 42 (version
unspecified) that it will help protect small businesses from
frivolous lawsuits.
ROBERT A. MINTZ, Attorney at Law
550 West 7th Avenue, Suite 1540
Anchorage, Alaska 99501
POSITION STATEMENT: Testifying on SSHB 42, emphasized that under
subsection (b) judgment is entered only to the issue relating to
the false claim; said that whether to exempt the State of Alaska is
a judgment call.
KAREN COWART, General Manager
Alaska Support Industry Alliance
4220 B Street, Suite 200
Anchorage, Alaska 99503
POSITION STATEMENT: Testified in support of HB 42 (version
unspecified) and legislation that addresses the escalating misuse
of legal actions against responsible development in Alaska.
DALE BONDURANT
31864 Moonshine Drive
Soldotna, Alaska 99669
POSITION STATEMENT: Asked a question regarding SSHB 42.
ACTION NARRATIVE
TAPE 00-32, SIDE A
Number 0001
CHAIRMAN PETE KOTT called the House Judiciary Standing Committee
meeting to order at 1:55 p.m. Members present at the call to order
were Representatives Kott, Rokeberg, James, Murkowski, Croft and
Kerttula.
HB 42 - CIVIL LIABILITY FOR IMPROPER LITIGATION
CHAIRMAN KOTT announced that the committee would hear SPONSOR
SUBSTITUTE FOR HOUSE BILL NO. 42, "An Act relating to civil
liability for certain false or improper allegations in a civil
pleading or for certain improper acts relating to a civil action;
amending Rule 82(b), Alaska Rules of Civil Procedure; and providing
for an effective date." He pointed out the new proposed committee
substitute (CS) [Version H] provided to members.
Number 0060
REPRESENTATIVE ELDON MULDER, Alaska State Legislature, sponsor of
SSHB 42, told members the new proposed CS was crafted in response
to concerns expressed by committee members and the Office of the
attorney general. He offered to have Michael Lessmeier, who had
worked with him on addressing those concerns in the legislation,
speak to those issues.
Number 0165
REPRESENTATIVE JAMES made a motion to adopt as a work draft the
proposed CS for SSHB 42, Version H [1-LS0264\H, Ford, 3/17/00].
CHAIRMAN KOTT asked if there was any objection. Hearing none, he
announced that Version H was before the committee. He asked the
committee aide whether the Legislation Information Offices (LIOs)
had been provided a copy of Version H, which she affirmed.
Number 0197
REPRESENTATIVE CROFT asked Representative Mulder whether he
believes Version H is an improvement over SSHB 42.
REPRESENTATIVE MULDER said yes.
REPRESENTATIVE CROFT referred to subsection (g) and inquired about
the reasons for exempting those areas. Subsection (g) read:
(g) This section does not apply to an action
(1) brought by a person incarcerated by the state;
(2) involving divorce or dissolution; or
(3) involving adoption, custody, support, or
visitation of a child.
REPRESENTATIVE MULDER said he believes a good case could be made
why each category shouldn't be included in the provisions here, but
the Department of Law could better address the reasons for listing
incarcerated felons. As to divorce and dissolution, the issues are
a bit different and contentious, and it didn't seem appropriate to
have a punitive side in a divorce. "In essence, in my mind,
there's enough punishment going on in a divorce," he stated. "And
the same thing with custody and support. It was within a family
itself."
REPRESENTATIVE CROFT indicated the exceptions all make some sense
in different ways. He agreed that one probably doesn't want to
determine what happens to a child based on who lied; that should be
based on the best interests of the child.
REPRESENTATIVE MULDER concurred.
REPRESENTATIVE CROFT mentioned civil litigation about the
constitutionality of various legislation passed by the Alaska State
Legislature, particularly regarding abortion. He asked: If the
lawyer representing the state, or one of the intervenors defending
that statute, made a misstatement of fact - defending the abortion
statute but mischaracterizing the number of abortions, for example
- should a judge enter judgment against the state, that the law is
unconstitutional, based on a misstatement in court?
Number 0454
REPRESENTATIVE MULDER answered that first, the misstatement in that
hypothetical situation would have to regard the main point of the
argument. But if that were the case, it should be thrown out
because it is factually incorrect. He pointed out that there is a
remedy, with notification required and 21 days to respond. At the
crux is whether [a statement] is true or not, and how important it
is to the overall outcome or decision.
REPRESENTATIVE CROFT agreed that it must be a material fact. The
question is whether it is important on that issue, whether it is
central or not. He turned attention to civil commitments, where
somebody acts strangely and a family member tries to get that
person committed and to take control of that person's assets.
Representative Croft asked whether the court should commit a person
based on a misstatement or whether it should be based on the
underlying question of whether that person should be managing his
or her own finances.
REPRESENTATIVE MULDER said that is an interesting hypothetical.
However, the central point of this bill is that there should be no
tolerance of misrepresentations of fact. "So to the end that this
allows for the person who is being harmed to be ... further
protected by forcing truth to come forward, I think that you've
probably got your answer," he concluded.
Number 0690
REPRESENTATIVE CROFT pointed out that subsection (b) relates to a
knowing misstatement of a material fact within litigation, for
which the court shall enter judgment on that issue, and that
subsections (a) and (c) have notice provisions. Subsection (b),
within the trial, is where his hypothetical situations relate; if
he made a false statement of a material fact in his own defense in
a civil commitment trial, he believes the judge would have to
commit him because it says "shall enter judgment on that issue."
REPRESENTATIVE CROFT said that while he agrees that there should be
zero tolerance for false statements in court, the question is how
to punish that. Should it be by determining the facts of the
lawsuit, regardless of whether it relates to a commitment,
constitutional issues or other areas? Or should it be with
increased fines, for example?
REPRESENTATIVE MULDER continued with the hypothetical civil
commitment, saying Representative Croft is assuming that the trier
of fact is going to only make that decision upon the
misrepresentation of fact. He stated:
I don't think that's necessarily the case. I think that
the trier of fact is going to look at the bigger picture.
You can be held accountable - financially so - for the
misrepresentation of fact. But I don't think it's a
foregone conclusion that just because you lied in your
defense that your whole case is going to be lost if there
are greater or other issues in it.
Certainly, if your only defense was a lie, you're not
doing a very good job of defending yourself, and I guess
I don't think there's ... much of an argument about this
bill or any other bill that should defend you. ... This
is meant to try and protect those people who tell the ...
truth, and encourage people and ... force people to tell
the truth.
REPRESENTATIVE CROFT said he thinks it does that. However, the
method is to enter judgment on that issue. A jury faced with that
decision on a civil commitment, with an instruction from the judge
that read like subsection (b), could find that a person is
competent but has made a false statement of material fact; under
the jury instruction, the jury would be mandated to enter judgment
against that person.
REPRESENTATIVE MULDER deferred to Mr. Lessmeier.
Number 0923
MICHAEL LESSMEIER, Attorney at Law, Lessmeier & Winters, and
Lobbyist for State Farm Insurance Company, told Representative
Croft he believes a couple of things implicit in his questions
aren't necessarily correct. Subsection (b) applies only to
statements made by a party, not by a representative of the party;
at least one of Representative Croft's hypotheticals dealt with
statements made by an attorney. Mr. Lessmeier pointed out that
many other sections of the bill deal with representatives of a
party as well as a party or people acting behalf of the party.
That distinction was made intentionally, he added.
MR. LESSMEIER continued. He said it also applies to statements
that are intentional, false and material; then the action relates
only to those claims directly related to the false statement.
Although not that familiar with the civil commitment procedure, Mr.
Lessmeier said he understands that that decision is made by a
judge, not by a jury. Furthermore, the statement has to be
material to the issue, and there is great discretion - purposely so
- under this language as to what is material to the issue, what is
intentional, and what the issue is to which it directly relates.
In application, there is great discretion to not take a frivolous
false statement and turn the sanction into something that nobody
would ever contemplate, and to reach a fair, equitable result while
sending message that says, "We don't want people to come into the
courtroom and make intentional false statement of fact that are
material."
Number 1087
REPRESENTATIVE CROFT returned to the hypothetical constitutional
issue he had posed earlier, with the state defending a law in civil
court. He asked who the party would be, then, because the attorney
general would be making representations on behalf of the State of
Alaska. He commented that there is no physical entity of the
government.
MR. LESSMEIER responded that in a sense they are talking about
semantics. The lawyer is not the party, and the attorney general
would take issue as to being the party in any litigation
representing the state. Second, if it were the governor or
somebody representing the state, Mr. Lessmeier said it is difficult
to see how one could make a single statement that would rise to the
level of being material in the context of litigation that involves
all of the citizens of the state, particularly for a constitutional
issue; those issues are seldom decided on specific facts before the
court but more generally involve issues of policy, precedent and
interpretation, for example. "It is hard to imagine a situation
where discretion would be invoked under this provision to decide a
constitutional argument," he added. "I just don't see that as
being realistic, and I don't think that's the intent of this."
Number 1201
REPRESENTATIVE CROFT indicated the House Judiciary Standing
Committee tries to ensure that the words in statutes have a
predictable result that members can feel comfortable with. As to
Mr. Lessmeier's discussion of the discretion under subsection (b)
on page 2 of Version H, lines 8-13, Representative Croft said it
uses the phrase "shall enter judgment," and "shall" is a word that
the legislature uses when there isn't discretion. If something is
found to be intentional, false and material, he doesn't see where
there is any discretion left; this says the penalty is meant to be
that the person loses the lawsuit, as opposed to all kinds of other
penalties that the legislature could describe. The penalty clearly
is taking away the ability of the judge and jury to make a result
according to law and the facts; they have to make it now on the
alleged perjury.
MR. LESSMEIER agreed that when one presupposes that there is a
finding that something is material, intentional and false, and that
it relates to the issue in question, then the discretion is taken
away. However, he submits that there is great discretion in
determining what is material, what is intentional, what is false,
and what those issues relate to. There is also a message: "We
want to protect people from those that would intentionally make
false statements of material fact."
Number 1375
REPRESENTATIVE KERTTULA requested confirmation that the remedy if
one lies - that the case goes against the party - may often impact
other people as well. She said that is a legitimate fear.
REPRESENTATIVE ROKEBERG asked whether that means lying is okay.
REPRESENTATIVE KERTTULA answered no, that it goes to the remedy.
She cited the Cleary case, regarding overcrowding of prisons, as an
example where the ramifications would have created a weird
situation if there had been a lie about the numbers - which would
have been a material fact regarding the existence of overcrowding -
and a subsequent finding against the state because of that. She
suggested perhaps there needs to be an exemption [for the state].
She asked whether that conceivably could be a problem.
MR. LESSMEIER responded that he thinks the answer has to do with
the issue of materiality. He suggested that there is a different
standard of materiality when the lie goes beyond simply the person
making the lie and has to do with a statewide issue. He further
suggested that there is a much different standard of materiality
there, which anyone making that determination would recognize.
REPRESENTATIVE KERTTULA asked, "What is it?"
MR. LESSMEIER answered:
I don't think that ... a judge, for example, that would
be making that determination would find that because
somebody on behalf of the state lied about an issue
involving numbers, that that reached, given the context
of that particular case, a material issue, a level of
materiality that was sufficient to end the litigation
with respect to that issue. I think ... that the concept
of materiality ... is one that is not necessarily rigid,
that purposely was put in here to allow consideration of
the statement in the context that it was made, in
relation to the case that it is made in. ... And that's
why ... we came up with this. ... It is intended not to
be a rigid concept.
REPRESENTATIVE KERTTULA replied that she isn't comfortable with
that. She has dealt with material facts, and if a case were all
about the numbers, she thinks probably one would have to say that
was material.
REPRESENTATIVE MULDER suggested that the numbers in the Cleary case
really weren't the issue. There was a question of what
overcrowding is. There is no standard for overcrowding, he added,
although there may be a national corrections standard. He said the
point gets back to what is material.
REPRESENTATIVE KERTTULA replied that if it were material, though,
then they would wind back in the problem. She indicated she sees
the point, however.
Number 1695
REPRESENTATIVE JAMES expressed frustration with the dialogue. She
said they would be talking about an attorney general making the
case based on numbers. She would fire somebody the next day who
had the wrong numbers, and she doesn't know why this argument is
being made, although it might have some bearing as just an example.
REPRESENTATIVE KERTTULA explained that she was giving the example
because [the state] would lose the case and have judgment entered
against it; that is the remedy. With those examples, when the
state is involved, she isn't sure an exemption isn't needed.
Although she would fire the person too, this is a problem.
REPRESENTATIVE CROFT agreed that the remedy should be to fire that
person and sanction that person in court for lying, for example,
but not to determine policy for the entire corrections system based
on it. The premise of this bill, however, is that the proper
sanction for lying in court is determining the law and the facts
and everything about a lawsuit, and entering judgment based on that
issue, instead of using other penalties such as firing, having
penalties or disbarring. The fundamental issue is whether that is
the direction to go. There could be a bill that increases
penalties or requires mandatory disbarment or increases sanctions.
This bill, however, says that instead of determining lawsuits as
they have always been decided, they will be determined based on who
lied, which would be a fundamental change in English and American
jurisprudence.
REPRESENTATIVE JAMES responded that the system doesn't work. This
giant change is needed to ensure that people don't do that [lie in
legal proceedings], which she believes attorneys and people will
continue to do if they can get away with it.
Number 1740
ANNE ADASIAK-ANDREW, Acting Executive Director, Alaska Visitors
Association (AVA), testified via teleconference from Anchorage.
She informed the committee that the AVA board had voted in support
of HB 42 at their last meeting in February. The largest statewide
nonprofit trade association, representing all facets of the tourism
industry and having more than 500 member businesses, AVA has a full
range of member businesses from small local rafting operators,
wilderness guides and kayaking companies to large airlines and
cruise lines; 90 percent of AVA members are small businesses with
fewer than ten employees and, therefore, AVA believes that the
majority of members would benefit from protection against frivolous
lawsuits.
MS. ADASIAK-ANDREW explained that many [AVA] members live in fear
of frivolous lawsuits because of the time and money it takes to
fight them, which can severely cripple a business or put someone
out of business. Some small businesses have paid off a fraudulent
claimant in order to avoid a drawn-out and expensive legal battle,
and to prevent their insurance rates from rising as a result.
Having to pay off a fraudulent claimant is simply not a fair way to
do business, and it impedes the growth of new businesses in Alaska.
Tourism is growing. Small family-owned tourism operations are
opening each year, including bed-and-breakfasts, restaurants,
kayaking companies and hiking companies. There is a need to
encourage their development and success, and to make it easier to
do business. This bill will help Alaskan businesses get back to
business and will force others to think twice before trying to make
a profit on false claims.
Number 1860
ROBERT A. MINTZ, Attorney at Law, testified briefly via
teleconference from Anchorage. He emphasized that in subsection
(b), judgment is entered only on the issue to which the false
statement relates, not to the entire claim unless the false
statement relates to the only claim in the action; furthermore, if
the action involves multiple claims and the false statement doesn't
apply to all claims, the judgment entered under that section only
applies to the claims to which the false statement directly
relates.
Number 1926
REPRESENTATIVE KERTTULA asked Mr. Mintz if he believes there should
be any concern about the State of Alaska or if there should be an
exemption for the state regarding the remedy.
MR. MINTZ said he believes it is a political question. Litigation
in which the state is a party is not often where this type of
conduct arises. On the one hand is the argument that the state
ought not to be exempt, but on the other hand, shouldn't the state
philosophically be held to the same standard of conduct? He said
it is a judgment call.
Number 1990
KAREN COWART, General Manager, Alaska Support Industry Alliance
testified via teleconference from Anchorage in support of HB 42
(version unspecified), noting that her organization has served as
a statewide nonprofit trade organization for businesses that
provide products and services to the oil and gas industry. The
350-plus members employ more than 29,000 people in Alaska, 25,000
of whom are permanent state residents. Ms. Cowart stated:
The Alaska Support Industry Alliance appreciates
legislative efforts to address the escalating misuse of
legal actions against responsible development in Alaska.
If Alaska is to continue encouraging resource
development, then the state must have an environment that
is at least equitable and fair to investors, and
certainly within our courts of law. We understand that
House Bill 42 would require litigating parties to
research their claims to assure accuracy, or pay the
consequences of suing without just cause. The Alliance
supports such measures.
Alaska has suffered significant economic losses as a few
individuals successfully circumvent public processes
through litigation. It seems that nearly every proposal
or plan to develop the state's natural resources or to
enhance its infrastructure is met with a lawsuit,
regardless of whether there are reasonable grounds to
sue. We believe many such legal actions only serve to
delay developments that are important to Alaskans'
quality of life and our state's economic well-being.
House Bill 42 creates an obligation in statute for
litigants and attorneys to make reasonable efforts to
ensure their claims have a factual bearing before filing
a lawsuit. The bill would also make those that filed a
frivolous suit responsible for assessed damages.
Further, the bill would assign financial liability to
those who try to cloud the issue with false or misleading
claims in hopes of finding a party willing to settle
rather than spend dollars to litigate. We believe each
party in a lawsuit has the responsibility to present
factual and legitimate information. A system that allows
deceit to be awarded is just not right and needs to be
changed. Thank you for the opportunity to provide the
Support [Industry Alliance's] view on this issue.
Number 2093
CHAIRMAN KOTT asked Ms. Cowart whether, as a result of the more in-
depth evaluation and research required in a case, the cost of doing
business for [legal] representation will increase.
MS. COWART replied that when looking at opportunities for
investment in Alaska, the parties that are prepared to invest have
already looked at what is legal and what is proper. Obviously, if
someone comes in and litigates to stop economic development, then
the party that has to protect itself and its future opportunity
will have to go into a lawsuit situation, and it will cost more.
Number 2141
DALE BONDURANT asked a question via teleconference from the Kenai
LIO: Does a person who hires a representative that presents a
falsehood lose? He expressed concern about individuals keeping
their liability down.
CHAIRMAN KOTT answered that he doesn't believe that is the case
because there are protections in the bill for that.
MR. LESSMEIER elaborated, noting that that was an issue
specifically addressed, in part in response to Representative
Croft's concerns expressed at the last hearing. Paragraphs (c)(2)
and (c)(3) apply only against the person who wrongfully initiated
or signed, or who wrongfully participates. Under (c)(2) and
(c)(3), it has to be wrongful conduct. Under paragraph (c)(1), it
only applies to the person who signs a pleading that has an
intentional false statement that is material. Under subsection
(b), it applies only to a party who makes an intentional false
statement of material facts. So there is no situation under this
bill where an innocent party would be penalized.
Number 2231
CHAIRMAN KOTT asked whether anyone else wished to testify; there
was no response. He announced that he was closing public
testimony.
Number 2240
REPRESENTATIVE ROKEBERG noted that he had a further question for
Mr. Lessmeier. He indicated he assumes the word "initiates" refers
to the party who is bringing the action. He asked whether the
attorney or the person bringing the action would sign the pleading.
MR. LESSMEIER answered that in most instances, the attorney signs
it. Although there are some instances where a party will sign a
pleading, it is not required under Alaska law.
REPRESENTATIVE ROKEBERG posed a situation in which the person who
has initiated the lawsuit lies, and his or her legal counsel
accepts that at face value and signs the pleadings. Representative
Rokeberg stated his understanding that both would be liable under
this.
MR. LESSMEIER said that isn't correct. That is addressed
specifically in paragraph (c)(2), which indicates that the action
for recovery can only be brought against the person who wrongfully
initiated or signed the pleading. "So they have to wrongfully
initiate or wrongfully sign, and that means signing without the
reasonable investigation, and not having a reasonable basis in fact
or law," he concluded.
Number 2304
REPRESENTATIVE JAMES asked: When the sanction against the person
who lied is implemented, and it wasn't the person who brought the
case but the attorney, does that just get rid of the attorney and
the case is not dismissed?
MR. LESSMEIER answered that if it is the attorney who makes the
wrongful statement, and the attorney doesn't correct it, then that
attorney would be subject to an action for damages later on,
assuming that the defending party prevailed on that claim. So if
the attorney makes the wrong statement, the case is not dismissed
but the attorney remains responsible for damages caused by that.
Number 2344
CHAIRMAN KOTT referred to the discussion about the attorney general
hypothetically making wrongful statements that result in the State
of Alaska losing a case. He asked Mr. Lessmeier whether there had
been discussions relating to the original bill or the sponsor
substitute as to whether the attorney general or state
representatives in such matters should be exempt.
MR. LESSMEIER answered:
I don't think we had that discussion. ... Representative
Mulder will have to speak for himself, but it was not my
contemplation to apply the policies of this bill to the
State of Alaska involving issues that affect the state,
beyond the two litigants, in other words, to statewide
issues. ... I certainly think that all parties,
regardless of the issues, should follow the precepts of
this bill. But ... I think, going back to your question
and Representative Kerttula's and Representative Croft's
point, it really boils down to a policy issue; and I
think Mr. Mintz laid that out for you. I think that's a
policy issue as to whether you do want to exempt the
state ... from this.
Number 2410
REPRESENTATIVE KERTTULA asked what would happen with a case with
precedential value, where a material fact that goes to the central
issue were lied about, even though the party was in the right. It
would result in a finding against the party, who would lose. If
there were a great precedence for the rest of the industry, for
example, she suggested the judgment would somehow have to be
structured to ensure that it didn't impact everybody else. She
asked Mr. Lessmeier whether that is how he saw it.
MR. LESSMEIER replied, "I think that you would never reach the
precedential issue."
REPRESENTATIVE KERTTULA responded, "Just dismissal."
Number 2449
REPRESENTATIVE MURKOWSKI noted that within subsection (b), the only
remedy available is entering judgment, which is very limiting; it
is the policy call that the sponsor has made. She asked Mr.
Lessmeier whether, in his conversations in helping to craft this,
there was any discussion of the availability of other remedies out
there, depending on the circumstances.
TAPE 00-32, SIDE B
Number 0001
MR. LESSMEIER answered:
I think when we were crafting this provision the
overriding issue that we were concerned with is ... when
you have a party that has engaged in lying and making an
intentional false statement of fact, and you discover
that, first of all, it's the rare case that you're
actually going to discover; and when you discover it, it
is probably not the only statement of that type that ...
is going to be made. And so the policy call here was
made to send a message of a definite and clear sanction
to those that actually will get caught engaging in the
kind of conduct that we're trying to prevent here. And
it is very specific, and it is very clear: it's
intentional, it's false and it's material. And that's a
pretty high standard to meet.
And the reason that the sanction is definite is because
once that conclusion is made, we wanted to send a message
that there would be a definite sanction, just for
purposes of deterrence, so that basically people would
understand that the judicial system is not going to allow
this kind of conduct. If you do anything other than
that, then, in our view, you're not sending that clear
message, and you may be sending no message at all. And
it is difficult to come up with another kind of a
sanction here that would have the same impact. So that
was the policy call that we made. The flip side of that
is that there is great discretion in making the
determination of whether the statement is intentional,
whether - more importantly - it is material, and whether
it, indeed, is false, and what it relates to.
Number 0110
REPRESENTATIVE MULDER said he appreciates the question, then
stated:
... We had some debate about the inclusion or exclusion
of (b). I think it gets to the heart of the question
because you've got to break it down to ... those first
two sentences. If a party intentionally makes a false
statement of material fact, they knowingly lied to win
their case, that's wrong. ... And that's what's wrong
with the system. If you intentionally lie to win, [you]
should be punished and penalized. That's the heart of
the whole issue. That's what it's all about. So, why
should there be discretion about that? ... There's
discretion about, "Well, did they intentionally do it?
Was it a material fact or not?" That's the discretion.
That's working around the edges .... The judge has to
make [that] determination: Was it intentional, and was
it material to the case? ... It is a policy call, and I
really fell down the side [of] this is what it's about.
This is saying you're lying, and it's not acceptable to
win a case based upon a lie.
CHAIRMAN KOTT asked whether there was further discussion; none was
offered.
Number 0184
REPRESENTATIVE JAMES made a motion to move HB 42 [proposed CS for
SSHB 42, Version H] from the committee with individual
recommendations and attached fiscal note(s).
REPRESENTATIVE CROFT objected. He explained that the committee is
trying to determine the impact on judicial cases in Alaska. The
only way to do that is to talk about what might happen, the
hypothetical cases. Referring to discussion of the Cleary case, he
said he believes that if the Department of Corrections came back
and wrongly said there are only "x" number of prisoners, within the
limits, that would be material. Additionally, if somebody falsely
said there are no partial-birth abortions performed in Alaska, that
would be material and could lead to a determination of
unconstitutionality based on something besides the law or the
facts; it would be based on, in effect, the conduct of the parties.
REPRESENTATIVE CROFT referred to Representative Kerttula's mention
of precedential cases and pointed out that usually another court
can look at the same factual situation and legal challenges in
another case and say, "This is the same issue," and that the issues
don't have to be relitigated. With this, however, one doesn't know
what has been decided anymore, because it isn't the issue itself
that is being decided.
REPRESENTATIVE CROFT further pointed out that often an
environmental impact statement (EIS) comes before the court, with
a challenge to its sufficiency and a question regarding whether
there is a significant impact on the environment. Sometimes that
can have dramatic consequences for development. For example, there
may be an EIS where the main issue is the impact on a caribou herd
from opening ANWR (Arctic National Wildlife Refuge); the people
defending it may say there is no significant impact, which would be
a lie if a report shows some small or moderate impact. If that
were found out, under this bill, judgment shall be entered on that
issue that there is a significant environmental impact, for
example, and that [the development] cannot proceed; the decision
would be taken away from the court. This bill takes away the
ability to have a "determination on the facts and the law" mean
that.
REPRESENTATIVE CROFT emphasized that he agrees lying in court is
wrong. However, there are a number of ways this can be approached.
The question is whether the approach that says this determines the
result of litigation is the appropriate one. Alternatives such as
mandatory minimum sanctions or another tribunal for review aren't
before the committee. Rather, this bill takes away the result of
a lawsuit that used to be based on the law and facts but which now
would be based upon something else.
Number 0350
REPRESENTATIVE CROFT restated his agreement with excluding child
custody cases, where the higher goal is the placement decision in
the best interests of the child. Other areas, however, have higher
goals as well: the judgment on the facts and the law. Noting Mr.
Lessmeier's mention at an earlier hearing that he had never seen
Rule 11 sanctions used, Representative Croft restated that he
himself had only practiced for two years and yet had seen Rule 11
used twice, once winning significant amounts of attorney fees and
costs when somebody didn't properly use the process. He believes
Rule 11 has teeth and perhaps needs to be strengthened, rather than
taking away the ability of the judge to make a determination on the
merits of a case.
REPRESENTATIVE CROFT reiterated that there is no discretion in
subsection (b), which says "shall." Furthermore, findings on
materiality, falsehood and relatedness aren't discretion but are
findings of facts or law, made by the judge or jury. He noted that
Mr. Lessmeier had testified in a prior hearing that the most likely
outcome of subsection (b) is a general instruction to the jury that
looks very much like subsection (b): "If you find that somebody
lied on an issue and that's a material fact, and they did so
intentionally, you shall enter judgment based on that."
REPRESENTATIVE CROFT indicated that conversations with attorneys
have suggested that at least subsections (a) and (c) would result
in a lot of collateral litigation, costing money. The final and
fundamental point, however, is whether, in reevaluating whether
they are doing enough to punish and prevent falsehoods in court,
[the legislature] should choose this or another method. Noting
that this method determines the result of a lawsuit, often with
dramatic consequences for other parties, he said he doesn't believe
this is the proper course to punish this admittedly bad conduct.
For those reasons, he objects.
Number 0505
REPRESENTATIVE JAMES said she can't believe they are having this
argument. She indicated the caribou issue was a bad example
because she can't believe that anyone, of any intelligence, would
say there is no effect, because there is no way to prove that;
furthermore, she doesn't want to hear more examples. If someone
purposely tells an untruth and it affects the case because it is a
material fact in the case, and if the case would or could have gone
differently if it weren't for the lie, then by all means the
penalty must be severe. As far as the game attorneys play, she has
no problem with that, but she does have a problem if they make a
purposely incorrect statement in order to win the case.
REPRESENTATIVE JAMES said this is a policy issue, and it is a
policy she supports. She understands the fears but believes
telling the truth is the best way to behave. Having had direct
experience with someone purposely lying about a material fact in a
case, perhaps she has a different attitude than other members;
however, it also has happened to some of her friends and other
people. This isn't a frivolous issue, and she thinks this is a
good piece of legislation, amended in many ways to make it even
better. This will at least let people know that they must tell the
truth or the penalties will be pretty high.
Number 0688
REPRESENTATIVE KERTTULA remarked that she doesn't believe attorneys
take something like this lightly at all, and as past president of
the bar association, she can say that the bar doesn't. That isn't
how she was taught, and it isn't how the people she works with
behave; people who behave differently get punished for it and can
be disbarred. She advised fellow members that she is struggling
with the fact that she sees situations where there is lying but
where the overall picture is that the case should be won. This
bill hampers that kind of discretion.
REPRESENTATIVE KERTTULA said she is for as strong a sanction as
possible up to that point but doesn't think that is necessarily the
right remedy. She has seen judges throw cases out because of
lying, she noted. Furthermore, there still could be frivolous
litigation under this, but there would be more of an argument at
the end. She doesn't condone any form of lying in a lawsuit, and
has sat on the board that sanctions people who have done it.
However, she thinks this just edges out a little far. "I could
support it, I think, without section (b), but that's where I bog
down," she concluded.
Number 0780
REPRESENTATIVE ROKEBERG commented that he would hope that the
triers of fact in Alaska can tell the difference between a false
statement and an opinion, or materiality. He offered his opinion
that the bill sends a message to people that they shouldn't lie; it
sends a message to society "that we're too litigious"; and it sends
a message to the bar that the legislature - and the people, he
believes - don't have confidence that [attorneys] are policing
themselves properly. He indicated that if what Representative
Kerttula says is correct, attorneys need a better public relations
firm to let people know that they are policing themselves.
Number 0826
REPRESENTATIVE MURKOWSKI pointed out that a responsible attorney
who has a question about ethics or propriety would call Stephen Van
Goor, counsel for the Alaska Bar Association, for example,
regarding where that attorney stands with a piece of legislation.
Representative Murkowski agreed that attorneys don't do a very good
job of promoting themselves or letting the world know that they are
policing themselves and doing a good job of it, although
occasionally one sees a newspaper notice saying an attorney has
been disbarred from practice for the next year. She suggested
perhaps attorneys need to look at [public relations] a little more
carefully. "But you always want to assume that when you are in a
profession that you will just do good work, and your good work will
be recognized," she commented. "Obviously, that's not the case
oftentimes."
REPRESENTATIVE MURKOWSKI noted the focus that day on subsection
(b), including what it does or doesn't do, and whether it is fatal
to the bill; she expressed concern that it is very narrow, with
only one remedy. She agreed that this is a policy call and
suggested the committee needs to decide how strong a message to
send. She said she has come a long way on this legislation; when
first looking at it, she didn't like it, in part because of the
light it casts upon the legal profession as a whole. However,
society is far too litigious, although whether this legislation is
the panacea for that, she doesn't know. Some of her concerns with
previous drafts of the bill have been addressed, and she believes
many of the unforeseen consequences mentioned by Representative
Croft a couple of hearings ago have been addressed in a workable
way. She concluded, "It kind of reminds me of the budget this
morning. It's not perfect. Is it the best we can do? I don't
know."
Number 1011
CHAIRMAN KOTT commented that he wants to give attorneys the benefit
of the doubt, but if there are any individuals who perhaps make
intentional false statements, a provision here certainly takes care
of that particular problem. He confirmed that Representative Croft
maintained his objection.
REPRESENTATIVE ROKEBERG directed Representative Murkowski's
attention to "shall" on page 2, line 10. He said it seems that the
trier of fact makes the determination that there is a falsehood
first, before acting upon the mandate. He asked whether there is
adequate flexibility or discretion on the part of the trier of fact
in the process of making the determination before acting.
REPRESENTATIVE MURKOWSKI replied to Representative Rokeberg that
she disagrees with Representative Croft that there is no discretion
in making a determination as to the materiality and whether it was
intentional. She thinks the judge has certain discretion to say
whether or not something is truly material and goes to the heart of
the issue; there is that flexibility. But once the trier of fact
has made that determination, there is no option to use other
sanctions. The only remedy that subsection (b) allows is entering
judgment against the party on any issues that relate to the
material false allegation.
REPRESENTATIVE CROFT responded that discretion usually means that
when one has made a determination, there is a range of options.
This isn't discretion but is what trial courts do all the time: if
they find that somebody was negligent and it caused the injury, and
if there are no defenses, then that person is liable. It is
factual and legal determination. Here, three factual
determinations have to be made: Was it a false statement,
intentionally made? Is it material to this litigation? And is it
related to the issue being addressed? After those three
determinations are made, there isn't any discretion left if all
three factors are found. Posing a situation where both parties are
lying, he expressed concern about how juries would resolve these
situations, which he believes may be confusing or contradictory.
Number 1307
REPRESENTATIVE JAMES responded that if both parties were lying, the
correct decision would be to throw the whole thing out.
REPRESENTATIVE ROKEBERG asked to hear Mr. Lessmeier's opinion on
changing it.
Number 1350
CHAIRMAN KOTT suggested that Representative Rokeberg have that
discussion later. He requested a roll call vote. Voting to move
the bill [proposed CS for SSHB 42, Version H] from the committee
were Representatives Rokeberg, James, Murkowski and Kott. Voting
against it were Representatives Croft and Kerttula. Therefore,
CSSSHB 42(JUD) was moved from the House Judiciary Standing
Committee by a vote of 4-2.
ADJOURNMENT
Number 1472
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 3:15 p.m.
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