Legislature(1995 - 1996)
02/14/1996 01:07 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.