Legislature(2003 - 2004)
04/02/2003 01:05 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
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
April 2, 2003
1:05 p.m.
MEMBERS PRESENT
Representative Lesil McGuire, Chair
Representative Tom Anderson, Vice Chair
Representative Jim Holm
Representative Dan Ogg
Representative Ralph Samuels
Representative Les Gara
Representative Max Gruenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 214
"An Act relating to the recovery of punitive damages against an
employer who is determined to be vicariously liable for the act
or omission of an employee; and providing for an effective
date."
- MOVED CSHB 214(JUD) OUT OF COMMITTEE
HOUSE BILL NO. 212
"An Act relating to trusts, including trust protectors, trustee
advisors, transfers of property in trust, and transfers of trust
interests, and to creditors' claims against property subject to
a power of appointment."
- HEARD AND HELD
HOUSE BILL NO. 92
"An Act relating to reports by members of the clergy and
custodians of clerical records who have reasonable cause to
suspect that a child has suffered harm as a result of child
abuse or neglect."
- HEARD AND HELD
HOUSE BILL NO. 164
"An Act relating to the state's sovereign immunity for certain
actions regarding injury, illness, or death of state-employed
seamen and to workers' compensation coverage for those seamen;
and providing for an effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
BILL: HB 214
SHORT TITLE:PUNITIVE DAMAGES AGAINST EMPLOYERS
SPONSOR(S): REPRESENTATIVE(S)SAMUELS
Jrn-Date Jrn-Page Action
03/26/03 0640 (H) READ THE FIRST TIME -
REFERRALS
03/26/03 0640 (H) JUD
03/28/03 0689 (H) COSPONSOR(S): ROKEBERG, MEYER
03/31/03 (H) JUD AT 1:00 PM CAPITOL 120
03/31/03 (H) Heard & Held -- Meeting
Postponed to 3:00 PM --
MINUTE(JUD)
04/02/03 0750 (H) COSPONSOR(S): MCGUIRE, HAWKER
04/02/03 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 212
SHORT TITLE:POWERS OF APPOINTMENTS/TRUSTS/CREDITORS
SPONSOR(S): REPRESENTATIVE(S)MCGUIRE
Jrn-Date Jrn-Page Action
03/24/03 0618 (H) READ THE FIRST TIME -
REFERRALS
03/24/03 0618 (H) L&C, JUD, FIN
03/26/03 0652 (H) L&C REFERRAL WAIVED
04/02/03 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 92
SHORT TITLE:CLERGY TO REPORT CHILD ABUSE
SPONSOR(S): REPRESENTATIVE(S)LYNN
Jrn-Date Jrn-Page Action
02/12/03 0186 (H) READ THE FIRST TIME -
REFERRALS
02/12/03 0186 (H) STA, HES
02/19/03 0257 (H) COSPONSOR(S): KERTTULA
03/06/03 (H) STA AT 8:00 AM CAPITOL 102
03/06/03 (H) Heard & Held
MINUTE(STA)
03/18/03 (H) STA AT 8:00 AM CAPITOL 102
03/18/03 (H) Moved CSHB 92(STA) Out of
Committee
MINUTE(STA)
03/24/03 0622 (H) JUD REPLACES HES REFERRAL
03/26/03 0633 (H) STA RPT CS(STA) NT 5DP 1NR
1AM
03/26/03 0633 (H) DP: GRUENBERG, SEATON, HOLM,
LYNN,
03/26/03 0633 (H) DAHLSTROM; NR: WEYHRAUCH; AM:
BERKOWITZ
03/26/03 0633 (H) FN1: ZERO(HSS)
03/26/03 0633 (H) FN2: ZERO(LAW)
03/26/03 0633 (H) REFERRED TO JUDICIARY
04/02/03 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
RAY R. BROWN, Attorney at Law
Dillon & Findley, PC
Anchorage, Alaska
POSITION STATEMENT: Expressed concerns about HB 214 and
explained changes that he and Mr. Schneider had suggested;
answered questions.
MICHAEL R. WIRSCHEM, Attorney at Law
Anchorage, Alaska
POSITION STATEMENT: Followed up on previous testimony on
HB 214, offering statistics from the Alaska Judicial Council
with regard to punitive damages.
JIM WILSON
Coastal Helicopters
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 214.
MARCIA R. DAVIS, Vice President and General Counsel
Era Aviation, Inc.
Anchorage, Alaska
POSITION STATEMENT: Provided information relating to HB 214.
MICHAEL J. SCHNEIDER, Attorney at Law
Law Offices of Michael J. Schneider, PC
Anchorage, Alaska
POSITION STATEMENT: Answered questions relating to HB 214 and
changes that he and Mr. Brown had proposed.
VANESSA TONDINI, Staff
to Representative Lesil McGuire
House Judiciary Standing Committee
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of the sponsor of HB
212, Representative McGuire.
STEPHEN E. GREER, Attorney at Law
Anchorage, Alaska
POSITION STATEMENT: Noted that HB 212 has widespread support.
DOUGLAS BLATTMACHR, President
Alaska Trust Company
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 212.
ROBERT MANLEY, Member
Hughes Thorsness Powell Huddleston & Bauman, LLC
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 212.
JONATHAN BLATTMACHR, Attorney
Milbank, Tweed, Handley & McCloy
New York, New York
POSITION STATEMENT: Urged the committee's support of [CSHB 212,
Version I].
DAVID SHAFTEL, Estate Planning Attorney
Anchorage, Alaska
POSITION STATEMENT: Relayed that all [of the members of the
informal group of which he is a part] recommend the adoption of
[CSHB 212, Version I].
RICH HOMPESCH, Attorney
Fairbanks, Alaska
POSITION STATEMENT: Noted that there is support for [CSHB 212,
Version I] in Fairbanks.
RICHARD THWAITES, Estate Planning Attorney;
Chairman, Alaska Trust Company
Anchorage, Alaska
POSITION STATEMENT: Provided comments during discussion of HB
212.
REPRESENTATIVE BOB LYNN
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 92.
FLOYD SMITH, Consultant
Alaska District Council of the Assemblies of God
Anchorage, Alaska
POSITION STATEMENT: Provided comments during discussion of HB
92, and suggested changes.
WILLIAM MOFFATT, Staff
to Representative Bob Lynn
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Assisted with the presentation of HB 92.
JOANNE GIBBENS, Program Administrator
Central Office
Division of Family & Youth Services (DFYS)
Department of Health & Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Provided comments during discussion of HB
92, suggested a change, and responded to a question.
TED BOATSMAN, Reverend
and Superintendent
Alaska District Council of the Assemblies of God
Anchorage, Alaska
POSITION STATEMENT: Provided comments during discussion of HB
92.
CHIP WAGONER, Lobbyist
for the Alaska Catholic Conference
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 92 and of
placing the term "neglect" back in the bill, and responded to
questions.
ACTION NARRATIVE
TAPE 03-28, SIDE A
Number 0001
CHAIR LESIL McGUIRE called the House Judiciary Standing
Committee meeting to order at 1:05 p.m. Representatives
McGuire, Anderson, Holm, Ogg, Samuels, and Gara were present at
the call to order. Representative Gruenberg arrived as the
meeting was in progress.
HB 214 - PUNITIVE DAMAGES AGAINST EMPLOYERS
Number 0093
CHAIR McGUIRE announced that the first order of business would
be HOUSE BILL NO. 214, "An Act relating to the recovery of
punitive damages against an employer who is determined to be
vicariously liable for the act or omission of an employee; and
providing for an effective date."
Number 0172
CHAIR McGUIRE asked whether anyone wished to testify; hearing no
response, she then closed public testimony.
The committee took an at-ease from 1:10 p.m. to 1:12 p.m.
Number 0196
CHAIR McGUIRE brought attention to written amendments provided
by Representative Gara. Amendment 1 read [original punctuation
provided]:
Page 2, line 2. After "acted"
Delete: "recklessly"
Insert: "negligently"
Amendment 2 read [original punctuation provided]:
Page 2, line 2. After "employing"
Insert: ", supervising or retaining"
[A third amendment, never formally offered, would amend page 2,
line 1, by deleting "and" and inserting "or" after "omission".]
CHAIR McGUIRE reopened public testimony.
Number 0275
RAY R. BROWN, Attorney at Law, Dillon & Findley, PC, informed
members that his letter [dated April 2, 2003, also signed by
Michael J. Schneider] fairly outlines his responses to comments
about Laidlaw Transit, Inc. v. Crouse placed on the record at
the previous hearing of HB 214. He specified that the letter
relays concerns about how far HB 214 goes and that the bill
doesn't track the [Restatement (Second) of Agency]. He strongly
urged the committee, if it takes action on the bill, to look at
Section 909 of the Restatement (Second) of Torts, which he said
Section 217(c) of the Restatement (Second) of Agency refers to
and relies upon for interpretation and illustration.
MR. BROWN alluded to the portion of his letter [on pages 2-3]
that quotes from the Restatement (Second) of Torts as follows:
Punitive damages can properly be awarded against a
master or other principal because of an act by an
agent if, but only if,
(a) the principal or a managerial agent authorized the
doing and the manner of the act, or
(b) the agent was unfit and the principal or a
managerial agent was reckless in employing or
retaining him, or
(c) the agent was employed in a managerial capacity
and was acting in the scope of employment, or
(d) the principal or a managerial agent of the
principal ratified or approved the act.
MR. BROWN offered his belief that the stated purpose of the bill
wouldn't protect employees adequately, particularly if one looks
at the language proposed in the bill versus that in Section 909
of the Restatement (Second) of Torts. He said the principal
difference, as pointed out [in his letter], is that under the
Restatement (Second) of Torts, not only the employer is couched
in terms of the principal; rather, it includes - which it
should, he opined - the managerial agent who is authorized.
Number 0380
MR. BROWN highlighted the significance of the fact that included
[in subsection (b) of the Restatement (Second) of Torts, quoted
previously] is recklessness not only in employing, but also in
retaining, since it says "or retaining". Referring to testimony
by him and Mr. Schneider at the bill's previous hearing, he
explained that not just the employment of the individual is
problematic; it is also the supervision and training, which gets
to the issue of whether the employer should have retained a
person, notwithstanding the fact that [the employer] had
exercised due diligence in the hiring process. Mr. Brown also
noted that subsections (c) and (d) [of the Restatement (Second)
of Torts, cited above] include the terms "managerial capacity"
and "managerial agent". He said those terms are significant.
MR. BROWN proposed, in the worst-case scenario, that the
committee adopt the language of Section 909 of the Restatement
(Second) of Torts. However, for adequate balance between
protecting the employer and employee, he suggested [as put forth
in his letter on page 3, that the committee adopt Section 909 of
the Restatement (Second) of Torts, except] to add
["supervising"] to subsection (b), so that it would read
"employing, supervising, or retaining", and to change "reckless"
to "negligent". That would fully protect the well-reasoned
concerns raised by the representative from ERA [Aviation, Inc.]
who testified at the bill's previous hearing, he told members.
Number 0480
CHAIR McGUIRE indicated those issues would be taken up by the
committee when considering the written amendments.
Number 0518
MICHAEL R. WIRSCHEM, Attorney at Law, informed members that
since his previous testimony, he had done research on what the
Alaska Judicial Council (AJC) has found. He noted that he would
summarize the three studies posted on the AJC's web site.
Reporting that the first study was done between 1985 and 1995
through the court system, he said the AJC looked at 223 tort
jury verdicts and found 17 awards of punitive damages in 15
different cases during those ten years.
MR. WIRSCHEM said the second study, done between September 1997
and May 1999, was a little different: it didn't track court
system data, but data reported to the AJC by attorneys. For a
total database of 1,685 cases reported, he said punitive damages
were asked for in only 108 cases, and only 5 settlements
included amounts for punitive damages.
MR. WIRSCHEM told members that the third study involved reports
to the AJC between June 1, 1999, and December 1, 2000, a period
of 18 months. In the entire database of 2,951 cases, including
83 trials, he said punitive damages were requested in 17 percent
of the reported cases, but awarded in only 8 cases - less than 1
percent. One award was statutorily required; the others
followed trial.
CHAIR McGUIRE thanked Mr. Wirschem for providing the foregoing
information requested by the committee.
Number 0695
JIM WILSON, Coastal Helicopters, testified in support of
[HB 214]. Noting that in his business, pilots can be gone
multiple weeks at a time without direct supervision, Mr. Wilson
said [the company] goes through extensive training programs to
make sure pilots know what they're supposed to be doing and how
they're supposed to be doing it. He provided an example of an
accident 10 or 11 years ago, as follows:
This particular pilot was out on the job. And we have
a mirror that we use to look at external loads when
they're carrying it. Well, this pilot had moved the
mirror up so he could see his landing gear. And in
training we teach them to look out the aircraft when
they're landing in small locations or areas where they
may not be stable, so that they can detect any
movement of the aircraft.
Well, this particular pilot landed on one of those
spots, took his eyes from the outside, ... looked at
the mirror [inside], and while he was doing that, the
aircraft slid forward and he hit a tree. And,
fortunately for us, no one was injured. But ... it
was a clear case that the pilot was not ... following
established procedures, and we could have been victim
to the punitive damages ... had there been injuries or
death.
Number 0835
REPRESENTATIVE GRUENBERG observed that Mr. Brown and Mr.
Schneider had provided both Section 217(c) of the Restatement
(Second) of Agency and Section 909 of the Restatement (Second)
of Torts. He asked whether those two sections are identical.
MR. BROWN noted that Section 909 of the Restatement (Second) of
Torts says it is duplicated by Section 217(c), and that he
therefore assumes it is true. He suggested the Laidlaw case
lays out the criteria under Section 217(c), but said he hadn't
compared the language to see whether it is identical.
REPRESENTATIVE GRUENBERG said it appeared Mr. Brown and Mr.
Schneider also included the commentary to Section 909 and case
citations to that. He asked whether there are additional
citations and commentary to Section 217(c) and, if so, whether
they are the same.
MR. BROWN indicated he hadn't looked at the commentary because
he'd relied upon his own experience that if Section 909 says
that Section 217(c) looks to the Restatement [(Second)] of Torts
for comment and illustrations, he'd felt he could assume they
would be nearly identical or identical. He added that another
60 pages of cases go along with this. He offered to fax those.
REPRESENTATIVE GRUENBERG said that wasn't necessary. He then
asked whether Mr. Brown prefers the Restatement language to the
language of the current bill.
MR. BROWN responded, "Absolutely."
Number 0975
MARCIA R. DAVIS, Vice President and General Counsel, Era
Aviation, Inc. ("ERA"), informed members that she had a copy of
Section 909 of the Restatement (Second) of Torts and Section
217(c) of the Restatement (Second) of Agency. She said the only
difference in the listing of the four exemptions in those two
sections is that the Restatement (Second) of Torts references
"the principal or a managerial agent" in all four clauses
[except for subsection (c)]. By contrast, the Restatement
(Second) of Agency only says "the principal" in each of those,
except for subsection (d), which talks about the agent. She
observed that the comments are lengthier in the [Restatement
(Second) of] Torts.
Number 1101
REPRESENTATIVE GRUENBERG said it seems the language from the
Restatement (Second) of Torts would be preferable to that from
the Restatement (Second) of Agency.
MS. DAVIS responded, "In terms of what is preferable or not
preferable, what we're trying to do is ... put this in the
context of an employer ... as a principal, and then, if you want
to expand the scope: employer, and then describe how far down
the chain you go." She said that seems to be the debate.
Number 1080
REPRESENTATIVE GARA referred to the proposed amendment from page
3 of the letter from Mr. Brown and Mr. Schneider discussed
previously, which suggested the legislation should be amended to
adopt Section 909 except to change subsection (b) to read as
follows:
The agent was unfit and the principal or a managerial
agent was negligent [reckless] in employing,
supervising or retaining [employing, retaining] him,
or ...
REPRESENTATIVE GARA said each amendment he'd handed out
addresses a different part of that sentence. He asked Mr. Brown
or Mr. Schneider to explain what kinds of cases might not be
covered under the original bill, what kind of conduct would be
drawn in [if it were amended], and what problem the bill tries
to prevent. Addressing a recommendation in the letter [proposed
by his own Amendment 1 to change "recklessly" to "negligently"
on page 2, line 2], he said:
Under the current bill, in order for ... an employer
or a corporation to be held liable for punitive
damages, first ... the employee will have had to have
been reckless. But then, under this bill, we'll have
to show that the employer was reckless in hiring the
reckless employee. You change that to "the employer
only has to be negligent in hiring or retaining that
employee". Why, ... in your view, does that make
things better?
Number 1157
MICHAEL J. SCHNEIDER, Attorney at Law, Law Offices of Michael J.
Schneider, PC, replied:
The sponsor statement says that the intent of the bill
is to ... take an employer who's behaving
appropriately, who's done nothing wrong, who is truly
innocent of any wrongdoing, and insulate them from
vicarious punitive-damage liability. And, indeed, in
Ms. Davis's comments a couple of days ago, she gave an
example where the employer really did nothing wrong -
did everything right - and ... expressed some
consternation at the injustice of suffering punitive-
damage exposure under those circumstances.
The language that we suggest tracks that idea. If you
are truly innocent, you're not going to get stuck with
punitive-damage exposure. On the other hand, ... if
the employer is negligent - has acted unreasonably in
hiring, [retaining], supervising the employee -
they're not innocent. They're a big part of the
problem. And under those circumstances, it would seem
to me, good public policy would dictate that they
enjoy punitive-damage exposure, albeit vicarious
exposure. ... It lowers the bar ... in terms of how
bad their conduct has to be: recklessness ... is a
further or farther deviation from the "reasonableness"
standard than negligence is. And under the language
we would suggest, if they are negligent, they can be
vicariously on the hook for punitive damages.
Number 1248
REPRESENTATIVE GARA inquired about the need for his amendment
[never formally offered, but mentioned previously as one of the
three written amendments] that would change "and" to "or" on
page 2, line 1.
MR. BROWN or MR. SCHNEIDER clarified that the suggestion [in the
letter, page 3] was "agent was unfit and". He added, "If the
agent was unfit and ... there is some wrongdoing on the part of
the employer, we think the employer ought to be stuck
vicariously."
REPRESENTATIVE GARA indicated that that particular amendment was
the result of a misunderstanding, then.
CHAIR McGUIRE requested that testifiers on teleconference
identify themselves when speaking.
Number 1369
MR. BROWN, on another subject, told members:
I'm not trying to speak disparagingly about any
religious group at all. I will confess that I am
Catholic, so I'm not trying to condemn the Catholic
Church. But the way this is presented and has been
submitted ... in the proposed House bill, I doubt very
seriously if, under those circumstances, ... any of
the victims of sexual abuse could bring any claims
against the archdiocese in any of the major
metropolitan areas where these claims have been raised
by victims of sexual abuse. I think it would be that
difficult. ... That's why we [have] proposed the
language of "negligence". ... I don't think they've
centered on the Catholic Church by any means, but I
think that's why the language is such as it is in
Section 909, to ... expand the base of persons liable
and responsible.
Number 1419
MS. DAVIS conveyed concern that [Amendment 1, which would change
"recklessly" to "negligently"] turns on its head the whole
concept that punitive damages are awarded when there has been
outrageous or reckless conduct. She said:
Granted, we're talking about the underlying reckless
employee, and then you step up to an employer; yet the
Restatement in both sections uses the word "reckless",
and ... I would pause long and hard before I'd change
that standard or lower it down, because we essentially
are converting the employer's liability here from a
punitive standard to more of a compensatory standard.
And I would probably take issue that individuals
harmed [by someone from the] Catholic Church would ...
(indisc.) the compensation under the compensatory side
for pain and suffering, emotional trauma, et cetera,
and then the issue for [punitive damages] can and
should be based on a "reckless" standard.
Number 1475
REPRESENTATIVE GARA offered his understanding that although
changing ["recklessly" to "negligently"] lowers the level of
care required before an employer is held liable, the bill raises
the bar by saying that employers who automatically would have
been liable now would be liable only if negligent or reckless.
Number 1523
REPRESENTATIVE SAMUELS, sponsor of HB 214, said the "reckless"
standard already is in both Section 909 and Section [217(c)] of
the respective restatements, and that he considers this a
clarification of what the courts already have come out with.
REPRESENTATIVE GARA replied that it isn't the law followed in
Alaska or lots of other states. He cautioned that adopting this
bill will radically change Alaska's law.
Number 1530
REPRESENTATIVE OGG asked whether using the word ["negligently"]
here would raise the present standard in law for the employer's
duty.
MS. DAVIS said the employer already has a duty to act reasonably
in hiring and retaining employees. She explained:
The problem that we're dealing with here is, this is a
bill that's a bit attenuated. This is a bill that
deals with the employer's vicarious liability for the
wrongs of an employee, apart from its own duty and its
own obligation. So I have a little bit of a hard time
grasping the concept of duty that's been overlaid over
vicarious liability. Duty is usually a direct
liability, not a vicarious liability. So I get
confused with the use of "duty" here.
But if we look in terms of ... threshold of liability,
currently under the Alaska Supreme Court's rule, ...
they basically have a scope-of-employment rule that
just says, "Whatever that reckless employee is doing,
as long as they're engaged in the pursuit of that
employer's business, the employer is liable, period -
... end of discussion, end of inquiry. We don't care
whether the employer was a bad guy [or a] good guy -
doesn't matter." So what we're doing here with this
rule of law is, we're trying to ... take away the
strict liability and say, "No, for punitive damages
you will only be liable for that employee's punitive
damages if these sets of conditions are met."
So, by virtue of the bill, we are ... raising the bar
for an employer's exposure to punitive damages that
have been imposed on the employee. We are not
changing in any way the employer's duties and direct
obligations with respect to its own compensatory and
its own punitive damages.
Number 1638
MS. DAVIS, in reply to further questions from Representative
Ogg, explained:
There's a step from innocent to negligent to gross
negligent to what we call reckless and outrageous, all
the way to intentional. ... We're moving to not
intentional, but reckless. And ... we picked that
because that is what is already contained in the
complicity rule that's adopted by other jurisdictions
that have adopted the restatements.
CHAIR McGUIRE suggested that summarized the entire bill and the
amendment.
Number 1682
REPRESENTATIVE GRUENBERG asked Mr. Brown or Mr. Schneider to
respond to Representative Ogg's question of whether this change
to ["negligently"] would alter current Alaska law.
AN UNIDENTIFIED SPEAKER responded that it would change Alaska
law and make it more difficult to obtain punitive damages for
vicarious liability. In reply to a further question from
Representative Gruenberg, he said:
This would move it to negligence for ... tortious
conduct. Remember, ... to even get to the "vicarious"
question, there still has to be outrageous conduct
proven ... as to the conduct ... of the agent, even to
get to this question, and then you have to jump over
the next hurdle, under ... our proposed language, of
showing that the employer was negligent in employing,
supervising, or retaining. So it's a double hurdle.
Number 1740
CHAIR McGUIRE, offering her understanding that there were no
further testifiers, again closed public testimony.
Number 1758
REPRESENTATIVE GARA moved to adopt Amendment 1 [text provided
previously].
REPRESENTATIVE SAMUELS objected.
REPRESENTATIVE GARA explained that Amendment 1 was offered in
recognition of the sponsor's concern that there should be some
culpability by an employer before being held liable for an
employee's reckless conduct. Calling it a middle ground, he
said it makes the law more protective of employers than it is
today, but not as protective as without the amendment. He
offered that it is good policy because it will never happen that
someone shows that an employer was reckless in hiring somebody
who then engaged in reckless conduct, since the standard for
recklessness is incredibly high. He mentioned previous
testimony about how rarely punitive damages are awarded.
REPRESENTATIVE GARA referred to a handout on [cases relating to]
negligence, noting that the first page says that to receive
punitive damages, [a plaintiff] must show reckless indifference
to the rights of others and a conscious action in deliberate
disregard of those rights - a very high standard. He also
indicated the law says that cases involving punitive damages
require much more evidence of being right than required in a
normal civil case: the standard is clear and convincing
evidence, somewhere between the normal civil standard and the
criminal standard. He said the protections already exist.
Number 1836
REPRESENTATIVE GARA provided an example of a school bus company
that pays employees the $12 an hour that its profit margin
allows, recognizing that some employees will be very good, but
others may not be the best in the world. The company hires
somebody with a history that isn't terrible, but includes lack
of diligence and perhaps laziness. If that driver decides not
to bother to put the tire chains on when conditions are icy,
Representative Gara suggested that is probably reckless conduct
on the part of the driver, but said the question is whether to
hold the employer liable. He remarked:
Depending on the warning signs the employer had that
this was a lazy person who might have a propensity not
to take the proper precautions when he's charged with
protecting the lives of a hundred children, maybe [the
employer should be held liable or] maybe not. But if
we said the employer had to be reckless in making the
hiring decision in the first place, there's no way the
school bus company would ever be held responsible for
hiring somebody who put children in danger.
If the purpose is to make sure that there's some
culpability on the part of an employer, I think we do
that by saying the employer shall act without
negligence in hiring and employing its workers.
[That] addresses the specific concern made in the
sponsor statement. It addresses the specific concern
we discussed the other day - it's whether we're
holding employers liable for things that they've done
wrong or whether we're holding them liable for things
where they've done nothing wrong. So that's the
purpose of the one-word change.
Number 1908
REPRESENTATIVE SAMUELS maintained his objection, saying the bill
does nothing to change "the direct punitive damages that can be
awarded to the company in direct liability." With regard to the
statistics provided by [Mr. Wirschem] about awards of punitive
damages, he said the point is that the hammer is always there,
and it helps in the settlement with regard to the rest of the
damages. He indicated that every small-business owner fears
being put out of business by having to pay punitive damages. He
said that if a company does its best and has good policies and
procedures as well as drug testing, for example, and yet
something happens when an employee makes his or her own
decisions, the entire company is at risk. Expressing sympathy
with Mr. Wilson, whose employees leave town for weeks on end,
Representative Samuels asserted his belief that [the helicopter]
industry is the most regulated on the planet. He added:
I can guarantee one more thing: If you say
"negligently", that becomes the argument and you lose
the argument every time, and once again, here comes
the hammer - you were negligent because you didn't
specifically say [the helicopter pilot] couldn't draw
the mirror up four inches; you said, "Don't use the
mirror." Well, ... there comes the argument again.
... If you're doing the absolute best that you can as
an employer, then you should have some rights, too.
Number 1985
A roll call vote was taken. Representatives Ogg, Gara, and
Gruenberg voted in favor of Amendment 1. Representatives Holm,
Samuels, Anderson, and McGuire voted against it. Therefore,
Amendment 1 failed by a vote of 3-4.
REPRESENTATIVE GARA brought attention to [Amendment 2, text
provided previously]. Referring to prior discussion, he offered
his belief that it makes the law say clearly what the sponsor
intends, since it includes supervising or failing to fire [an
employee] to the extent that an employer is liable for
recklessly employing someone. Therefore, Amendment 2 makes the
bill read that an employer is liable if the employer acted
recklessly in employing, supervising, or retaining the employee.
Number 2050
REPRESENTATIVE GARA moved to adopt Amendment 2.
REPRESENTATIVE SAMUELS objected for the purpose of discussion.
He told members, "We certainly mean the hiring and the continued
employment; we don't mean if you hire somebody and then you know
they're bad after you hire them that you should be let off the
hook, because you shouldn't."
The committee took an at-ease from 1:50 p.m. to 1:51 p.m.
CHAIR McGUIRE relayed that it was decided [during the at-ease]
to have a friendly amendment to Amendment 2 such that "or
retaining" would be inserted after "employing" on page 2,
line 2. Thus Amendment 2, as amended, no longer would contain
the word "supervising".
Number 2107
REPRESENTATIVE GARA explained: "We had a discussion over this
amendment of the amendment. And I guess we feel that there are
some circumstances where, then, bad supervising might be
encompassed under this language. And the intent is just to
leave it for the courts." He asked whether that is fair.
REPRESENTATIVE SAMUELS pointed out that supervisors sometimes
don't make company policy.
Number 2139
REPRESENTATIVE HOLM remarked that supervision doesn't need to be
included because a company wouldn't employ someone without the
idea of supervising that person. He said the implication of
supervision is inherent in employment.
Number 2147
REPRESENTATIVE GRUENBERG disagreed that the term "supervision"
is within the legal concept of hiring. He said that usually in
the law, "employing" is the decision of whether to hire someone;
it is very different from decisions after the person has been
hired. That is why he thought [including "supervision"] was in
line with the intent of the bill, he said, expressing hope that
Representative Samuels would revisit his objection.
CHAIR McGUIRE suggested that a decision to retain or not to
retain a person speaks for itself. If an employee has been
driving a tractor while drunk and the company decides not to
fire the person, she offered her belief that the company has
just allowed that risk to continue.
REPRESENTATIVE GRUENBERG agreed, but suggested that a decision
about retaining an employee is less inclusive than supervision,
which could be just letting someone do the job without
supervision. He emphasized the importance of including
["supervising"].
CHAIR McGUIRE pointed out that nowhere in [the relevant sections
of the Restatement (Second) of Torts or the Restatement (Second)
of Agency] is the word "supervised" contained.
Number 2230
REPRESENTATIVE GARA suggested perhaps the amendment wasn't
needed in the first place, and said:
But we wanted to make sure it was clear to the courts.
I think Representative Holm is right that the
intention of the word "employing" means the whole
gamut, from hiring to ... terminating. But we wanted
to make sure that it did, and so we put employing and
retaining. I feel very comfortable that the whole
concept is covered by the amendment we've offered, but
... there was a definitional problem that
Representative ... Samuels raised about using the word
"supervisory", and I'm comfortable that we've
addressed everybody's problems the way ... we've dealt
with it here.
Number 2257
REPRESENTATIVE GRUENBERG conveyed confidence that the members
understand the use of the word "employing" here, and suggested
there may be another way to do this. Although he said he would
withdraw his objection [to removing "supervising"],
Representative Gruenberg emphasized that the legislative history
should be crystal clear "that we mean to include within the
phrase 'employing or retaining' the concept of supervising too."
REPRESENTATIVE SAMUELS announced that he was withdrawing his
objection Amendment 2, as amended.
Number 2310
CHAIR McGUIRE asked whether there was any objection to adopting
Amendment 2, as amended. There being no objection, it was so
ordered.
REPRESENTATIVE GRUENBERG moved to adopt Amendment 3, a
modification of Amendment 1, which had failed to be adopted. He
specified that on page 2, line 2 [after "acted"], the amendment
would delete "recklessly" and insert "grossly negligently".
REPRESENTATIVE SAMUELS objected, citing the argument stated
previously [for Amendment 1].
Number 2341
REPRESENTATIVE OGG, noting that he hadn't spoken to Amendment 1,
referred to the conduct described by Representative Samuels and
suggested that someone acting that way generally wouldn't be
declared negligent by a court. He explained:
If you acted in good faith and followed all the
standards as you described them, a person would not be
negligent. However, under the present law they would
have been liable for strict liability under this
"vicarious" concept. I'm a little uncomfortable
jumping up four steps ... in passing a change like
this. I see that the "negligent" doesn't go, but I'm
happy to go with this one, the "gross negligent".
That's jumping up two steps, and you're covered beyond
that conduct that would have been safe under
"negligent".
TAPE 03-28, SIDE B
Number 0001
REPRESENTATIVE GARA said he'd rather have ["negligently"] but
supports the current amendment as an alternative.
REPRESENTATIVE GRUENBERG indicated he was trying to reach some
middle ground and craft a bill that the entire committee could
support.
A roll call vote was taken. Representatives Gara, Gruenberg,
and Ogg voted in favor of Amendment 3. Representatives Holm,
Samuels, Anderson, and McGuire voted against it. Therefore,
Amendment 3 failed by a vote of 3-4.
Number 2302
REPRESENTATIVE GRUENBERG began discussion of Amendment 4. He
said he understood the intent of the bill, which is to adopt the
restatement language, and that he understood from people who
oppose the bill that the restatement language itself would be
preferable to the language of the bill.
REPRESENTATIVE GRUENBERG [moved to adopt Amendment 4], in lieu
of the bill, to adopt Section 909 of the Restatement (Second) of
Torts.
CHAIR McGUIRE declared the foregoing to be out of order.
REPRESENTATIVE GRUENBERG requested an appeal of that ruling.
The committee took an at-ease from 2:04 p.m. to 2:05 p.m.
Number 2280
REPRESENTATIVE GRUENBERG [renewed his motion to adopt Amendment
4] to adopt Section 909 of the Restatement (Second) of Torts in
lieu of the bill.
REPRESENTATIVE SAMUELS objected.
REPRESENTATIVE GRUENBERG explained, "The restatement has been
thought through by the best legal minds. It has commentary. It
has all kinds of cases construing it. We're buying a known
quantity here. And if that's the intent of the bill, let's
adopt the restatement."
REPRESENTATIVE SAMUELS offered his understanding that the
drafters of the bill, when including "the act or omission", were
changing things to suit the Alaska Statutes. He indicated that
that is why [the restatement] wasn't used as the bill.
Number 2239
REPRESENTATIVE GRUENBERG said he'd consider it a friendly
amendment if Representative Samuels wanted to say "an act or
omission by an agent". He indicated the desire to "buy a known
quantity" and do what has been adopted across the country.
REPRESENTATIVE SAMUELS maintained his objection, suggesting he
needed to do more research on it. He said, "To me, it says the
same thing." He added that the key point of the entire
legislation, as brought up by Representative Gara, is the
negligence versus recklessness.
REPRESENTATIVE GRUENBERG countered, "It says in (b), which is
the section we were dealing with, the word is 'reckless'."
REPRESENTATIVE SAMUELS said he understood, and added, "That's
where we got it from."
CHAIR McGUIRE explained that she'd ruled Representative
Gruenberg's motion out of order previously because the amendment
was to rewrite a bill. She requested a vote.
REPRESENTATIVE SAMUELS expressed concern about unintended
consequences.
A roll call vote was taken. Representatives Gara and Gruenberg
voted in favor of Amendment 4. Representatives Samuels,
Anderson, Ogg, Holm, and McGuire voted against it. Therefore,
Amendment 4 failed by a vote of 2-5.
Number 2163
REPRESENTATIVE HOLM moved to report HB 214, as amended, out of
committee with individual recommendations and the accompanying
fiscal note(s).
CHAIR McGUIRE asked whether there was any objection.
REPRESENTATIVE GARA noted his objection, but suggested moving
the bill to the House floor.
CHAIR McGUIRE announced that there being no further objection,
[CSHB 214(JUD)] was reported from the House Judiciary Standing
Committee.
The committee took two brief at-eases from 2:10 p.m. to 2:11
p.m.
HB 212 - POWERS OF APPOINTMENTS/TRUSTS/CREDITORS
Number 2110
CHAIR McGUIRE announced that the next order of business would be
HOUSE BILL NO. 212, "An Act relating to trusts, including trust
protectors, trustee advisors, transfers of property in trust,
and transfers of trust interests, and to creditors' claims
against property subject to a power of appointment."
CHAIR McGUIRE, speaking as the sponsor of HB 212, informed the
committee that HB 212 is a product of work done since 1997, when
the legislature passed the original trust Act, which put into
place a policy that the trust industry would be a part of
Alaska's economy. There have been good results from this, she
opined, noting that every year, there are modifications to the
original Act in order for Alaska to remain competitive with
other states.
Number 2047
VANESSA TONDINI, Staff to Representative Lesil McGuire, House
Judiciary Standing Committee, Alaska State Legislature,
explained that a proposed committee substitute (CS) represents a
continuing attempt to keep Alaska's trust laws competitive with
other states, such as Delaware. Alaska has a unique tax
structure in that it's virtually nonexistent, and in order to
take advantage of this, in 1997 the Alaska State Legislature
decided to venture into the trust industry. The trust industry
has brought jobs and money to the state and this has resulted in
a capital base increase for investment purposes. Ms. Tondini
said that the trust Act has been a success by all accounts;
however, in order to remain competitive, Alaska must stay on top
of the changes made by other states.
MS. TONDINI explained that HB 212 makes changes to the [law
pertaining to spendthrift trusts] and adds the ability to have a
trust protector and trust advisor, similar to Delaware law. The
aforementioned abilities allow the settlor to have as much
control as possible when the settlor decides to give a gift or
create a trust.
Number 1957
MS. TONDINI, in response to Representative Anderson, explained
that the only change encompassed in the CS is in Section 7.
Language was added to the section dealing with subjecting
appointed property to the claims of the donee's creditor. The
original bill merely stipulated that the power of appointment is
permitted under [paragraphs] (1)-(2), only mentioning the
donee's estate. Basically, the language added is as follows:
"is permitted by the donor of the power to appoint the property
to the donee, the creditors of the donee, the donee's estate, or
the creditors of the donee's estate;". She explained that the
language was changed in order to conform this section so that it
also applies to inter vivos powers of appointment because the
donee's estate would only be applicable under testamentary power
of appointment.
Number 1895
STEPHEN E. GREER, Attorney at Law, informed the committee that
his practice is limited to estate planning. Mr. Greer clarified
that HB 212 isn't special interest legislation, rather this
legislation is meant to refine Alaska's present trust law.
Since this law was originally passed in 1997, there has only
been one amendment in 1998. However, Delaware has amended its
statute six times. Mr. Greer also informed the committee that
there is widespread support for HB 212.
Number 1787
REPRESENTATIVE SAMUELS moved to adopt the proposed committee
substitute (CS) for HB 212, Version 23-LS0471\I, Bannister,
4/1/03, as the work draft. There being no objection, Version I
was before the committee.
Number 1767
DOUGLAS BLATTMACHR, President, Alaska Trust Company, simply
announced support for HB 212, which he believes will improve
Alaska's trust laws and help the state continue to attract trust
business.
Number 1748
ROBERT MANLEY, Member, Hughes Thorsness Powell Huddleston &
Bauman, LLC, informed the committee that he has been practicing
as a trust and estates attorney for about 25 years. He
specified that he is only representing himself. Mr. Manley
noted his support of HB 212. He explained that his clients use
trusts to reduce estate gift tax and to preserve family assets.
MR. MANLEY directed attention to Section 1, which offers
statutory confirmation for the office of trust protector and
trust advisor. A trust protector is commonly used in trusts. A
trust protector, he explained, acts as a court of appeals for
the surviving spouse if the institutional trustee is
unreasonable. This trust protector is particularly important in
perpetual or long-term trusts. He said this [change] and others
make Alaska's trust law better.
Number 1640
JONATHAN BLATTMACHR, Partner, Milbank, Tweed, Handley & McCloy,
informed the committee that he is a member of the Alaska,
California, and New York Bar [Associations]. He said that his
firm has had dozens of clients who have created trusts in
Alaska. This legislation will allow Alaska to stay in the
forefront of the trust business, which is a free and clean
business no matter the location. The aforementioned is why so
many jurisdictions are trying to better their laws. Even New
York is considering making changes, including possibly
eliminating its income tax on trust income. Alaska already
enjoys that. Mr. J. Blattmachr urged the committee's support of
the legislation. He echoed earlier testimony that [the trust
industry] is one in which one must constantly keep ahead and
thus this won't be the last time that there will be a request to
make changes to better Alaska's law.
REPRESENTATIVE GRUENBERG noted that committee members should've
received comments from the Alaska Child Support Enforcement
Division (CSED). Basically, he remarked, the CSED speaks on
behalf of one class of creditors: those who are owed child
support. However, he believes that many of the CSED's comments
reflect the views of other creditors. Representative Gruenberg
surmised that the CSED views one of the problems with HB 212 as
being that it allows people to shield their assets from
legitimate creditors. Since the only contact the settlor or
donor has to make with Alaska is to create a trust in Alaska,
people with no contact at all with the state could use the state
as a haven for avoiding creditors. Therefore, Representative
Gruenberg noted he was concerned with some of the provisions
allowing people to use [trusts] as a shield for creditors,
because the bar is raised for proving fraud in various areas.
MR. J. BLATTMACHR recalled his involvement in Alaska's original
legislation in 1997 when he met with a number of departments,
including those charged with the duty of [collecting] child
support. The existing law, he remarked, specifies that no one
can create an Alaskan trust and avoid the claims for child
support if that individual is behind in child support payments.
Furthermore, with these type of trusts, no matter whether they
are created in Alaska, Delaware, Rhode Island, or Nevada, one
cannot receive a discharge in bankruptcy for child support in
the United States. Therefore, even if a parent decides to
catch-up on his/her child support, that parent can't then place
his/her assets in a trust in Alaska in order to never pay any
more child support.
MR. J. BLATTMACHR said that won't work because there is an
explicit provision in the United States bankruptcy law that says
child support, alimony, and eight other categories, including
intentionally harming someone, cannot be discharged. The
ability to obtain the child support at some point, even after
the child is of majority, [is still there] because the trust
will be in Alaska and before the court. The court could specify
that whenever this individual receives a distribution - the
individual who is behind in child support payments - there must
be notice to the child welfare division, to the custodial
parent, and to the child if the child is an adult. Therefore,
those assets can be attached. He noted that he met with [CSED
in 1997] and the division withdrew its opposition once the
aforementioned was explained.
MR. J. BLATTMACHR turned to the general question of taking
advantage of creditors. Throughout the United States, in every
state, a person can transfer assets to someone else either
outright or in trust. Once those assets are transferred, those
assets are no longer [available] for the claims of that person's
creditors unless the creditor can prove it was a fraudulent
transfer. For example, in 1994 when Mr. J. Blattmachr's firm
first started making money, he took his extra profits and placed
them in trust for his wife. This was before Alaska's trust Act
was enacted, so he created the trust under New York's laws.
This means that the assets are completely immunized against his
creditors and against his wife's creditors - since she didn't
create the trust - unless the creditor can prove that it was a
transfer to defraud a known creditor. Alaska law essentially
says the same thing.
MR. J. BLATTMACHR noted, however, that Alaska has allowed for a
pure discretionary beneficiary, which would forever prevent
permanently subjecting the assets of the trust to the claims of
creditors. The aforementioned is in line with the federal law
specifying that a pension plan is forever protected from claims
of creditors. Therefore, he said, he didn't believe [HB 212]
does anything extraordinary. The changes made [in the CS]
include clarifying during litigation where the burden of proof
will fall, and providing the judge an easier time in determining
whether there is a fraudulent claim. The [CS] also changes the
charitable remainder trust, which is a trust that an individual
creates which will ultimately go to charity, such that the
interest in the charitable remainder trust is protected from
claims of creditors. Charitable remainder trusts are a creature
of federal law, and although it's possible that federal law
would provide protection, [the desire with the CS] is to make
that clear in Alaska.
Number 1107
DAVID SHAFTEL, Estate Planning Attorney, began by informing the
committee that he is a member of the informal group of estate
planning attorneys that have worked on improving the trust
statutes in Alaska. A number of good statutes have been enacted
since 1997 he opined. He relayed that the informal group feels
that this particular statute continues to clarify in Alaska law
as it relates to trusts. As a practicing estate planning
attorney who deals with clients daily on these matters, Mr.
Shaftel said that the residents of Alaska have benefited
tremendously from the legislature's work in this area. He
related that all [of the members of the informal group]
recommend this legislation.
REPRESENTATIVE GARA noted that in his district there is a ground
swell of support for this legislation.
Number 0933
RICH HOMPESCH, Attorney, informed the committee that there is
support for this legislation in Fairbanks. He concurred with
the comments of the previous witnesses. There is no doubt that
Alaska has seen an increase in its trust business since 1997, he
remarked, and relayed his belief that this legislation will
further nurture the trust industry in Alaska.
Number 0884
RICHARD THWAITES, Estate Planning Attorney; Chairman, Alaska
Trust Company, informed the committee that he has been an estate
planning attorney in Alaska for 29 years and has been involved
with the development of the original trust legislation. He
remarked that the trust industry is a competitive industry, and
that more and more practitioners are coming to Alaska and using
the Alaska trust system. This legislation helps Alaska stay [at
the top of the trust industry], he added.
REPRESENTATIVE GARA returned to the situation in which there
isn't enough money to pay a child support obligation when a
trust is created. Although he said that he feels comfortable
that it's not a problem, he requested that Mr. Thwaites comment
on the matter. He asked if his understanding is correct that
before a trust is signed and authorized in this state, an
affidavit of solvency is signed, and that the Affidavit of
Solvency includes a paragraph in which the applicant swears that
he/she has no debts beyond their ability to pay and that
creating a trust won't thwart the individual's ability to
fulfill his/her financial obligations. He asked if that
paragraph is signed for each trust in the state.
MR. THWAITES answered that the Affidavit of Solvency document
included in the committee packet is one the Alaska Trust Company
requires before accepting a trust for administration. He opined
that generally speaking, an estate planning attorney should have
some such document. He pointed out that the document used by
the Alaska Trust Company specifies that no more than half of an
individual's resources are being placed in a trust. He noted
that there is a similar concept in the securities law for a
qualified investor. There is no intention, he said, for these
[trusts] to be used to defraud creditors. Furthermore, the cost
of establishing and administering these trusts is fairly
significant and, thus, it isn't something that a smaller estate
would undertake.
Number 0603
REPRESENTATIVE GARA asked if it's standard to receive some
assurance [similar to that provided by the Affidavit of
Solvency] before a trust is entered into.
MR. THWAITES noted that there are five competitors in the
[trust] industry in Alaska and due to privacy laws, he couldn't
speak to the practices of the competitors. He specified that
[the Alaska Trust Company] has always [used the Affidavit of
Solvency document].
MR. SHAFTEL pointed out that if the transfer results in the
settlor being insolvent, that in itself is a strong form of
evidence that the trust was created with an intent to evade
creditors. With regard to the practice of attorneys, Mr.
Shaftel relayed his belief that since 1997, [practically all] of
the estate planning attorneys in Anchorage have used the
Affidavit of Solvency and have required financial statements
with CPA verification as well as an agreement from the client
which specifies that all of the representations of the client's
financial condition are accurate. He relayed his belief that
the practitioners are very careful that the trust isn't used to
evade existing creditors.
MR. GREER concurred with Mr. Shaftel's comments. He recommended
that those having questions with regard to the Alaska experience
with self-settled trusts read Mr. Shaftel's article on the
matter.
CHAIR McGUIRE noted that Mr. Shaftel's article is part of the
committee packet.
Number 0356
MR. J. BLATTMACHR concurred with Mr. Shaftel that if an
individual makes a transfer and renders himself or herself
insolvent, that's a per se a fraudulent transfer. For example,
if an individual with debts of a million dollars takes assets
worth $300 million and transfers them to an Alaska trust, the
individual has made a fraudulent transfer and the trust, under
Alaska law, will not provide any asset protection. That is the
rule throughout the United States and hasn't been changed by
prior Alaska legislation or this legislation. Additionally, in
order to perform an Alaska trust, the individual has to be up to
date with child support payments. Therefore, this legislation
would seem to encourage people to catch up.
MR. J. BLATTMACHR said that from experience with his own
practice, virtually all banks, trust companies, and attorneys
insist upon a statement of solvency because assisting someone in
bankruptcy fraud is a go-to-jail crime under federal law and
makes the [attorney] secondarily liable for damage done to
creditors. Therefore, every attorney that he knew of who
performs asset protection is extremely careful to ensure that
there is nothing that will render a particular creditor
insolvent, because of the possibility of being civilly liable
for it and the possibility of going to jail. Every year people
are prosecuted in the U.S. and sent to prison for bankruptcy
fraud.
MR. D. BLATTMACHR offered his understanding that most
institutions use the [Affidavit of Solvency] document or one
similar to it.
Number 0189
REPRESENTATIVE GRUENBERG asked if there is currently a
requirement in law that the settlor file an Affidavit of
Solvency.
MR. THWAITES answered, "Not that I'm aware of."
REPRESENTATIVE GRUENBERG pointed out that with real estate
transactions, the legislature has required a disclosure
statement to be given to the buyer for the purpose of protection
against real estate fraud. [The Affidavit of Solvency] would
provide various protections. Therefore, he asked if those
behind this legislation would have a problem with requiring that
the settlor maintain such an affidavit on file, with its filing
being a continuing Affidavit of Solvency and, thus, requiring
any change to be disclosed under oath.
MR. THWAITES said he didn't want Alaska to have a list of
negative checks against Alaska's trust industry in its
competition with Nevada, Rhode Island, and Delaware.
REPRESENTATIVE GRUENBERG countered that he didn't want to have a
lot of people defrauding creditors, which he viewed as higher
public policy.
MR. J. BLATTMACHR remarked that requiring the grantor to put in
an Affidavit of Solvency at the inception of the trust would be
potentially good for Alaska. However, he said he thought one
would be crazy to do it if it would render the individual
insolvent, because of the possibility of going to jail.
Furthermore, it's a fraudulent transfer and the creditor can get
[the funds] under the law of all states. He opined that making
someone prove that he/she is solvent before being allowed to
create a trust demonstrates the seriousness of the matter to
someone who might be considering such an option for the purpose
of evading creditors.
TAPE 03-29, SIDE A
Number 0025
MR. J. BLATTMACHR noted, however, that it may not be helpful to
require a grantor to continue to give such affidavits of
solvency. As long as a grantor creates a trust in good faith,
without intention to defraud, and is not insolvent at that time,
the fact that he/she later becomes insolvent is ignored under
the law. Thus, although it might be good to require an
affidavit proving solvency when initially establishing a trust,
to require one periodically afterwards would not be practical,
since it would not have any legal impact.
MR. THWAITES agreed.
CHAIR McGUIRE opined that requiring an affidavit initially is a
good suggestion and furthers the legislation's intent.
REPRESENTATIVE GRUENBERG, after noting that it is very difficult
to litigate fraudulent transfer cases and prove an intent to
defraud, turned to the concerns provided in writing by the Child
Support Enforcement Division (CSED), specifically the concern
pertaining to Section 3, page 3, lines 11-12. The CSED document
says in part:
Section 3 of the bill increases the proof required to
prove intent to defraud creditors. Currently, we only
have to prove that the person intended in part to
defraud creditors. ... If the bill passes, we will
have to prove that defrauding creditors was the
primary intent ....
REPRESENTATIVE GRUENBERG posited that the CSED is concerned that
use of the phrase, "made with the primary intent to defraud"
raises the burden of proof.
MR. J. BLATTMACHR opined that the CSED's concern is irrelevant
because, in order to create an effective "Alaska trust" to begin
with, one must be up to date with child support payments. He
acknowledged, however, that perhaps that phrase may make it
harder for a general creditor to prove that the transfer was
made with the intent to defraud.
REPRESENTATIVE GRUENBERG asked whether, in order to set aside
the fraudulent conveyance under Alaska law, it must be shown
that the primary intent was to defraud, or whether all that is
needed is to show that it was an intent in part.
Number 0360
MR. GREER said that under Alaska law, the burden of proof is a
preponderance of the evidence. The reason for inserting the
word primary, he explained, is that rarely will an individual
admit to a fraudulent conveyance. Instead, what it comes down
to is letting the trier of fact determine whether or not certain
badges of fraud exist. He mentioned that according to the First
Nat'l Bank v. Enzler case, there are a number of factors that
can be badges of fraud, one of which is simply a transfer to a
child. He opined that insertion of the term primary was not
intended to raise the burden of proof beyond a preponderance of
the evidence; rather, it simply clarifies that the trier of fact
is allowed to weigh all of the circumstances. Thus, for
example, if it is found that a trust was created for the benefit
of a child, that fact, in and of itself - that it was a transfer
to a child - would not be sufficient to constitute a fraudulent
conveyance.
REPRESENTATIVE GRUENBERG noted that Version I, on page 4, lines
29-30, keeps the current standard of a preponderance of the
evidence. He relayed that his concern is not about the quantum
of proof - which is a preponderance of the evidence rather than
the standard of clear and convincing that is used in Delaware -
and it is not about the badges of fraud. Instead, his concern,
he said, is that under HB 212, "you're going to have to prove
..., to set it aside, that the primary intent was to defraud a
creditor." He said that he could not recall whether, under the
Enzler case, other cases, and current law, it must be proven
that the intent to defraud is a primary intent. He said that
his feeling is that the CSED is correct, and that currently, as
long as there was "an intention" to defraud, the conveyance can
be set aside.
MR. GREER replied:
It can only be set aside if it's shown by a
preponderance of the evidence that it was the intent
of the settlor, in transferring the assets to the
trust, ... to defraud [the] CSED. If they can
establish that, by a preponderance of the evidence,
then that transfer can be set aside. That's how I see
the law now, and how I continue to see the law even
under this bill.
Number 0578
REPRESENTATIVE GRUENBERG said, "So ... if that were one of many
intentions, ... under current law it would be sufficient if you
could show that that was an intention; it would not, under
current law, have to be the primary intention. Right?"
MR. SHAFTEL remarked that for 70 to 80 percent of his clientele,
asset protection is always a concern, as are tax reduction and
asset management. The point is, he added, if someone has
multiple intents, one of which is asset protection, he/she will
say that asset protection for a relative or spouse is one of
his/her intentions. Thus, if that is enough to set aside a
transfer, he warned, that does away with a lot of bona fide
estate planning. He opined that HB 212, including this
provision, closes gaps in the current law relating to trusts and
the protection that trusts provide, and clarifies the areas of
that law that are of concern to those associated with the trust
industry. He opined that current law is ambiguous and could be
construed a number of different ways. He said that if one's
primary intent is to defraud a creditor, then that transfer
should be set aside; however, if asset protection is just one of
ten different intentions, for example, then it should not be
enough.
REPRESENTATIVE GRUENBERG turned to the word "defraud" on page 3,
line 13. He opined that the distinction between "defraud" and
"asset protection" is not simply a "nice" distinction.
Defrauding means to act dishonestly with the intent, basically,
to steal money or [avoid a creditor's claim]; it does not mean,
in the general sense, to protect money from potential future
creditors. For this reason, he indicated, he is concerned
because the language now stipulates that the intent to actually
defraud a bona fide current creditor must be a "primary"
intention.
MR. SHAFTEL opined that HB 212 would provide clarity in the very
area that Representative Gruenberg has concerns about. He
suggested that current language could allow a trier of fact to
go astray and set aside a transfer simply because asset
protection was goal.
REPRESENTATIVE GARA asked whether, if the language was altered
to read "intent to defraud" instead of "primary intent to
defraud", that would interfere with Alaska's ability to be
competitive in the trust market.
MR. THWAITES remarked that it would hinder Alaska's ability
slightly because other states' statutes are a little clearer,
adding that the goal of this legislation is to keep up with
those other states.
Number 0989
CHAIR McGUIRE made a motion to adopt Conceptual Amendment 1: "I
want to allow the bill drafters an opportunity to work it [into]
the right place, but, essentially, it will say, 'A settlor of a
trust is required to sign an affidavit of solvency prior to the
creation of a trust.'"
REPRESENTATIVE GRUENBERG said he strongly supports Conceptual
Amendment 1, but cautioned that the term "affidavit of solvency"
will have to be carefully drafted so that it is similar to what
"we have been given."
CHAIR McGUIRE agreed, and assured members that committee staff
would ensure that all aspects of such an affidavit are
considered.
REPRESENTATIVE GARA objected for the purpose of discussion. He
posited that they were trying to get at the same thing, but said
that if one could envision someone who is trying to defraud a
beneficiary of a child support payment, one could also envision
that that same person would try to get a trust drafted before
child support kicks in. Therefore, he opined, "you would want
to include that the person will have to state under oath that
they're not planning to defraud an anticipated child support
payment.
CHAIR McGUIRE said, "I like it - good friendly amendment - I
like it." [Conceptual Amendment 1 was treated as amended.]
REPRESENTATIVE GARA added: "But I don't think we have to
include that whole trust document. I think just the concepts
that you've discussed can be written down much more briefly than
incorporating a whole affidavit."
CHAIR McGUIRE agreed. She asked whether there were any further
objections to Conceptual Amendment 1 [as amended]. There being
none, Conceptual Amendment 1 [as amended] was adopted.
REPRESENTATIVE GRUENBERG said he still has concerns about the
intent language on page 3, lines 11-13, because it is so
difficult to prove fraud in the courtroom. He asked that the
legislation be held over for the purpose of allowing him an
opportunity to discuss this issue further with the [interested
parties].
CHAIR McGUIRE agreed to hold HB 212 [Version I, as amended] over
until [the next meeting].
HB 92 - CLERGY TO REPORT CHILD ABUSE
Number 1169
CHAIR McGUIRE announced that the final order of business would
be HOUSE BILL NO. 92, "An Act relating to reports by members of
the clergy and custodians of clerical records who have
reasonable cause to suspect that a child has suffered harm as a
result of child abuse or neglect." [Before the committee was
CSHB 92(STA).]
The committee took an at-ease from 3:10 p.m. to 3:13 p.m.
Number 1190
REPRESENTATIVE BOB LYNN, Alaska State Legislature, sponsor, said
that although no one is above the law, there must first be a
law. He elaborated:
One only has to read the national headlines to
conclude it's long past time to mandate reporting by
clergy of actual or suspected sexual abuse of
children. Doctors, and nurses, and teachers already
are required to report. Alaska's children and
Alaska's faith community are Alaska's most important
and valuable resources, and resources most worthy of
protection. That's why I introduced HB 92 .... I
believe HB 92 will be good for children, good for all
of our churches, and good for Alaska.
A couple points, please, before I proceed. Please
understand that [it is] is not my intent to cast
stones at any particular church, or any particular
individual, or any particular group of individuals.
As a point of information and to avoid any
misunderstanding of my intent, I sent my proposed
legislation to our [Legislative Legal and Research
Services] in mid-December of 2002, ... long before
some of the publicity we've seen recently involving
one of our archbishops ....
As another point of clarification or perhaps even
disclosure, I'm a practicing Roman Catholic, active in
my church, but I'm here testifying strictly as a
legislator and strictly as a layperson. I can speak
only of my personal lay-knowledge of church practices
..., and I don't speak for my personal church or
anybody else's church or place of worship. I should
also add, thankfully, there's been no personal
involvement of me or anyone in my family with any [of]
the situations which [have] prompted me to introduce
this bill.
Number 1308
REPRESENTATIVE LYNN continued:
Headlines don't tell the entire story. No church has
a monopoly on sinners, whether they are clergy or non-
clergy, and certainly no church has a shortage of
people who find inaction more convenient than action.
It is neither fair nor accurate to conclude from
newspaper headlines that sexual abuse or failure to
report abuse is territory limited to only one place of
worship. A church [which] organizes a hierarchy of
clergy, such as the Catholic Church and several
others, may actually have an easier reporting
situation than churches in which clergy report only to
their own congregation, where there is not one boss,
so to speak, and no single keeper of personnel
records.
The point is, however a church is organized, the
appalling failure of any [clergy] member to
voluntarily report abuse should not become an excuse
for bashing anyone's church. The surreptitiousness
involving sexual mistreatment of children and a
failure to report abuse [have] no denominational
boundaries. [House Bill 92] is intended to protect
our children and strengthen the entire spectrum of our
faith communities by doing what common sense tells us
needs to be done. All 50 states have some form of
mandated reporting of sexual abuse of children, and
many include clergy among the mandated reporters.
[House Bill 92] does, in fact, provide a reporting
exception for penitential communication, commonly
known as confession. The ... right of confession - in
my faith family, we call it a sacrament - ... is not
generally well understood outside churches that
practice it. It's understandable that some may
believe exclusion of mandatory reporting of confession
in HB 92 is unfair to churches that don't practice a
formal rite of confession. The only thing I can say
is, this hearing and this bill are not the place to
debate the theology of confession or any other church
doctrine or practice.
Number 1402
REPRESENTATIVE LYNN went on to say:
It may also not be commonly known that the right of
confession is not limited to [the] Roman Catholic
Church. Other churches have a similar special right
of confession, including Episcopalians and the various
orthodox churches such as the Greek Orthodox, Russian
Orthodox, and the Orthodox Church of America. Some
well-meaning person is sure to ask the question, and
it's an understandable question, "What's more
important, reporting child abuse or protecting the
seal of confession?" And, frankly, the answer to that
is above my pay grade, and I suppose God would have to
answer that. The reality is, however, that the
absolute protection of the seal of confession goes
back to biblical days, and priests have suffered
execution rather than reveal whatever is contained in
a confession.
With this in mind, we can see that no state law is
going to trump the seal of confession even though some
states have seen fit to have this unenforceable law in
their statute books. Whatever, HB 92 would probably
encompass - and, admittedly here, I'm guessing - over
95-98 percent of the abuses they should be reporting,
and better something than nothing. A case can also be
made that everyone should be mandated to report sexual
abuse and, in fact, some states have that very law.
At some point perhaps we should visit that option, but
... now is the time to put clergy on the mandated
reporting list. Of course, not every allegation of
abuse is valid; properly reported, an allegation can
be investigated and, [if] necessary, guilt or
innocence [can] be determined by [a] proper court of
law.
Number 1462
REPRESENTATIVE LYNN concluded:
There can be no due process of law, however, without a
law. [House Bill 92] has a very broad range of
support, including the direct letters of support from
the Russian Orthodox Diocese of Sitka and Alaska, the
[Episcopal Diocese of Alaska], Pastor John Hunn of the
Anchorage Grace Church, the government relations
department of the Seventh-day Adventist Church, the
Alaska Catholic Conference, and Anchorage Baptist
Temple of which Jerry Prevo is the pastor. Mr. Chip
Wagoner of the [Alaska] Catholic Conference is here
with us today and he may be able to answer some of the
questions as HB 92 pertains to his catholic community.
[House Bill 92] has had two hearings in the House
State Affairs [Standing] Committee and two of your
members were very positive participants in those
hearings, and they'd be able to confirm how thoroughly
we checked over this bill. In summary, no one of any
age or situation should suffer sexual abuse. My bill
simply adds clergy, who treat the health of the soul,
to the current list of mandated reporters, a list that
includes doctors, nurses, and teachers. I think the
requirement for clergy to report suspected child abuse
is both reasonable and too long overdue. [House Bill
92] is not a panacea - and no legislation is a panacea
for anything - but it is a practical step in the right
direction. Our faith communities and our children
need the added protection of HB 92 to help root out
perverts and their enablers, and to preserve the
reputation of our faith communities. And with that
said, I respectfully ask your support of HB 92.
Number 1545
FLOYD SMITH, Consultant, Alaska District Council of the
Assemblies of God, said that there are three issues he wishes to
discuss. One is the confidentiality clause, another is who is
included as clergy, and the last is the immunity provision
contained in the bill. He noted that Alaska District Council of
the Assemblies of God comprise 84 churches ranging from the
Arctic Slope to Wrangell; some of their churches have less than
100 [parishioners] and some have more than 2,500 or 3,000
[parishioners]. He warned that the Alaska District Council of
the Assemblies of God will have some substantial difficulties
meeting all the terms and conditions of HB 92 because of the
wide variance in their churches' resources.
MR. SMITH relayed, however that his organization has now, and
has had for many, many years, a zero tolerance policy with
regard to child abuse, adding that his organization routinely
reports suspected child abuse. Regardless, he opined that HB 92
contains deficiencies. He turned to proposed Sec. 47.17.021 -
reports by clergy members - which provides that there will be an
exemption in reporting of child abuse if the child abuse is
learned of during a penitential communication - in other words,
during a confession. He said that Alaska District Council of
the Assemblies of God would much prefer that the committee look
instead at the Alaska Rules of Court, specifically Alaska Rules
of Evidence Rule 506, which says in part, "A communication is
confidential if made privately and not intended for further
disclosure ...." He noted that in the Alaska Rules of Evidence
Commentary, it says of Rule 506:
It recognizes that the need for a private enclave for
spiritual counseling is not confined to those whose
religion requires confession, but extends to all who
attempt to lead righteous lives with the aid and
comfort of their religion and religious advisers.
MR. SMITH suggested that the committee may wish to consider
replacing the word "penitential" with the word "confidential";
he opined that doing so would be in accord with Rule 506. He
also suggested striking lines 19-23, from page 2, beginning with
the words, "[who,] in the course of the discipline or practice
of". He said that the problem with this language is that with
regard to protestant denominations, the term "duty" - now
located on page 2, line 22 - becomes a term of art, one which he
finds almost impossible to define in terms of his organization's
ministers.
Number 1782
MR. SMITH elaborated:
We have an obligation, under our church discipline or
custom or tenants or however you wish to phrase it,
that when a parishioner or other person approaches a
minister and says, "I'd like to talk to you about
this; this is something I need to get off my chest,"
... that this is intended and is understood to be a
confidential communication just as if the person had
entered [a] confessional booth at the cathedral. To
extend to one denomination a right of confidentiality,
which is denied to another, begins to move toward very
serious and substantial constitutional issues of
establishment of religion, equal protection of the
laws, and, frankly, I'm not sure if we have time to
get into that. But we feel strongly that we are
entitled to the same protection [of] confidentiality
as extends to any other religious denomination.
MR. SMITH then turned to the issue of defining clergy. He noted
that as currently stated in HB 92, "'clergy member' means a
bishop, pastor, priest, minister, rabbi, religious healing
practitioner, or person in a similar leadership position of a
church, temple, religious denomination, or religious
organization". He remarked Rule 506 is much more concise,
relaying that it says, "A member of the clergy is a minister,
priest, rabbi, or other similar functionary of a religious
organization, or an individual reasonably believed so to be by
the person consulting the individual."
MR. SMITH said he assumes that the term "priest" includes a
bishop; thus including the term "bishop" is not necessary. He
also said he assumes that the term "pastor" includes a minister;
but maybe it doesn't, he then acknowledged. He explained that
the Alaska District Council of the Assemblies of God has many
individuals who assume leadership positions, such as those who
lead bible study groups and altar attendants. He asked whether
all such people would become mandated reporters. If so, he
remarked, his organization would have great difficulty with that
stipulation.
Number 1889
MR. SMITH then turned to As 47.17.050, which says in part with
regard to immunity, "a person who, in good faith, makes a report
under this chapter ... is immune from civil or criminal
liability". He said that upon reading that language, it
occurred to him that "we do not have any presumption in that
language, that it is presumed that this report is made in good
faith." Bearing in mind that the law requires a person to
report immediately, and in no case longer than 24 hours, he
opined that "this" is an invitation to a lawsuit and is "a
lurking problem." He mentioned that he is investigating whether
this provision of current law has been utilized. He suggested
that the committee do some research to determine whether "this
immunity provision" is adequate. He said he would prefer a
presumption, which can only be overcome by clear and convincing
evidence.
REPRESENTATIVE GARA, after noting that there is no
confidentiality provision for clergy with regard to elder abuse,
asked why there should be such a provision with regard to child
abuse.
MR. SMITH suggested that the bill should be held over to the
next session in order to allow more time for research on that
issue.
REPRESENTATIVE LYNN, with regard to the definition of clergy
member, said that the term "bishop" was included to accommodate
concerns raised by the Church of Jesus Christ of Latter-day
Saints, whose bishops perform functions similar to ministers and
priests. He said that originally, the definition was written
more narrowly in order that it not include everybody that works
in some capacity for the church; the definition was intended to
just encompass the "actual practicing leadership of the church."
With regard to the term "penitential communication", he noted
that that language is used without a problem in several other
states.
REPRESENTATIVE GARA remarked that "penitential" is defined to
mean the confession of somebody who has done something wrong,
somebody who has done something that they feel guilty about. He
said, "It's almost an irony that we are protecting people who go
to clergy, who have done something wrong, and we are not
protecting the victim." He opined that the current language in
the bill would require clergy to report abuse if a victim
discloses it, but in using the term "penitential communication",
anything revealed by the aggressor would not have to be
reported.
REPRESENTATIVE LYNN clarified that anybody who walks into a
confessional is called a penitent, regardless of whether he/she
is the victim or the aggressor.
Number 2266
WILLIAM MOFFATT, Staff to Representative Bob Lynn, Alaska State
Legislature, sponsor, said that in his faith community, if
somebody comes to confession, regardless of who it is, he, as a
priest, cannot reveal what is said even if given permission by
the penitent. He noted, however, that just because somebody
comes to confession, it does not automatically mean that he/she
will get absolution. In his church, he remarked, if he won't
give someone absolution, no other priest can. He indicated that
he would tell someone who confesses to a crime that he/she is
not going to get absolution until he/she reports that crime to a
civil authority. He opined that with regard to regular
conversations, clergy have a duty as citizens to report abuse of
any kind. He remarked that repentance is not just feeling sorry
for one's actions; rather, it includes being sorry for an
action, being willing to do something about it - to make amends
- and following through with [making amends]. He opined that
the [confidentiality provision in] HB 92 is intended to
recognize that some religions have a certain centuries-old
tradition.
TAPE 03-29, SIDE B
Number 2345
JOANNE GIBBENS, Program Administrator, Central Office, Division
of Family & Youth Services (DFYS), Department of Health & Social
Services (DHSS), said that the DHSS supports the intent of HB 92
to include clergy members in the list of mandated reporters.
However, she asked the committee to examine the provision that
exempts the reporting of neglect. She elaborated:
The department feels that, as mandated reporters,
clergy should be required to report everything that
... all current mandated reporters are required to
report. I know there's been some concern in previous
hearings about that issue and, ... for clarification
purposes, I just wanted to share with the committee
the fact that, ... first of all, issues of neglect are
the number one most reported type of child
maltreatment nationally. Issues of neglect ... also
result in long-term damages to children, even more so
than some other types of abuse. And we could
certainly share with the committee documentation of
that through national studies and those types of
things. Child deaths related to neglect are almost on
an equal keel with child deaths related to physical
abuse, looking at a number of national studies.
There's been some concern that [including] neglect may
mean having to ... file a report with the division or
with law enforcement because a family is poor and does
not have some of the financial abilities or other
abilities to meet the needs of their children. And
that's certainly not the case. And when we train
mandatory reporters - which we would do for clergy as
well - we would, of course, include that in our
training. So when we're talking about making reports
to the division regarding neglect, we're talking about
instances where families may have the resources,
themselves, to provide for the physical needs of their
children [but] refuse to do so; [they] don't take
adequate care of their kids. We may be talking about
families where assistance has been offered [but]
refused.
Number 2229
MS. GIBBENS went on to say:
Quite often, reports of neglect allow us to intervene
early with a family, to maybe prevent future and more
severe abuse. And neglect calls often don't result in
taking custody of a child, but often result in the
division being able to facilitate services for a
family. For instance, you might have a single mother,
and maybe there's been a long-term pattern of ... not
being able to adequately feed ... or clothe her child,
and she's struggling because she doesn't know whether
to stay home ... but needs to find a job, and doesn't
have the resources.
With our involvement, we can help her get daycare, and
pay for that, for her child. So, in essence, ... we
would like the committee to ... reconsider not
including the neglect issue in terms of the mandatory
reporting, because we really do feel ... [that] we
have the same goals as clergy members do ... in terms
of the health and safety of their parishioners and
people that they care for, and see this as a way for
us to potentially help families that may not be able
to get the help they would otherwise.
CHAIR McGUIRE thanked Ms. Gibbens for her testimony, and
mentioned that there might be an amendment that would address
the issue of neglect.
Number 2157
TED BOATSMAN, Reverend, and Superintendent, Alaska District
Council of the Assemblies of God, relayed that his organization
has a zero tolerance policy regarding abuse of children, women,
and the elderly. He noted that his organization has removed the
credentials of those who have violated that policy. He relayed
that he wanted HB 92 to be denominationally friendly,
acknowledging, however, that that might be difficult,
particularly with the use of the term "penitential
communication". He said that as a protestant, he sees himself
having to defend which conversations were intended to be private
and confidential, and which were not.
MR. BOATSMAN added, therefore, that he supports the language in
Rule 506, as previously mentioned by Mr. Smith, regarding
communications and clergy members. He then turned to the term
"similar leadership position" on page 3, line 2, of HB 92. He
said he is assuming that this term includes church elders, who,
although not ordained in his organization, are held to very high
spiritual standards, and who also find themselves in positions
similar to actual clergy. He opined that HB 92 is a good idea
that just needs to be adjusted a bit to ensure that it is
denominationally friendly and doesn't create liability issues
for certain religions but not others.
Number 2002
CHIP WAGONER, Lobbyist for the Alaska Catholic Conference
("Conference"), explained that the Alaska Catholic Conference is
made up of the three Roman Catholic bishops of Alaska, and is
the vehicle "they" use when speaking on public policy matters.
He said that the Conference supports HB 92 and, after hearing
Ms. Gibbens's testimony, would support putting the term
"neglect" back in the bill. Turning to the issues raised by Mr.
Smith, he said that the Alaska Rules of Evidence, Rule 506, "do
not provide any sort of an exception unless there's a case
action or proceeding currently in court." Therefore, in order
to use [Rule 506], the statute itself must contain the language
of that rule.
MR. WAGONER went on to say:
[The] position of our church is, number one, our
priests and our bishops and what we call our fulltime
ministers ... - all pastoral ministers - of the
diocese of Juneau are to assume that they are
mandatory reporters. So if we have our director of
religious education or anyone else that hears a report
of sexual abuse or neglect, they are to assume that
they are mandatory reporters and should report it.
And whether you pass the law or not, that is the
position of our diocese, and it's the position of the
Anchorage archdiocese. And the Fairbanks diocese,
which has a brand new bishop, is currently reviewing
their policies, but I'm sure that would probably apply
there too.
The one time that our church would not report
allegations of suspected sexual abuse or neglect is in
the very narrow sacrament of penance and
reconciliation. So if a person came to one of our
priests and wanted to talk about their marriage
problems, and sexual abuse came up, we would be
reporting it, whether you pass the law or not. If one
of them came and said something about a neighbor to
the priest, it would be reported. It is only in the
very narrow exception, per our church's policy, of the
sacrament of penance and reconciliation where we would
not report it. And the sacrament of penance and
reconciliation, depending on which book you want to
read, actually started in the second century. The
form we know today started in the fifth century.
Number 1883
MR. WAGONER read from an unspecified document:
What happens in the sacrament of penance and
reconciliation is almost more than one can imagine.
If we could meet Jesus today, we would expect to be
received with love and compassion because he is
perfect and knows what it is to forgive. Instead, we
confess to an ordinary human being who represents
Jesus Christ sacramentally.
MR. WAGONER added that his church has seven sacraments, of which
"this is one, and they all flow directly from Jesus Christ."
Noting that he was quoting from Pope John Paul II, he said:
In faithfully observing the centuries old practice of
the sacrament of penance, the practice of individual
confession, with a personal act of sorrow and the
intention to amend and make satisfaction, the church
is therefore defending the human soul's individual
right - man's right to a more personal encounter with
the crucified forgiving Christ, with Christ saying,
through the minister of the sacrament of
reconciliation, "Your sins are forgiven; go, and do
not sin again."
MR. WAGONER said his church would like, at the very least, to
see the narrow exception pertaining to information revealed
during the sacrament stay in the bill, although he acknowledged
that other churches may not have the sacrament. He assured the
committee that [aside from that exception] anytime those other
churches would be required to report something, so, too, would
his church. In response to questions, he said he would find out
for the committee who can receive the sacrament.
REPRESENTATIVE GARA opined that it is that very narrow
definition of the sacrament that causes the problem. He
elaborated:
Most other religions have an equivalent thing, but
that is not as narrowly defined. ... Many other
religions have a confidential communication that you
can have with a religious leader, which, in your
church, would be reportable, but they don't have a
sacramental confession. And, so, I don't think we can
write the bill that would just allow an exception for
the sacramental confession without having an equal
protection problem for the other religions. But,
then, if we extend the definition to be broad enough
that it also covers confidential communications
between a clergy and a member, which would be
reportable by the Catholic church if it were outside
of the sacrament and confessional context - if [we]
extend the definition to cover those things - now
we're covering things that would be reportable by your
church, but [only] to be fair to the other churches.
And I don't know that that's the proper way to go
about it, either.
Number 1644
MR. WAGONER, in response, asked that his church not be penalized
simply because other churches have chosen not to have the
sacrament of confession, which he characterized as being at the
heart of his church for centuries.
REPRESENTATIVE LYNN, in response to a request by Chair McGuire,
said he would provide the committee with information regarding
the reporting requirements in other states.
CHAIR McGUIRE remarked that it is important to ensure that one
religion's right to confidential communication is not being
protected more than the rights of other religions.
MR. WAGONER noted that information regarding other states can be
found in a document produced by the National Clearinghouse on
Child Abuse and Neglect Information, which is a service of the
Children's Bureau; Administration on Children, Youth and
Families; Administration on Children and Families; U.S.
Department of Health and Human Services.
CHAIR McGUIRE relayed that Ms. Gibbens has indicated that she
will provide that document to the committee.
MR. WAGONER said that according to his understanding, in only
New Hampshire and West Virginia is the confessional not
privileged, and some states simply require "all persons" to be
mandatory reporters. In response to a question, he said he
would research whether people who go to confession are
encouraged to turn themselves in to law enforcement for acts
that may warrant it.
CHAIR McGUIRE noted that with the attorney-client privilege,
there is a distinction between past acts and future acts in that
attorneys are required to report possible future acts. She
asked whether there is something similar for information
revealed in the confessional.
[Although inaudible on the tape, Mr. Wagoner indicated that
there is not.]
Number 1398
REPRESENTATIVE GARA thanked Mr. Wagoner for being willing to
have the reporting of neglect added back in the bill. He then
again raised the point that clergy are, by statute, required to
report instances of elder abuse, regardless of where or when it
is learned of. He opined that this is also the right approach
to take on the issue of child abuse, noting that the competing
concerns of protecting somebody from harm and protecting
someone's confidentiality are common to both types of abuse. He
said it seems to him that protection from harm is more
important. He asked Mr. Wagoner for the church's position
regarding the distinction between the reporting requirements for
elder abuse and the reporting requirements for child abuse.
MR. WAGONER relayed that in the eyes of the church, there is no
distinction between elder abuse and child abuse: the sacrament
is inviolate for both. He said he would be very surprised to
learn that there have been any reports of elder abuse that came
from information learned in the confessional.
REPRESENTATIVE GARA said:
I think we recognize that if we ... decided not to
grant a privilege, ... as a matter of conscience, some
members of the clergy would not obey it. And that
would probably be the reality. And that's probably
the reality in any other states. So, I understand
that.
REPRESENTATIVE SAMUELS remarked that lacking an exception for
information revealed in the confessional, the legislation would
be criminalizing priests.
REPRESENTATIVE GARA pointed out, however, that such is already
the case regarding elder abuse.
REPRESENTATIVE GRUENBERG opined that both sets of laws should be
congruent: either there should be reporting without exception
for both types of abuse, or there should be an exception
pertaining to information revealed in the confessional for both
types of abuse.
CHAIR McGUIRE asked whether there are any reporting requirements
in statute for spousal abuse.
Number 1236
MS. GIBBENS said that domestic violence is addressed in a couple
of ways. She relayed that AS 47.17.035 speaks to the duties of
the department with regard to domestic violence cases, and that
AS 47.17.020(h) says:
This section does not require a person required to
report child abuse or neglect under (a)(6) of this
section to report mental injury to a child as a result
of exposure to domestic violence so long as the person
has reasonable cause to believe that the child is in
safe and appropriate care and not presently in danger
of mental injury as a result of exposure to domestic
violence.
MS. GIBBENS noted that AS 47.17.035 stipulates that the
department must develop protocols with the Council on Domestic
Violence and Sexual Assault (CDVSA). She said that if the issue
of domestic violence arises during an investigation of child
abuse, "it needs to be something that has to be screened for,
and then ... a decision needs to be made about the appropriate
protection of the child." She added that the department is
required to make reasonable efforts to protect the child and
prevent the removal of the child from the custody of the parent
who is not the domestic violence offender.
REPRESENTATIVE GARA surmised, then, that currently there are no
specific reporting requirements regarding domestic violence.
CHAIR McGUIRE announced that HB 92 would be held over.
REPRESENTATIVE LYNN asked for the committee's assistance
regarding specific changes.
REPRESENTATIVE SAMUELS asked Representative Lynn whether he had
any objection to replacing the language pertaining to neglect.
REPRESENTATIVE LYNN said he did not, noting that it was part of
the original bill.
REPRESENTATIVE GRUENBERG mentioned that at the next meeting, he
would be offering an amendment that would incorporate Mr.
Smith's suggestion regarding Rule 506.
REPRESENTATIVE GARA mentioned that perhaps instead of bringing
in the entirety of Rule 506, the same goal could be accomplished
simply by changing "penitential communication" to "confidential
communication".
CHAIR McGUIRE, after some committee discussion, noted that at
the next hearing, one of the issues that would be addressed
would be the differences between the reporting requirements in
HB 92 and the elder-abuse statute.
[HB 92 was held over.]
ADJOURNMENT
Number 0910
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 4:17 p.m.
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