03/17/2008 02:05 PM House JUD
| Audio | Topic |
|---|---|
| Start | |
| HB103 | |
| HB278 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
March 17, 2008
2:05 p.m.
MEMBERS PRESENT
Representative Jay Ramras, Chair
Representative Nancy Dahlstrom, Vice Chair
Representative John Coghill
Representative Ralph Samuels
Representative Max Gruenberg
Representative Lindsey Holmes
MEMBERS ABSENT
Representative Bob Lynn
COMMITTEE CALENDAR
HOUSE BILL NO. 103
"An Act amending Rule 62, Alaska Rules of Civil Procedure, to
limit the amount of the bond required to stay execution of a
judgment in a civil litigation during an appeal or review; and
amending Rules 204 and 205, Alaska Rules of Appellate Procedure,
to limit the amount of the bond required to stay execution of a
judgment in a civil litigation during an appeal."
- HEARD AND HELD
HOUSE BILL NO. 278
"An Act relating to sex offenders and child kidnappers."
- MOVED CSHB 278(JUD) OUT OF COMMITTEE
HOUSE BILL NO. 355
"An Act requiring the disclosure of the identity of certain
persons, groups, and nongroup entities that expend money in
support of or in opposition to ballot initiatives and the
aggregate amounts of significant contributions or expenditures
made by those persons, groups, and nongroup entities."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 103
SHORT TITLE: BOND REQUIREMENT ON APPEAL
SPONSOR(S): REPRESENTATIVE(S) COGHILL
01/22/07 (H) READ THE FIRST TIME - REFERRALS
01/22/07 (H) JUD
03/12/08 (H) JUD AT 1:00 PM CAPITOL 120
03/12/08 (H) Heard & Held
03/12/08 (H) MINUTE(JUD)
03/17/08 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 278
SHORT TITLE: SEX OFFENDER/CHILD KIDNAPPER REGISTRATION
SPONSOR(S): REPRESENTATIVE(S) BUCH, DOLL, GRUENBERG
01/04/08 (H) PREFILE RELEASED 1/4/08
01/15/08 (H) READ THE FIRST TIME - REFERRALS
01/15/08 (H) JUD, FIN
03/13/08 (H) JUD AT 1:00 PM CAPITOL 120
03/13/08 (H) Heard & Held
03/13/08 (H) MINUTE(JUD)
03/17/08 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
MARGARET R. SIMONIAN, Attorney
Friedman Rubin & White Trial Lawyers
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 103.
DYLAN C. BUCHHOLDT, Attorney
Pentlarge Law Group
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 103.
MICHAEL J. SCHNEIDER, Attorney
Law Offices of Michael Schneider, P.C.
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 103.
VICTOR SCHWARTZ, Attorney; Private Sector Co-Chair
Civil Justice Task Force
American Legislative Exchange Council (ALEC)
Washington, D.C.
POSITION STATEMENT: Testified during the hearing on HB 103.
EMILY NENON, Director
Alaska Government Relations
American Cancer Society (ACS)
Anchorage, Alaska
POSITION STATEMENT: Answered a question during the hearing on
HB 103.
REPRESENTATIVE BOB BUCH
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as one of the joint prime
sponsors of HB 278.
ACTION NARRATIVE
CHAIR JAY RAMRAS called the House Judiciary Standing Committee
meeting to order at 2:05:20 PM. Representatives Samuels,
Dahlstrom, Coghill, and Ramras were present at the call to
order. Representatives Holmes and Gruenberg arrived as the
meeting was in progress.
HB 103 - BOND REQUIREMENT ON APPEAL
2:05:33 PM
CHAIR RAMRAS announced that the first order of business would be
HOUSE BILL NO. 103, "An Act amending Rule 62, Alaska Rules of
Civil Procedure, to limit the amount of the bond required to
stay execution of a judgment in a civil litigation during an
appeal or review; and amending Rules 204 and 205, Alaska Rules
of Appellate Procedure, to limit the amount of the bond required
to stay execution of a judgment in a civil litigation during an
appeal." [Before the committee was the proposed committee
substitute (CS) for HB 103, Version 25-LS0401\E, Bailey, 5/2/08,
which had been adopted as the work draft on 3/12/08.]
2:06:09 PM
MARGARET R. SIMONIAN, Attorney, Friedman Rubin & White Trial
Lawyers, stated that she was a life long Alaskan, practicing law
in Anchorage. She noted that she works for a firm that
specializes in insurance cases and contract disputes. She
stated that she wished to speak in opposition to HB 103, and
opined that this body, other legislatures around the country,
and Congress have spent time attempting to curb the incidence of
frivolous lawsuits. However, this bill, unwittingly, sets up a
system of frivolous appeals, and is a dangerous precedent to
set. She said that she read through the materials that were
available from the sponsor and noted that the focus seems to be
that this bill would only generate appeals from plaintiffs who
have won, and defendants who have lost. She argued that HB 103
would affect any losing party in a dispute, because it sets up a
system in which the person who loses gets to appeal, without
having to post a bond in an amount equal to the amount of the
judgment.
MS. SIMONIAN pointed out that this problem was recognized in the
fiscal note, in which the Department of Law (DOL) stated that
the fiscal note is indeterminate but likely significant. The
reason the fiscal note can not be calculated is that a great
deal of post trial litigation would ensue, she opined. She
reported that the sponsor, and those who support the bill, seem
to believe that HB 103 would protect the party that won at
trial, in that it offers protection if the loser attempts to
hide assets or dissipate assets in order to avoid paying the
judgment. However, nothing in this bill provides a mechanism
for ensuring that the assets are not hidden. She explained that
the reality of an appeal is that it lasts for many years. Since
the bill does not create a mechanism to figure out if a company
is hiding assets, the burden is on the person who won at trial
to keep track of the losing party's assets. She opined that the
bill was not necessary since the trial court has the discretion
to lessen the amount of an appeal bond, as well as to increase
it; however, this fact is not recognized by the sponsor in any
of the supporting documents. Ms. Simonian stated that if a
company did not have the assets to post a bond on appeal and
could potentially face bankruptcy in order to do so, the company
could go to the trial court and request a lessor bond amount.
MS. SIMONIAN further explained that HB 103 would apply with
equal force to business disputes. She referred to three
examples in the committee materials in which businesses who lost
were forced into bankruptcy. However, none of those cases
involved personal injury or an individual plaintiff versus a
company situation. Instead, the cases involved businesses
against businesses. She opined that, in cases in which a
business has a contract dispute with another business, the bill
would encourage the losing party to appeal, even if the losing
party does not have a meritorious reason for appealing. She
warned that the business community may not understand that this
bill might end up hurting the business community since
[businesses] would be tied up in the appellate process, even in
instances in which an appeal does not have any merit.
2:11:01 PM
REPRESENTATIVE GRUENBERG referred to page [2], line 6, in the
proposed CS, Version E, that contains the phrase "dissipating
assets". He explained that "dissipating" implies an action on
the part of the appellant and offered a hypothetical example in
which a company is falling into hard times, but the company is
not taking action to dissipate assets. He opined that HB 103
would apply rather than having the exception apply. Thus, the
judgment could become worthless even though the appellant is not
intentionally or negligently "dissipating assets."
MS. SIMONIAN argued that is always the case. She cautioned the
body against the claim that, without this bill, people who have
a judgment against them would sometimes go into bankruptcy
because they can not afford the appeal bond. She said, "The
bottom line is that sometimes companies go into bankruptcy
because they can't afford to pay the judgment that a jury has
said they owe, whether that's to an individual or to another
company." Ms. Simonian advised that the claim that this aspect
of the bill somehow protects the party that won at trial is
illusory; in fact, if a party can prove by a preponderance of
the evidence that a company is intentionally dissipating assets,
the party can force that company to post a bond just by saying
it, and not providing a practical method to do so, does not
provide any protection at all.
MS. SIMONIAN then asked:
How is a person who has ... won at trial, whatever the
dispute may be, whether it is a contract dispute or a
real estate dispute, ... supposed to prove by a
preponderance of the evidence that the party that lost
is now trying to hide or dissipate its assets? ...
There's no way to prove that.
2:14:49 PM
REPRESENTATIVE GRUENBERG remarked:
If there is a litigable issue of "intentional
dissipation" and if the appellee bears the burden of
proof by a preponderance of the evidence, isn't that,
in essence, an action for fraud within the main
action? Aren't those basically the elements you have
to prove to show a fraudulent transfer?
REPRESENTATIVE GRUENBERG then indicated the difficulty in
litigating a fraudulent transfer.
MS. SIMONIAN agreed. In fact, in order to protect the judgment,
the person would have to litigate a separate case and by passing
this bill, the committee would impose a whole new level of
litigation on both parties, which is essentially a fraudulent
transfer case with the same standard of proof, which is a
preponderance of the evidence. She also pointed out that, in
order to access this sort of information, which is not public
information, the information would have to be in the context of
litigation.
2:16:41 PM
CHAIR RAMRAS referred to the many letters of support in members'
files and asked whether she could explain their support for the
bill.
MS. SIMONIAN surmised that HB 103 was sold to supporters as a
bill of tort reform. Thus, the business community is in support
of tort reform, and the bill does make it easier for a business,
that has lost at trial, to appeal a case. However, the other
part of that equation is that this would also make it easier for
a business that has lost to another business in a contract
dispute to make a frivolous appeal. Ms. Simonian dismissed the
idea of multi-million dollar judgments driving businesses into
bankruptcy as unsubstantiated. In fact, the biggest judgment
issued in the state of Alaska after trial was the John Ellsworth
v. Cook Inlet Region, Incorporated (CIRI) case, in which the
jury awarded each side millions of dollars. Furthermore, had HB
103 been in effect at that time, one of the parties would have
been able to appeal the jury's decision without posting a bond
that was the amount of the judgment against them.
MS. SIMONIAN presented a scenario in which a hotel owner sues
another party for defaulting on a contract and wins, then that
the company, regardless of the merits of the appeal, would be
allowed to appeal without posting a bond in the amount of the
judgment. The hotel owner would not only need to litigate the
appeal, but would need to litigate whether the company is trying
to hide its assets to avoid paying the money that they owe you
since they defaulted on their contract. She surmised that the
letters of support came from people who may not have understood
the implications of the bill. She stated that she read some of
the letters, which seemed to have the misconception that
someone's right to trial was somehow infringed and that this
bill would make it easier for a person to exercise his or her
right to trial.
CHAIR RAMRAS said, "With all due respect, Ms. Simonian, as a
person in the private sector, than I fundamentally misunderstand
this bill, because that's precisely the way I get it."
REPRESENTATIVE GRUENBERG pointed out that the language states
that the amount of the bond may not exceed the lesser amount of
$5 million, or 10 percent of the appellant's net worth. He
asked, in a case in which punitive damages are not at issue, but
the net worth of the company may be an issue, at the point of
trial, up to the time of judgment, whether the bill would add a
layer of post trial discovery.
MS. SIMONIAN confirmed that post trial discovery would be added
since the party would never know a company's net worth unless a
jury has decided that punitive damages are appropriate. She
opined that if punitive damages were not an issue, that HB 103
would require another layer of litigation in order to determine
whether $5 million, or 10 percent of the company's net worth, is
less.
2:22:10 PM
REPRESENTATIVE GRUENBERG then inquired as to whether Ms.
Simonian was aware of cases in which an insurance company has
decided to appeal, not for the benefit of the insured, but
because an important point of insurance law is involved.
MS. SIMONIAN said yes.
REPRESENTATIVE GRUENBERG then remarked:
And does this then measure who the real appellant is
because ... in an auto accident, and you've got person
A versus person B, who maybe is simply, doesn't even
have anything except for a $50,000 policy ... but the
real issue is something that Allstate or State Farm or
Geico ... has a real interest in.
MS. SIMONIAN said that she was unsure. She opined that the
insurance company would argue to "look at the person and not the
insurance company." She said that she thought that the intent
of the bill was to protect the idea that a business should not
go into bankruptcy in order to appeal a decision; therefore,
looking at the insurer would undermine the intent.
REPRESENTATIVE GRUENBERG observed that the insurance company is
not a named appellant or a named appellee.
MS. SIMONIAN concurred, adding that the judgment would be
against the assets of the insured, not of the insurance company.
REPRESENTATIVE COGHILL, speaking as the sponsor of HB 103,
expressed his understanding that "the insurance is the set for
the bond, but the strict liability is on the appellant."
MS. SIMONIAN said, "That is true if they're insured, typically
... the judgment would only be the amount they're insured ...."
REPRESENTATIVE COGHILL then asked whether a company has ever had
to fight its insurance company to maintain the agreed bonding
requirement.
MS. SIMONIAN indicated that she had not handled a case like
that.
2:26:05 PM
REPRESENTATIVE COGHILL, referring to the matter of fairness,
asked whether it is appropriate for an appellant to dissipate
his or her assets.
MS. SIMONIAN said no.
REPRESENTATIVE COGHILL then inquired as to whether the amount,
or the language in the bill, was disturbing in this rule change.
MS. SIMONIAN responded that the amount is disturbing, and while
the language is intended to ensure that there is not an abuse of
the appellant process, she still has concerns about the bill.
REPRESENTATIVE COGHILL questioned whether, during the appellant
process, the judgment is in the hands of the court, and whether
there would be a separate trial or [the proceedings would be] a
part of the appeal process.
MS. SIMONIAN explained that, when a judgment is entered, the
trial court is done and responsibility transfers to the
appellate court. However, the bill requires the parties to
continue to litigate before the trial court and simultaneously
litigate the appeal.
REPRESENTATIVE COGHILL surmised that the issues of "state and
other governmental entity," "intentionally dissipating assets,"
and "environmental disaster" become problematic because they are
in a very different discovery mode.
MS. SIMONIAN concurred, adding that an appellant is not allowed
to dissipate assets and so if there were no exception there
would be issues of fraud. She also stressed that an appellant
would be required to reveal its financial records to the other
party throughout the years of the appeal process.
REPRESENTATIVE COGHILL stated that the purpose is [to prevent]
an appeal that would immediately drive a company into
bankruptcy, yet maintain sympathy for the prevailing party.
There is also the attempt to lower the limit of appeal and
establish safeguards.
MS. SIMONIAN warned that the safeguards are intrusive and are
nearly impossible to be effective in the realm of litigation,
because whoever won would have to become a watchdog over the
party that lost.
2:32:59 PM
REPRESENTATIVE COGHILL described his interest in lessening bond
requirements, and explained that the bill is modeled on
legislation in other states. He asked whether the establishment
of a cap on the amount of bonds and the addition of performance
requirements would still create problems. He then asked, "Do
you think that it should always be the value of the judgment or
is there some place for a cap?"
MS. SIMONIAN explained that [the existing] rule has a built-in
mechanism to ensure that an unfair result does not occur. She
reminded the committee that the amount of the bond is at the
discretion of the court and does not have to be equal to the
amount of the judgment; in fact, a company could present
information to the court and request a lower amount. She
acknowledged that unfair situations have occurred. Furthermore,
a low cap on bonds would encourage frivolous appeals. Ms.
Simonian said that the situation involving the Exxon Valdez is
an example of "playing the appellant game," at the expense of
the parties who should have been compensated, for 20 years.
REPRESENTATIVE GRUENBERG noted that normally the federal
bankruptcy law protects a debtor, and a person who has a
judgment is just another type of creditor. He opined that the
sponsors of the bill are seeking protection for debtors against
creditors. Recently, the federal government has sought to limit
the protection that debtors have under the bankruptcy Act, and
the bill is counter to that.
[Chair Ramras turned the gavel over to Vice Chair Dahlstrom.]
MS. SIMONIAN agreed.
REPRESENTATIVE GRUENBERG also pointed out that those with
judgments against them often delay [payment], because the amount
of interest is far less than the value of the use of the money.
He gave an illustrative example.
MS. SIMONIAN strongly agreed, and described the financial
advantages to a party that holds up a judgment for several
years.
REPRESENTATIVE GRUENBERG then referred to Alaska Rules of Civil
Procedure, Rule 80, Bonds and Undertakings, and asked for its
effect in this circumstance.
MS. SIMONIAN said she had not considered its effect.
2:43:15 PM
DYLAN C. BUCHHOLDT, Attorney, Pentlarge Law Group, stated that
he represents plaintiffs in personal injury claims. He said
that he echoed many of Ms. Simonian's comments and added that
the protections the bill was seeking are built-in the current
process. In addition, he pointed out that 97 percent of civil
cases are settled before trial and the remaining cases do not
warrant a change in the rules. Furthermore, he opined that the
present bond requirement is the only "rock solid" way to protect
the judgment because the other party would not have a way to
determine whether a dissipation of funds has occurred; in fact,
enactment of the bill would force every appellee to immediately
file suit to protect their assets.
MR. BUCHHOLDT then spoke of the "environmental disaster"
exception. Although this exception is the direct result of the
litigation involving the Exxon Valdez, there remains the
question of whether other cases, such as those involving
catastrophic injuries to families, should also be excepted. Mr.
Buchholdt concluded that the bill was really written for the
benefit of big business, such as insurance companies, and he
encouraged the committee to table the bill.
[Vice Chair Dahlstrom returned the gavel to Chair Ramras.]
2:48:08 PM
MICHAEL J. SCHNEIDER, Attorney, Law Offices of Michael
Schneider, P.C., informed the committee that he has practiced
law in Anchorage for 33 years. He referred to his letter of
March 15, 2007, to Senator Huggins that addressed an identical
bill, SB 48. He joined with the comments of the two previous
witnesses and added that there would always be extremely rare
instances, in the current system, where outcomes prove to be
unfair. However, HB 103 would change a system that works well
for everyone and have the system address "cases that are a few
standard deviations away from the main." Mr. Schneider also
stressed to the committee that the bill is terrible public
policy due to the fact that anyone, or any business, can be
drawn into litigation, and HB 103 would afford the loser
"another bite at the apple" paid for by the public. Mr.
Schneider re-stated the avenues of relief that are already
afforded a party assessed a judgment. He then concluded that
there was no reason for changes to a system that was fair to
all.
REPRESENTATIVE GRUENBERG pointed out that the bill is
inconsistent in its use of the terms "intentionally dissipating
assets" and "dissipating assets."
MR. SCHNEIDER said, "That would be a bad idea." He then
described the difficulty and the cost, after a judgment is
issued and the discovery period is over, to determine whether a
company is dissipating assets.
REPRESENTATIVE GRUENBERG stated that under existing rules, the
amount of the supersedeas bond is the amount of the judgment,
plus the costs on appeal, plus interest. However, the amount
required by HB 103 would only be the amount of the judgment. He
then asked for an estimate of the difference in the amounts.
MR. SCHNEIDER estimated that there would be a difference of 15-
20 percent.
REPRESENTATIVE GRUENBERG further asked how one would know
whether costs were "outside the ordinary course of business."
MR. SCHNEIDER compared the statement to "How many legal fairies
can dance on the head of a pin?"
2:58:57 PM
VICTOR SCHWARTZ, Attorney, Private Sector Co-Chair, Civil
Justice Task Force, American Legislative Exchange Council
(ALEC), disagreed with previous testimony that an appellant has
nothing to lose, considering the amount of the bond that could
be forfeited. Furthermore, 37 states already have a similar
law, and no problems have been reported. He then stressed that
the right to appeal is an important right and the bill intends
to address cases in which a judge has made a significant error.
CHAIR RAMRAS closed public testimony on HB 103.
REPRESENTATIVE SAMUELS referred to page 3, lines 6 and 7, of the
bill that read:
(A) to awards in actions or proceedings in which the
state or another governmental entity is a party;
REPRESENTATIVE SAMUELS than asked the representative for the
American Cancer Society the following:
When I read that it seemed that that was the way to
get away from the issue of big tobacco and their
appeal bonds, which was an issue three or four years
ago, and I'm just wondering if you have an opinion on
that.
EMILY NENON, Director, Alaska Government Relations, American
Cancer Society (ACS), stated that she has not seen that version
of the bill.
3:03:25 PM
CHAIR RAMRAS announced that HB 103, Version E, would be held
over.
HB 278 - SEX OFFENDER/CHILD KIDNAPPER REGISTRATION
3:03:53 PM
CHAIR RAMRAS announced that the final order of business would be
HOUSE BILL NO. 278, "An Act relating to sex offenders and child
kidnappers." [Before the committee was the proposed committee
substitute (CS) for HB 278, Version 25-LS1104\E, Luckhaupt,
2/21/08, which had been adopted as the work draft on 3/13/08.]
CHAIR RAMRAS recalled that previous discussion raised the
questions of whether people could be identified by their
"handles" and whether clarification of the definition of
"Internet communication identifier" would be provided.
3:05:19 PM
REPRESENTATIVE BOB BUCH, Alaska State Legislature, speaking as
one of the joint prime sponsors of HB 278, concurred and asked
Representative Holmes to present Amendment 1, an amendment
labeled 25-LS1104\E.2, Luckhaupt, 3/17.08, which read:
Page 1, line 10, following "address;":
Insert "or"
Page 1, lines 11 - 14:
Delete all material and insert:
"(C) establishment of an online identifier
or any change to an online identifier; in this
subparagraph, "online identifier" has the meaning
given in AS 12.63.010;"
Page 3, lines 4 - 6:
Delete all material and insert:
"(I) each online identifier used by the sex
offender or child kidnapper;"
Page 3, lines 16 - 17:
Delete "electronic mail address, instant
messaging address, or other Internet communication"
Insert "online"
Page 3, line 19:
Delete "address or"
Page 3, following line 19:
Insert a new bill section to read:
"* Sec. 4. AS 12.63.010(f) is amended to read:
"(f) In this section,
(1) "correctional facility" has the meaning
given in AS 33.30.901;
(2) "online identifier" means any
electronic mail address information or instant
message, chat, social networking, or other similar
Internet communication name, but does not a include
social security number, date of birth, or pin number."
Renumber the following bill sections accordingly.
Page 3, line 20:
Delete "a new subsection"
Insert "new subsections"
Page 3, lines 23 - 24:
Delete "electronic or messaging address or
Internet"
Insert "online"
Page 3, line 24:
Delete "address or"
Page 3, lines 26 - 27:
Delete "electronic or messaging addresses and
Internet communication"
Insert "online"
Page 3, line 30:
Delete "addresses or"
Page 3, following line 31:
Insert a new subsection to read:
"(j) In this section, "online identifier" has
the meaning given in AS 12.63.010."
Page 4, line 11:
Delete "electronic or messaging addresses or
Internet communication"
Insert "online"
Page 4, line 13:
Delete "addresses and"
Page 4, lines 14 - 16:
Delete "electronic or messaging address, or any
changes to those addresses, or the establishment of an
Internet communication identifier,"
Insert "online identifier"
Page 4, lines, 18 - 19:
Delete "electronic or messaging addresses or
Internet communication"
Insert "online"
Page 4, line 19:
Delete "addresses and"
3:05:40 PM
REPRESENTATIVE HOLMES explained that Amendment 1 is aimed at
defining "online identifier" and adding conforming language.
REPRESENTATIVE BUCH stated that Amendment 1 answered
Representative Coghill's questions and was patterned after
Arizona's registration law.
CHAIR RAMRAS closed public testimony on HB 278.
REPRESENTATIVE HOLMES made a motion to adopt Amendment 1. There
being no objection, Amendment 1 was adopted.
3:07:15 PM
REPRESENTATIVE DAHLSTROM moved to report the proposed committee
substitute (CS) for HB 278, Version 25-LS1104\E, Luckhaupt,
2/21/08, as amended, out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSHB 278(JUD) was reported from the House
Judiciary Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 3:07 p.m.
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