Legislature(2003 - 2004)

05/06/2003 08:06 AM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE JUDICIARY STANDING COMMITTEE                                                                             
                          May 6, 2003                                                                                           
                           8:06 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Ralph Seekins, Chair                                                                                                    
Senator Scott Ogan, Vice Chair                                                                                                  
Senator Gene Therriault                                                                                                         
Senator Hollis French                                                                                                           
Senator Johnny Ellis                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 8                                                                                                               
"An Act relating to tampering with public records."                                                                             
     MOVED CSSB 8(JUD) OUT OF COMMITTEE                                                                                         
                                                                                                                                
HOUSE BILL NO. 224                                                                                                              
"An Act  relating to a  tobacco product manufacturer's  compliance                                                              
with  certain statutory  requirements  regarding cigarette  sales;                                                              
and providing for an effective date."                                                                                           
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 93                                                                                                              
"An Act  relating to  limitations  on actions  to quiet title  to,                                                              
eject a  person from, or recover  real property or  the possession                                                              
of it; and providing for an effective date."                                                                                    
     MOVED CSSB 93(JUD) OUT OF COMMITTEE                                                                                        
                                                                                                                                
CS FOR HOUSE BILL NO. 214(JUD)                                                                                                  
"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."                                                                                                                          
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 13                                                                                                              
"An Act  prohibiting discrimination  in insurance  rates  based on                                                              
credit rating  or credit scoring;  and providing for  an effective                                                              
date."                                                                                                                          
     ITEM REMOVED FROM AGENDA                                                                                                   
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
SB 8 - See HESS minutes dated 3/5/03, 3/10/03, 3/24/03 and                                                                      
     Judiciary minutes dated 4/25/03.                                                                                           
HB 224 - No previous action to record.                                                                                          
SB 93 - See Labor and Commerce minutes dated 3/11/03 and 4/1/03.                                                                
     See Judiciary minutes dated 4/16/03, 4/30/03 and 5/2/03.                                                                   
HB 214 - See Labor and Commerce minutes dated 4/29/03 and                                                                       
     5/1/03.                                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Mr. Mike Barnhill, Assistant Attorney General                                                                                   
Department of Law                                                                                                               
PO Box 110300                                                                                                                   
Juneau, AK  99811-0300                                                                                                          
POSITION STATEMENT: Supported HB 224.                                                                                         
                                                                                                                                
Senator Wagoner                                                                                                                 
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Sponsor of SB 93.                                                                                        
                                                                                                                                
Mr. John Tillinghast                                                                                                            
Sealaska Corporation                                                                                                            
One Sealaska Plaza                                                                                                              
Juneau AK 99801                                                                                                                 
POSITION STATEMENT: Commented on SB 93.                                                                                       
                                                                                                                                
Representative Ralph Samuels                                                                                                    
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Sponsor of HB 214.                                                                                        
                                                                                                                                
Ms. Sarah Nelson                                                                                                                
Staff to Representative Samuels                                                                                                 
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Commented on HB 214.                                                                                      
                                                                                                                                
Ms. Marsh Davis, General Counsel                                                                                                
Era Aviation                                                                                                                    
POSITION STATEMENT: Supported HB 214.                                                                                         
                                                                                                                                
Mr. Jim Wilson                                                                                                                  
Chairman, Legislative Committee                                                                                                 
Alaska Air Carriers                                                                                                             
Juneau, AK 99801                                                                                                                
POSITION STATEMENT: Supported HB 214.                                                                                         
                                                                                                                                
Ms. Pam LaBolle, President                                                                                                      
Alaska State Chamber of Commerce                                                                                                
217 2nd Street                                                                                                                  
Juneau, AK 99801                                                                                                                
POSITION STATEMENT: Supported HB 214.                                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-38, SIDE A                                                                                                            
                                                                                                                              
              SB   8-TAMPERING WITH PUBLIC RECORDS                                                                          
                                                                                                                                
CHAIR  RALPH   SEEKINS  called   the  Senate  Judiciary   Standing                                                            
Committee  meeting to  order at  8:06 a.m.  Present were  Senators                                                              
Ogan, Therriault and  French. The first order of  business to come                                                              
before the committee was SB 8.                                                                                                  
                                                                                                                                
SENATOR  THERRIAULT  moved  to   adopt  committee  substitute,  \D                                                              
version, SB 8. There was no objection and it was so ordered.                                                                    
                                                                                                                                
CHAIR SEEKINS said  that the Department of Law did  not expect the                                                              
number of  new felony prosecutions  to rise and didn't  anticipate                                                              
a fiscal impact with passage of the legislation.                                                                                
                                                                                                                                
SENATOR  OGAN  moved  to  pass   CSSB  8(JUD),  version  \D,  from                                                              
committee with  individual recommendations  and zero  fiscal note.                                                              
There was no objection and it was so ordered.                                                                                   
                                                                                                                                
SENATOR ELLIS arrived at 8:13 a.m.                                                                                              
                                                                                                                                
              HB 224-CIGARETTE SALES REQUIREMENTS                                                                           
                                                                                                                                
CHAIR SEEKINS announced HB 224 to be up for consideration.                                                                      
                                                                                                                                
MR. MIKE BARNHILL,  Assistant Attorney General, supported  HB 224,                                                              
which  is the  companion  to  SB 162.  This  bill  relates to  the                                                              
Master  Settlement  Agreement,  which is  the  settlement  between                                                              
Alaska,  45  other   states  and  the  major   tobacco  companies.                                                              
Litigation  was  settled  in  1998 in  exchange  for  a  permanent                                                              
revenue stream  and a few weeks  ago, Alaska got our  first annual                                                              
payment of about $17.5 million.                                                                                                 
                                                                                                                                
The agreement  has provisions for  reducing the revenue  stream in                                                              
certain  circumstances.   One  of  them  is   a  non-participating                                                              
manufacturer  adjustment (NPM) (manufacturers  who haven't  signed                                                              
on to  the Master Settlement agreement  with the states).  The way                                                              
to avoid that is  to do two things: first, the  state has to enact                                                              
a NPM  statute,  which we did  in 1999.  It requires  all NPMs  to                                                              
deposit  a  certain   amount  of  money  into   escrow  for  every                                                              
cigarette  they sell  in the  State of  Alaska. For  the past  two                                                              
years, they have had to deposit about 1.5 cents per cigarette.                                                                  
                                                                                                                                
The other  thing they  have to  do to  avoid the downward  revenue                                                              
adjustment  is to  diligently  enforce  that statute.  Alaska  has                                                              
been doing that  since it's enactment in 1999.  However, they have                                                              
found  in certain  circumstances,  enforcement  can be  difficult,                                                              
because  many of  the NPMs  are small  tobacco manufacturers  that                                                              
are located  in far  flung parts  of the  world like India,  China                                                              
and  the Philippines.  As an  example,  a company  in India  makes                                                              
hand  rolled   candy  flavored   cigarettes  and  was   selling  a                                                              
substantial   amount  of   them  into  the   state,  but   weren't                                                              
depositing  the  escrow.  The Department  of  Revenue  (DOR)  sent                                                              
several  letters advising  them of  our laws  and they refused  to                                                              
comply. Finally,  the case was referred  to him and he  decided to                                                              
sue.  They  had  to  hire a  process  server  to  hand  carry  the                                                              
complaint and summons  that was filed in Juneau to  India and they                                                              
ultimately got a default judgment.                                                                                              
                                                                                                                                
Other states  have had similar  experiences with this  company and                                                              
others  and decided  there  has to  be another  way  to deal  with                                                              
them.  In  2001,  legislation  that is  designed  to  enhance  our                                                              
ability  to enforce  our laws was  enacted. It  created a  contra-                                                              
band list of companies  that did not comply with  our escrow laws.                                                              
By  last summer,  about 15  other states  followed suit.  However,                                                              
the problem  was that  each of the  statutes was different.  Then,                                                              
the National  Association  of Attorneys General  got involved  and                                                              
with  the  help of  the  states  a  uniform  law was  drafted.  It                                                              
creates a directory  of cigarette companies that  are permitted to                                                              
sell cigarettes  in Alaska. To get  on the list,  the manufacturer                                                              
has  to certify  annually  either that  they  are a  participating                                                              
manufacturer under  the Master Settlement  Agreement or  that they                                                              
are a  NPM, but in  compliance with  our laws. Local  distributors                                                              
look up the web  page on the Department of Revenue's  web site and                                                              
import cigarettes accordingly.                                                                                                  
                                                                                                                                
Other provisions  in the bill  concern monitoring  compliance with                                                              
information  supplied  to  the  DOR and  the  penalties  for  non-                                                              
compliance.  There is a  tax credit  for cigarettes a  distributor                                                              
brings  into the  state relying  on the  DOR list  and then  finds                                                              
that the company  is out of compliance. There is  also a provision                                                              
for  service   of  process,   which  allows   him  to   serve  the                                                              
commissioner   of  the  Department   of  Community   and  Economic                                                              
Development.                                                                                                                    
                                                                                                                                
SENATOR   OGAN  asked   if  other   states   were  enacting   this                                                              
legislation verbatim.                                                                                                           
                                                                                                                                
MR.  BARNHILL replied  the 12  states  that have  enacted it  have                                                              
done so nearly  verbatim. Our tax credit provision  is a variance,                                                              
but the DOR thought it important to do that.                                                                                    
                                                                                                                                
SENATOR OGAN  said he  thought it  didn't look like  streamlining,                                                              
but more like adding more regulations and hoops to jump through.                                                                
                                                                                                                                
SENATOR  THERRIAULT said  the escrow  was set  up as  a source  of                                                              
paying possible  future judgments.  He didn't understand  how this                                                              
prevents them from becoming judgment proof.                                                                                     
                                                                                                                                
MR. BARNHILL  explained  that the  context of  this is the  Master                                                              
Settlement   Agreement.  The   states  sued   the  major   tobacco                                                              
companies, not  the hundreds  of small ones.  To fund  the revenue                                                              
stream the tobacco  companies raised the price  of cigarettes. The                                                              
concern was that  only the major companies were  raising the price                                                              
of cigarettes  and the  smaller companies could  come in  and grab                                                              
market  share. That  would  essentially undermine  the  agreement.                                                              
This provision  was  put in to  level the  economic playing  field                                                              
for  those smaller  companies. The  money  sits in  escrow for  25                                                              
years.  In  Alaska, the  total  amount  of  escrow that  has  been                                                              
required  to be  deposited over  the  3.5 years  this program  has                                                              
been in  effect is about  $40,000. So,  there's not much  point in                                                              
suing  the companies,  because there's  not much  to recover  from                                                              
the escrow accounts.                                                                                                            
                                                                                                                                
SENATOR  THERRIAULT  asked  how  they get  to  be  judgment  proof                                                              
before liability arises.                                                                                                        
                                                                                                                                
MR.  BARNHILL replied  if they  are a  small company  and they  go                                                              
bankrupt  in 10  years,  there's  no money  to  recover from  them                                                              
unless  there is  money sitting  in  the escrow  account. The  tax                                                              
provision  is on page  5, line  16, and  is paid  at the point  of                                                              
importation, not at the point of sale to the consumer.                                                                          
                                                                                                                                
SENATOR  FRENCH asked  if this  legislation  works in  conjunction                                                              
with tax stamps  and pricing floors in other  legislation they are                                                              
discussing this year.                                                                                                           
                                                                                                                                
MR.  BARNHILL  replied  he  is   aware  of  that  legislation  and                                                              
although  HB 224 doesn't  work in  conjunction  with it, it's  not                                                              
inconsistent with it, either.                                                                                                   
                                                                                                                                
SENATOR  FRENCH said  that he  needed  more time  to consider  the                                                              
bill.                                                                                                                           
                                                                                                                                
CHAIR SEEKINS said they would hold the bill for further work.                                                                   
                                                                                                                                
                   SB  93-ADVERSE POSSESSION                                                                                
                                                                                                                                
CHAIR SEEKINS announced SB 93 to be up for consideration.                                                                       
                                                                                                                                
SENATOR  WAGONER,  sponsor of  SB  93,  explained that  version  X                                                              
creates  two subsections  -  one  for utilities  and  one for  the                                                              
state. Subsection  (c), line  14, will  allow public utilities  to                                                              
get rights  to an easement  for utility  purposes after  10 years.                                                              
Subsection  (d)   was  made  for   DOT  with  slightly   different                                                              
language, but accomplishes the same goal.                                                                                       
                                                                                                                                
SENATOR  FRENCH said  the coastal  trail runs  along the coast  in                                                              
his  district and  about  100 yards  behind  it,  homes have  been                                                              
developed for 40  years. There are lots between the  trail and the                                                              
homes that  will go up for  sale pending soil testing.  Folks have                                                              
been accessing  the  coastal trail  with a little  by way  through                                                              
the  woods since  the trail  was built  (20 years  ago). It  looks                                                              
like there's  going to be a  fight now between the  developers and                                                              
the  homeowners over  access to  the coastal  trail. They  haven't                                                              
recorded  title  of  any  kind or  easement  or  taken  any  legal                                                              
action. He  wanted to know  if this bill  would alter  their right                                                              
to litigate access they have been using.                                                                                        
                                                                                                                                
SENATOR  WAGONER   replied  he  couldn't  answer   that,  but  Mr.                                                              
Tillinghast could.                                                                                                              
                                                                                                                                
MR.  TILLINGHAST, Sealaska  Corporation,  said the  answer is  no.                                                              
"Whatever  rights  the public  acquired  by  virtue of  that  past                                                              
usage wouldn't be affected by this bill."                                                                                       
                                                                                                                                
SENATOR FRENCH asked if it would from this time forward.                                                                        
                                                                                                                                
SENATOR  THERRIAULT interrupted  to  move to  adopt CSSB  93(JUD),                                                              
version \X. There was no objection and it was so ordered.                                                                       
                                                                                                                                
MR.  TILLINGHAST replied  page  2, line  19  says, "the  continued                                                              
ability  to  perfect  access  to   public  trails"  so  access  is                                                              
preserved in the  bill to the extent of DOT's  ability to preserve                                                              
access for a paved road.                                                                                                        
                                                                                                                                
SENATOR OGAN  asked if anyone  remembers the Hillside  park access                                                              
case.                                                                                                                           
                                                                                                                                
SENATOR  FRENCH said  that he  remembers  it was  about access  to                                                              
Rabbit Lake - from  a trailhead across private land  to state park                                                              
land. The  trail had  been used  for perhaps  30 years.  Through a                                                              
series of  state bungles, that access  was lost and  the litigants                                                              
ended up buying access from the owner.                                                                                          
                                                                                                                                
CHAIR  SEEKINS asked  what  caused Sealaska  to  bring this  issue                                                              
before the Legislature and how this might address it.                                                                           
                                                                                                                                
MR.  TILLINGHAST   replied  that   Sealaska  has  had   to  expend                                                              
significant  attorney's  fees  and time  evicting  squatters  from                                                              
their  property,  who squatted  in  reliance  on  the law,  as  it                                                              
exists today. The  fact that they were successful  in getting them                                                              
off is almost  beside the point,  because they had to  spend a lot                                                              
of  money to  do that  and they  continue  to have  to patrol  the                                                              
property.  The philosophical  reason is that  as private  property                                                              
owners, they  do not feel they  should have obligations  placed on                                                              
them  to   consistently  patrol   their  property  to   chase  off                                                              
"thieves"  any   more  than  the   government  should   have  that                                                              
obligation.  It may  have had  social value  in the  past when  we                                                              
didn't want  to take land from  the railroads, but those  days are                                                              
over.                                                                                                                           
                                                                                                                                
CHAIR SEEKINS asked  if there are regulations that  protect Native                                                              
lands from notorious adverse possession.                                                                                        
                                                                                                                                
MR.  TILLINGHAST  replied  there  are.  The  doctrine  of  adverse                                                              
possession protects  any land a  corporation received  under ANGSA                                                              
until  that land  is  developed.  Unfortunately,  the courts  have                                                              
developed  a  very low  threshold  for  the meaning  of  developed                                                              
saying that  lands are developed  as soon as they  are subdivided.                                                              
There   is  no   question  that   logging   would  be   considered                                                              
developing.                                                                                                                     
                                                                                                                                
CHAIR  SEEKINS asked  why  some of  the  other large  corporations                                                              
weren't sitting  here with  him because they  surely had  the same                                                              
problem.                                                                                                                        
                                                                                                                                
MR.  TILLINGHAST  responded  that  he assumed  they  did,  but  he                                                              
couldn't speak for them.                                                                                                        
                                                                                                                                
SENATOR  OGAN   asked  why   section  1   was  divided   into  two                                                              
paragraphs.                                                                                                                     
                                                                                                                                
SENATOR WAGONER  explained the  original bill  had a section  that                                                              
pertained to  DOT. Chugach Electric  and Homer Electric  expressed                                                              
concern and they  tried to combine them with the  DOT section, but                                                              
it didn't work out. So, they were separated.                                                                                    
                                                                                                                                
CHAIR  SEEKINS said  this  bill  in effect  eliminates  squatters'                                                              
rights  and  if  there's  a good  faith  mistake  about  someone's                                                              
property line, that's not affected by this.                                                                                     
                                                                                                                                
SENATOR WAGONER concurred.                                                                                                      
                                                                                                                                
SENATOR  THERRIAULT  moved to  pass  CSSB 93(JUD)  from  committee                                                              
with zero  fiscal note and  individual recommendations.  There was                                                              
no objection and it was so ordered.                                                                                             
                                                                                                                                
8:40 - 8:45 a.m. - at ease                                                                                                      
                                                                                                                                
           HB 214-PUNITIVE DAMAGES AGAINST EMPLOYERS                                                                        
                                                                                                                                
CHAIR SEEKINS announced HB 214 to be up for consideration.                                                                      
                                                                                                                                
REPRESENTATIVE  RALPH SAMUELS, sponsor  of HB  214, said  the bill                                                              
creates  new guidelines  for  damages  against an  employer  under                                                              
vicarious liability.  It stipulates that an employer  shall not be                                                              
responsible  for paying  damages  unless he  okayed  the act.  The                                                              
point  is  if a  company  did  nothing  wrong,  it should  not  be                                                              
punished, which is what punitive damages are for.                                                                               
                                                                                                                                
The  bill does  not have  anything to  do with  direct damages  or                                                              
compensatory   damages.  Language   comes  from  restatements   of                                                              
National  Standards.  The  Alaska   Supreme  Court  found  in  the                                                              
Laidlaw case,  that if it  had come up  in trial, they  would have                                                              
leaned toward the National Standards.                                                                                           
                                                                                                                                
SENATOR FRENCH  said he thought  the purpose  of this bill  was to                                                              
overturn the result of the Laidlaw case.                                                                                        
                                                                                                                                
REPRESENTATIVE  SAMUELS said he  didn't know  how the  case ended,                                                              
but he knows what the court said.                                                                                               
                                                                                                                                
SENATOR  FRENCH said  the one  place  this bill  differs from  the                                                              
restatement  of National  Standard  has to  do  with the  employee                                                              
working in a managerial capacity for the employer.                                                                              
                                                                                                                                
REPRESENTATIVE  SAMUELS said  they wanted  to make  sure they  had                                                              
someone who had control over the policies of the company.                                                                       
                                                                                                                                
SENATOR FRENCH  said he noticed  that the restatement  was careful                                                              
to add to  the managerial reference  "who was acting in  the scope                                                              
of  employment."  This  bill  says you  can  only  award  punitive                                                              
damages if  the employee was a  manager of the employer,  not that                                                              
they were acting within the scope of employment.                                                                                
                                                                                                                                
MS.  SARAH  NELSON, Staff  to  Representative  Samuels,  responded                                                              
that  there are  two different  kinds  of this  law, the  narrower                                                              
complicity of  rule and the  one that is  acting within  the scope                                                              
of employment. They were aiming at a narrower construction.                                                                     
                                                                                                                                
MS.  MARSHA  DAVIS,  General  Counsel,   Era  Aviation,  said  she                                                              
thought  that language  was  left  out because  it  resulted in  a                                                              
tighter  definition  than the  restatement,  but  it broadens  the                                                              
number of people it would affect.                                                                                               
                                                                                                                                
TAPE 03-38, SIDE B                                                                                                            
                                                                                                                              
SENATOR FRENCH  asked if this would  penalize the lead  on a night                                                              
shift for Exxon or BP.                                                                                                          
                                                                                                                                
MS. DAVIS  replied  that you would  have to  ask yourself  whether                                                              
that  individual  has sufficient  authority  and  control to  make                                                              
decisions for the  alter ego - the employer. They  are looking for                                                              
someone who can create and alter company policies.                                                                              
                                                                                                                                
SENATOR OGAN  said the most  infamous case of vicarious  liability                                                              
he could  think of was  Joe Hazelwood on  the Exxon  Valdez. Exxon                                                              
has a policy that  you don't drink and drive their  ships. So, are                                                              
they suddenly not liable because he violated their policy?                                                                      
                                                                                                                                
MS. DAVIS  replied that  the $5 million  in punitive  damages were                                                              
assessed  against  Exxon  directly.  Mr.  Hazelwood  had  punitive                                                              
damages for  $5,000. This  bill wouldn't  touch anything  that has                                                              
to do  with maritime  law, but it  would make  Exxon or  BP liable                                                              
for Mr. Hazelwood's punitive damage assessment.                                                                                 
                                                                                                                                
SENATOR  FRENCH  asked  if  she   thought  this  bill  would  have                                                              
produced a different result in the Laidlaw case.                                                                                
                                                                                                                                
MS. DAVIS  replied she didn't  think it would,  but it would  be a                                                              
very  close  question.  The  question was  did  Laidlaw  know  the                                                              
individual had a  drug/alcohol problem and yet allow  him to drive                                                              
the van.  The jury  could conclude that  was reckless  behavior on                                                              
the part  of Laidlaw  and that  would have  the same result,  that                                                              
Laidlaw was responsible for the punitive damages.                                                                               
                                                                                                                                
MS.  DAVIS said  one reason  the vicarious  liability should  stay                                                              
with the  employee is that lawyers  go after the deep  pockets. In                                                              
this  case  Laidlaw  was  liable  to pay  the  $100,000  that  was                                                              
assessed and the employee got off scot-free.                                                                                    
                                                                                                                                
     It's appropriate  if you're going to punish  someone for                                                                   
     the wrong  doing that they  actually be punished  rather                                                                   
     than sliding  that punishment to what is  essentially an                                                                   
     innocent  party in the  transaction  and allows the  bad                                                                   
     behavior  to proceed  on because  they  [don't have  the                                                                   
     deepest pocket.]                                                                                                           
                                                                                                                                
SENATOR FRENCH  asked why they  wouldn't include the  phrase "held                                                              
in  the course  and scope  of employment"  since  that's the  test                                                              
they used in Laidlaw.                                                                                                           
                                                                                                                                
MS.  DAVIS  replied  that  under   Alaska  law,  you  couldn't  be                                                              
determined  to be vicariously  liable without  an initial  finding                                                              
that  the  conduct  of  the  employee  was  within  the  scope  of                                                              
employment.  It's a bit  duplicative to  have a precondition  that                                                              
presumes  the  action  was  within the  scope  of  employment.  It                                                              
wouldn't  hurt  anything  to put  it  back  in,  but it  would  be                                                              
duplicative.                                                                                                                    
                                                                                                                                
SENATOR THERRIAULT  asked  if is he  acting as  an employee  if he                                                              
lets an employee use one of his mobile rigs over the weekend.                                                                   
                                                                                                                                
MS.  DAVIS  said  the  question  would  be  whether  his  business                                                              
receives any compensation for that use.                                                                                         
                                                                                                                                
SENATOR THERRIAULT said no.                                                                                                     
                                                                                                                                
MS. DAVIS  said she  would question  whether  any conduct  by that                                                              
employee could be tied back to his business.                                                                                    
                                                                                                                                
MR. JIM  WILSON, Alaska Air Carriers,  supported HB 214  saying it                                                              
would reduce the  cost of their insurance. They  have an extensive                                                              
training program,  but one pilot  didn't follow procedure  and use                                                              
the mirror  to observe external  loads carried under  the aircraft                                                              
when landing  in a confined area.  His blades hit a stump  and the                                                              
aircraft  was totaled.  Fortunately,  there  were  no injuries  or                                                              
deaths, but had  there been, they could have  seen punitive damage                                                              
suits. The  pilot put the company  at risk and those are  the kind                                                              
of things he is concerned about.                                                                                                
                                                                                                                                
SENATOR FRENCH asked  if he was sued or whether  any money changed                                                              
hands.                                                                                                                          
                                                                                                                                
MR.  WILSON replied  it was  an  expensive accident;  they lost  a                                                              
helicopter and the pilot lost his job.                                                                                          
                                                                                                                                
SENATOR  ELLIS asked  if he thought  his insurance  rate would  go                                                              
down with this legislation.                                                                                                     
                                                                                                                                
MR. WILSON  replied his  insurance underwriter  told him  it would                                                              
be one of the tools that would help it go down.                                                                                 
                                                                                                                                
SENATOR ELLIS asked  Mr. Wilson if the insurance  underwriter said                                                              
he  would  reduce  his  insurance  premium if  he  got  this  bill                                                              
passed.                                                                                                                         
                                                                                                                                
MR. WILSON  repeated he  just said  it would be  one of  the tools                                                              
that would make it go down.                                                                                                     
                                                                                                                                
SENATOR ELLIS  said after the  bill has  been signed into  law, he                                                              
wanted Mr.  Wilson to tell him  how much his insurance  went down.                                                              
"I'll be really excited if that, in fact, ever happens."                                                                        
                                                                                                                                
MR. WILSON said he believed it would.                                                                                           
                                                                                                                                
MS.  PAM LABOLLE,  President, Alaska  State  Chamber of  Commerce,                                                              
supported HB 214.  Prior to the passage of tort reform  in 1996 or                                                              
97,  the insurance  rates  in this  state  were  escalating at  an                                                              
astonishing rate. A  great deal of it was because  of the punitive                                                              
damage  assessments, because  you  can't insure  against  punitive                                                              
damages because they are used to punish a wrongdoer.                                                                            
                                                                                                                                
If  you go  to  court, however,  you  run the  risk  of getting  a                                                              
punitive  assessment and  that causes  many  businesses and  their                                                              
insurance companies  to settle out of court rather  than take that                                                              
chance. She  said the  insurance rate  might not  go down,  but it                                                              
could  level  out   or  rise  slightly  versus   the  astronomical                                                              
increases  that  happened  before   passage  of  the  tort  reform                                                              
legislation and the punitive damages definition.                                                                                
                                                                                                                                
CHAIR SEEKINS  said that negotiating  an insurance rate is  a long                                                              
process, especially  with a business.  He agreed that  rates could                                                              
fall or at  least not rise as fast  as they find ways  to keep the                                                              
truly responsible parties liable for their actions.                                                                             
                                                                                                                                
SENATOR FRENCH  said he thought  this bill restricts  the doctrine                                                              
too far.                                                                                                                        
                                                                                                                                
     Reading  the  Laidlaw  is  kind  of  an  eye-opener  for                                                                   
     anybody  with a  child who  goes to  school, because  in                                                                   
     the Laidlaw  case this bus driver  was, as far as  I can                                                                   
     tell,  smoking marijuana  every single  day and  showing                                                                   
     up to  work after  having smoked  marijuana and,  in the                                                                   
     course of her  job, rolled the bus with a  bunch of kids                                                                   
     in  it  and hurt  the  kids.  The  trial jury,  as  they                                                                   
     sometimes  do, kind of  lays down  a big heavy  punitive                                                                   
     award,  which the  trial court  reduced substantially  -                                                                   
     because  contrary  to  popular opinion,  there  is  some                                                                   
     oversight  of punitive damage  awards. Frankly,  I think                                                                   
     a  bus  company  that  employs  a  bus  driver  that  is                                                                   
     smoking marijuana  every single day should  tighten down                                                                   
     the  screws  a  little  bit  to  make  sure  that  isn't                                                                   
     happening. If  it takes a punitive damage  award to make                                                                   
     them  tighten down  the screws,  I'm okay  with that.  I                                                                   
     think this  bill needs to be  amended to make  sure that                                                                   
     employees  acting within the  scope of their  employment                                                                   
     are   included   within   the    definition   of   those                                                                   
     individuals who put the company on the hook.                                                                               
                                                                                                                                
He  would  be much  more  comfortable  if  the bill  mirrored  the                                                              
language of the restatement, which is the national standard.                                                                    
                                                                                                                                
SENATOR  THERRIAULT said  he needed  more time  to go through  the                                                              
issues.                                                                                                                         
                                                                                                                                
SENATOR  SEEKINS   said  they  would  hold  HB   214  for  further                                                              
consideration.  There being  no  further business  to come  before                                                              
the committee, he adjourned the meeting at 9:20 a.m.                                                                            

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