04/28/2004 08:06 AM Senate JUD

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ALASKA STATE LEGISLATURE SENATE JUDICIARY STANDING COMMITTEE April 28, 2004 8:06 a.m. TAPE(S) 04-54, 55 MEMBERS PRESENT Senator Ralph Seekins, Chair Senator Scott Ogan, Vice Chair Senator Gene Therriault Senator Johnny Ellis Senator Hollis French MEMBERS ABSENT All members present COMMITTEE CALENDAR CS FOR HOUSE BILL NO. 15(FIN) am "An Act relating to fair trade practices and consumer protection, to telephone solicitations, to charitable solicitations; and providing for an effective date." HEARD AND HELD CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 29(JUD) am "An Act relating to real estate licensees and real estate transactions; and providing for an effective date." SCHEDULED BUT NOT HEARD SENATE BILL NO. 246 "An Act relating to the commission of an offense or a juvenile delinquency act involving the victim's race, sex, color, creed, physical or mental disability, sexual orientation, ancestry, or national origin; relating to sentencing, informal adjustment, and adjudication for those offenses and acts; relating to a diversity tolerance program for certain juvenile delinquency acts; relating to a civil cause of action for certain acts involving discriminatory harassment; and providing for an effective date." HEARD AND HELD CONFIRMATION HEARINGS: Violent Crimes Compensation Board - David Ingraham, Gerad Godfrey Board of Governors of the Alaska Bar - Joe N. Faulhaber, Michael J. Hurley Commission on Judicial Conduct - Peter J. Aschenbrenner, Thomas G. Nave PREVIOUS COMMITTEE ACTION BILL: HB 15 SHORT TITLE: SOLICITATIONS/CONSUMER PROTECTION SPONSOR(s): REPRESENTATIVE(s) FATE 01/21/03 (H) PREFILE RELEASED (1/10/03)

01/21/03 (H) READ THE FIRST TIME - REFERRALS

01/21/03 (H) L&C, STA, FIN

01/29/03 (H) L&C AT 3:15 PM CAPITOL 17

01/29/03 (H) Committee WITNESS REGISTER Dr. David Ingraham and Mr. Gerard Godfrey, nominees to the Violent Crimes Compensation Board Mr. Joe Faulhauber and Mr. Michael Hurley, nominees to the Board of Governors of the Alaska Bar Mr. Thomas Nave and Mr. Peter Ashenbrenner, nominees to the Alaska Commission on Judicial Conduct Representative Hugh Fate Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of HB Ms. Virginia Tornes Alaska Public Interest Research Group (AkPIRG) Anchorage, AK POSITION STATEMENT: Supports ACTION NARRATIVE TAPE 04-54, SIDE A CHAIR RALPH SEEKINS called the Senate Judiciary Standing Committee meeting to order at 8:06 a.m. Senators Therriault, Ellis, French and Chair Seekins were present. The committee first took up confirmation hearings. ^CONFIRMATION HEARINGS ^VIOLENT CRIMES COMPENSATION BOARD CHAIR SEEKINS asked Mr. Ingraham to address the committee. DR. DAVID INGRAHAM, nominee to the Violent Crimes Compensation Board, told members he was asked if he wanted to serve on this board about six months ago, during which time he became familiar with it. As an emergency room physician, he sees the results of a lot of violence, so he sees this opportunity as a way to give something back to the victims. CHAIR SEEKINS thanked Dr. Ingraham for his willingness to serve. SENATOR THERRIAULT moved to advance Dr. Ingraham's name to the full body in joint session for consideration of appointment to the Violent Crimes Compensation Board. CHAIR SEEKINS announced without objection, the motion carried. MR. GERARD GODFREY told members he is currently serving as the public member on the Violent Crimes Compensation Board and is up for reappointment. He said his family experience with violent crime has provided him with some degree of empathy for the plaintiffs. He has studied in the fields of criminal justice and psychology. SENATOR THERRIAULT moved to advance Mr. Godfrey's name to the full body in joint session for consideration of appointment to the Violent Crimes Compensation Board. CHAIR SEEKINS announced without objection, the motion carried. ^BOARD OF GOVERNORS OF THE ALASKA BAR MR. JOE FAULHAUBER, appointee to the Board of Governors of the Alaska Bar, told members he is fascinated with the U.S. legal system and believes it to be the most beautiful and fair system in history, even though it can be cumbersome and frustrating. He was first appointed to serve on this board by Governor Hickel and has served for seven years. He serves with brilliant scholarly types who often deal with the process rather than the product, which is hard for those in business to grasp at times. However, over the years he has come to appreciate that approach and appreciates working with the board and staff. For those reasons, and because he likes to think he has made some improvements over the years, he would like to continue to serve. SENATOR THERRIAULT moved to advance Mr. Faulhaber's name to the full body in joint session for consideration of appointment to the Board of Governors of the Alaska Bar. CHAIR SEEKINS announced without objection, the motion carried. MR. MICHAEL HURLEY, a senior commercial analyst with Conoco Phillips in Anchorage, said he has been involved in many of the legal issues with the state for many years. He believes his experience as a senior commercial analyst, working in government affairs, and dealing with the legislature, puts him in a unique position to contribute as the public member of the Board of Governors of the Alaska Bar. SENATOR ELLIS asked Mr. Hurley to provide his thoughts on the need for continuing education for Alaska Bar members. MR. HURLEY said he believes the Alaska Bar Association has a fair requirement for continuing education, which he supports. He has been required to participate in continuing education for his own profession, which he also supports. SENATOR ELLIS noted that former Senator Donley believed the continuing education requirements for the Alaska Bar members were onerous but he believes those requirements are a good idea. He then asked Mr. Faulhauber to address the same question. MR. FAULHAUBER said that topic is dear to his heart. He noted there is no requirement for continuing education at this time. The Board of Governors mandated continuing education after quite a bit of effort and cooperation but the Supreme Court changed it to voluntary. Right now, members who attend continuing education classes sign an affidavit. He believes that concept recently sunsetted so the board is taking another look at the issue. He believes the public expects a certain level of competency of occupational licensees and he does not know of any other way to insure that, other than continuing education. He noted that brilliant people like Judge Kleinfeld spoke against it but he probably does not need it. Mr. Faulhauber said he personally experienced that requirement in the real estate industry and believes the competency of that industry is much higher than it was 25 years ago. SENATOR THERRIAULT moved to advance Mr. Hurley's name to the full body in joint session for consideration of appointment to the Board of Governors of the Alaska Bar Association. CHAIR SEEKINS announced that without objection, the motion carried. ^ALASKA COMMISSION ON JUDICIAL CONDUCT MR. PETER ASHENBRENNER, nominee to the Alaska Commission on Judicial Conduct, told members that the Alaska Constitution provides for a body of members to, for one, give a fair shake to members of the public who have a complaint about a judge. The Commission investigates such complaints and makes recommendations as to conduct or reprimands or removes a judge. He appeared once before the Commission so has some familiarity with its proceedings. His interest is in judging the judges, a challenging job in a constitutional system. He sat as a part- time federal judge for 16 years. CHAIR SEEKINS noted that he has known Mr. Ashenbrenner for a long time and believes he will be an excellent commission member. SENATOR THERRIAULT moved to advance Mr. Ashenbrenner's name to the full body in joint session for consideration of appointment to the Alaska Commission on Judicial Conduct. MR. THOMAS NAVE, nominee to the Alaska Commission on Judicial Conduct, told members he is a private practitioner and has been practicing in Juneau for 27 years. SENATOR THERRIAULT asked what type of law he practices. MR. NAVE said his practice has narrowed itself over the years. He was the deputy director of the public defender's agency until attorney; they concentrated on a civil practice - personal injury for both the defense and plaintiffs. They found themselves defending attorneys who were sued for malpractice. He still does some criminal defense work but the lion's share of his work is civil. SENATOR THERRIAULT moved to advance Mr. Nave's name to the full body in joint session for consideration of appointment to the Alaska Commission on Judicial Conduct. CHAIR SEEKINS announced that without objection, the motion carried. He then announced the committee would take up HB REPRESENTATIVE HUGH FATE, sponsor of HB 15. CHAIR SEEKINS indicated that SCS AS seller, but also a letter, postcard, a notice or other written communication advising, requesting, motivating or encouraging a person to contact the seller by telephonic means. She reminded members that definition only applies to businesses or people who are not on the exempt list. She pointed out that violating a criminal fraud statute is a felony. That statute was designed to deal with fraud and theft, not the ordinary run-of-the-mill consumer protection problems. She pointed out that fraud and theft would include people who sell an item on behalf of a non-existent business and pocket the money, not a situation where a seller misrepresented an item. She said it is probably appropriate that thievery be a felony. MS. BURKE said most other kinds of "unfair trade practices" are dealt with in an entirely different section of AS 45. The remedies under those sections are injunctive relief, damages, or refunds, which seem more appropriate for the types of things dealt with in subsections (10) and (11) - sales of magazines, periodicals, sound recordings, books, or memberships in book clubs. She said subsection (10) of version W would remove, from the list of exempted businesses, sales of sound recordings and books. That means a book distributor who mails a buyer a mail order catalog would be exempt. However, a bookseller who mails a postcard advertising a single book to a buyer that includes an credit card because, even though the sale is buyer initiated, that would constitute a prohibited telephonic sale unless a written contract accompanied the transaction. Magazines are a little different because they have a qualified exemption under version W. The qualified exemption is from the registration and written contract requirement only if the seller gives the buyer the right to review the magazine and cancel the subscription and the buyer is provided a written notice of that right. MS. BURKE said in looking at the rest of the bill, that is already required for all those exempt under existing law, such as funeral directors, insurance agents, etcetera, not just for magazine solicitation. She referred to page 7 of version W and pointed out that although her clients have no problem with this section, its import is that only certain sections of are entitled to exemption, section .010. Therefore, under this version, if a seller falls under the listed exemptions, the seller does not have to register, pay the registration fee, have a contract with the buyer, or make certain disclosures in the written contract. However, what is now applicable to everyone are the cancellation and refund rights that are in current law under section .030(a) and (b). The opt-out is only for .030(c) and (d). Under the cancellation and refund provision of .030(a) and (b), they are exactly the same as what is being required under subsection (11)(A) just for magazines. Ms. Burke emphasized, "So I don't think you need this at all - subsection A, totally unnecessary." MS. BURKE then turned attention to subsection (B) and described why the written disclosure is problematic. She stated: We have no problem with making disclosures in any kind of telephone situation if it's verbal - no problem at all. The difficulty is if it's required to be in writing, and that's true of whether it's a seller initiated call or if it's a buyer initiated call in response to a mail out of a postcard, or what have you and here's why. If it's a seller initiated call, you can't make a written disclosure and do the credit card thing because you're on the telephone so that's a problem with that. SENATOR FRENCH noted the bill says a written disclosure notice must be given to the buyer before or at the time the initial invoice is received. He said an invoice strikes him as being the receipt one gets in the mail after a purchase or a credit card statement. MS. BURKE said she does not interpret the word "invoice" to mean a credit card statement. She understands it as a request for payment. SENATOR FRENCH asked whether the entire dispute is about when that invoice is received. He questioned how an invoice could accompany a telephonic credit card transaction. MS. BURKE agreed and said that perhaps is the policy debate but she is suggesting that if the legislature wants to outlaw all credit card sales for magazines, that language will do it. If the legislature does not want to do that, section (11)(B) creates serious problems. TAPE 04-54, SIDE B CHAIR SEEKINS said an invoice would indicate request for payment and usually for goods received before the payment is due. He noted that he believes the committee is trying to say if the customer is to receive an invoice for future payment, that invoice should include a written notification. SENATOR FRENCH agreed that is the intent the committee is trying to convey. CHAIR SEEKINS said the customer needs to be made aware of the option to cancel two times: upon receipt of the first issue or within 7 days after receipt of the invoice, whichever is later. He said he believes that if the practice is that a person receives unsolicited magazines and is later sent an invoice, the invoice should include written notification. MS. BURKE said no one has a problem with that, however the qualifier is if the transaction is structured so that payment is not due until later, requiring a disclosure is fine. However, the problem comes with the buyer who initiated the call and does not want to receive an invoice and write a check but would prefer to pay by credit card on the phone. She repeated that under the language of this bill, that sale would not be exempt. CHAIR SEEKINS said the committee would be willing to look at language to accomplish its intent. It wants to make sure the person receives the notification along with the first issue and has the right to cancel; it does not want to bar a person's ability to purchase with a credit card. MS. BURKE said there is no question that under this bill as drafted, the right to cancel exists whether or not that is disclosed to the buyer, for magazines and everything else. The form in which disclosure of that right is required is of issue: whether it should be provided by the seller as opposed to an informational or educational campaign by the consumer protection division, and whether disclosure can be made in a format other than in writing. CHAIR SEEKINS asked Representative Fate if the previous discussion aligns with his intent. REPRESENTATIVE FATE replied that he sees nothing in this legislation that prohibits the use of a credit card by a person initiating the sale and that was not his intent. He said regarding the invoice issue, he sees an invoice as more of a record because sometimes an invoice arrives before the bill, sometimes after. He emphasized that he had no intent to prohibit the use of a credit card. MS. BURKE said she is concerned that the language in the bill does not comport with the committee's intent. She offered to work with committee staff to find appropriate language. SENATOR FRENCH suggested changing the word "invoice" to reflect the intent that when people first receive notice that they purchased a magazine, they also receive a disclosure. He thought the sponsor's intent was that the buyer who purchases on the telephone is told upfront during the transaction of a right to cancel. He said the problem is that people forget that they ordered something. MS. BURKE said people who forget that they've been told of the 7-day cancellation policy will also lose their invoices so she does not know why a verbal declaration of the cancellation and refund right is inadequate. SENATOR FRENCH disagreed. CHAIR SEEKINS said the committee's intent is to fully protect the Alaskan citizen who is involved in the transaction within reason. He believes it is reasonable to expect both. MS. BURKE said in terms of having the disclosure come with the magazine that may be problematic only because this pertains to national magazine distributors. Every state has different disclosure requirements so that would require a publisher to have an Alaska-specific disclosure requirement, which would be burdensome and costly. The result could be that Alaskans might not be able to take advantage of perfectly legitimate offers in the mail from which a buyer would call and subscribe to a magazine because the buyer could not purchase with a credit card. CHAIR SEEKINS asked Ms. Drinkwater to comment. MS. DRINKWATER said she agrees from a consumer protection standpoint that written notification is very important. She pointed out that people often do not receive a magazine within a week; often the magazine arrives 60 to 90 days later so it is not realistic to think that consumers will remember the information they were given when they placed the order. She said that while the industry has suggested that it has wonderful cancellation policies, consumers have no way to exercise their rights without written notification of those policies. 9:06 a.m. CHAIR SEEKINS suggested, in the interest of time, Ms. Burke, Ms. Drinkwater and the sponsor work to draft adequate language that will not restrict Alaskans' ability to exercise their purchasing prerogative but provide for consumer protection. [No member objected.] MS. DRINKWATER deferred to Mr. Marcus. MR. DAVE MARCUS, Assistant Attorney General, Department of Law, clarified that his understanding of the charge is to allow instantaneous credit card purchases that do not involve invoices and provide subsequent written notice of cancellation, either with the first subscription delivery or otherwise so that there is a written notice of cancellation. CHAIR SEEKINS agreed and said it may not have to be simultaneous with the first delivery but could come at a different point. SENATOR FRENCH questioned why a consumer couldn't get a written notice of the sale and right to cancel within 14 days of the telephone transaction. CHAIR SEEKINS noted that would come from the solicitor rather than the publisher. MS. BURKE interrupted to say she would be happy to explore those issues. She asked for clarification about mail or telephone solicitations for books or sound recordings. She said according to this bill, those companies are not exempt and would be guilty of fraud. SENATOR FRENCH admitted that he had difficulty following Ms. Burke's explanation of that problem and asked her to send him a written explanation. CHAIR SEEKINS said he does not believe it was the sponsor's intent to unduly single out CDs and books. REPRESENTATIVE FATE affirmed that. CHAIR SEEKINS asked that those items be considered in the proposed amendment. He asked that the group provide such an amendment soon otherwise the committee would have to move forward without it. He then announced he would hold the bill in committee. The committee took a 5-minute recess. 9:15 a.m. SB SENATOR GEORGIANNA LINCOLN, sponsor of AS 09.55 that authorizes punitive damages against a person who causes physical injury or property damage with the intent to intimidate or harass and authorizes a lawsuit against the parent or legal guardian of a minor for the same if the suit is based on reckless conduct by the parent or legal guardian. It also prohibits lawsuits under this section against the state or its political subdivisions. CHAIR SEEKINS asked if Section 1 will allow a complainant to bring a civil lawsuit. SENATOR LINCOLN affirmed that is correct. CHAIR SEEKINS asked how "harassment" is defined in that regard. SENATOR LINCOLN explained the definitions of "prejudice", "bias", and "hatred" are on page 3 and those the Department of Justice. MS. ANNE CARPENETI, representing the Criminal Division of the Department of Law, noted the Administration has not taken a position on SB word "harassment" is defined in criminal law and she is not aware of such a definition in civil law. She pointed out that does not mean every term used in civil or criminal law needs to be defined because often the common understanding of terms is used. CHAIR SEEKINS said he was trying to determine what harassment is if a person could be sued for it. SENATOR FRENCH pointed out that with any new provision, there will be some "finding out" as people bring lawsuits with good and bad arguments. He noted that burning a cross in someone's front yard would be a good claim under the statute but hurling a racial epithet at another might not because the defendant must have physically injured the plaintiff or damaged property. He noted the jury would make that determination. CHAIR SEEKINS argued that he would prefer that the 60 legislators define that term. MS. CARPENETI said the statute describes the civil action as discriminatory harassment and then goes on to describe the basis of that action. It does not necessarily use that term in establishing what must be proved. CHAIR SEEKINS asked Ms. Carpeneti to review CSHB 15(L&C) Out of Committee 02/07/03 (H) MINUTE(L&C) 02/10/03 (H) L&C RPT CS(L&C) NT 3DP 4AM 02/10/03 (H) DP: CRAWFORD, ROKEBERG, ANDERSON; 02/10/03 (H) AM: LYNN, GATTO, GUTTENBERG, DAHLSTROM 02/18/03 (H) STA AT 8:00 AM CAPITOL 102 02/18/03 (H) Heard & Held 02/18/03 (H) MINUTE(STA) 02/25/03 (H) STA AT 8:00 AM CAPITOL 102 02/25/03 (H) Scheduled But Not Heard 03/11/03 (H) STA AT 8:00 AM CAPITOL 102 03/11/03 (H) Heard & Held 03/11/03 (H) MINUTE(STA) 03/13/03 (H) STA AT 8:00 AM CAPITOL 102 03/13/03 (H) Moved CSHB 15(STA) Out of Committee 03/13/03 (H) MINUTE(STA) 03/26/03 (H) STA RPT CS(STA) NT 3DP 4NR 03/26/03 (H) DP: SEATON, GRUENBERG, WEYHRAUCH; 03/26/03 (H) NR: HOLM, LYNN, DAHLSTROM, BERKOWITZ 02/19/04 (H) FIN AT 1:30 PM HOUSE FINANCE 519 02/19/04 (H) Heard & Held 02/19/04 (H) MINUTE(FIN) 02/23/04 (H) FIN AT 1:30 PM HOUSE FINANCE 519 02/23/04 (H) Moved CSHB 15(FIN) Out of Committee 02/23/04 (H) MINUTE(FIN) 02/24/04 (H) FIN RPT CS(FIN) NT 7DP 3NR 02/24/04 (H) DP: HAWKER, CROFT, CHENAULT, FATE, 02/24/04 (H) MEYER, HARRIS, WILLIAMS; NR: STOLTZE, 02/24/04 (H) JOULE, MOSES 03/03/04 (H) TRANSMITTED TO (S) 03/03/04 (H) VERSION: CSHB 15(FIN) AM 03/04/04 (S) READ THE FIRST TIME - REFERRALS 03/04/04 (S) L&C, JUD 03/25/04 (S) L&C AT 1:30 PM BELTZ 211 03/25/04 (S) Heard & Held 03/25/04 (S) MINUTE(L&C) 04/06/04 (S) L&C AT 2:00 PM BELTZ 211 04/06/04 (S) Heard & Held 04/06/04 (S) MINUTE(L&C) 04/13/04 (S) L&C AT 1:30 PM BELTZ 211 04/13/04 (S) -- Meeting Canceled -- 04/20/04 (S) L&C AT 2:00 PM BELTZ 211 04/20/04 (S) Moved SCS CSHB 15(L&C)am Out of 04/20/04 (S) MINUTE(L&C) 04/22/04 (S) L&C RPT SCS 1DP 4NR SAME TITLE 04/22/04 (S) NR: BUNDE, DAVIS, FRENCH, STEVENS G; 04/22/04 (S) DP: SEEKINS 04/28/04 (S) JUD AT 8:00 AM BUTROVICH 205 s/Bill/Detail/23?Root=HB15'>HB 15 name='HB15' href='/basis/Bill/Detail/23?Root=HB15'>HB 15 15 Bill/Detail/23?Root=HB15'>HB 15 Bill/Detail/23?Root=HB15'>HB 15 of HB 15 to be name='HB15' href='/basis/Bill/Detail/23?Root=HB15'>HB 15 is/Bill/Detail/23?Root=SB246'>SB 246 href='/basis/Bill/Detail/23?Root=SB246'>SB 246 but answered 1985, at which time he went into business with the district name='HB15' href='/basis/Bill/Detail/23?Root=HB15'>HB 15. 15-SOLICITATIONS/CONSUMER PROTECTION /Bill/Detail/23?Root=HB15'>HB 15, told members that he ll/Detail/23?Root=HB15'>CSHB 15(L&C), version W, was Bill/Detail/23?Root=HB15'>HB 15 because it reinforces /23?Root=HB15'>HB 15. She asked to concentrate on two 43.63.105 includes not only a call initiated by the 800 number to call to purchase, cannot purchase that book with a AS 43.63 246-HATE CRIMES/DISCRIMINATION/TOLERANCE PROG href='/basis/Bill/Detail/23?Root=SB246'>SB 246, informed members 23?Root=SB246'>SB 246. She noted that various groups "AS 11.76.200". a civil lawsuit for compensatory and are FBI terms from 246. She noted that she would be surprised if the tes.asp#11.61.120'>AS 11.61.120. /23?Root=SB246'>SB 246 will expand that. He then added "intentionally" Root=SB246'>SB 246 was part of a governor's bill two /Detail/23?Root=SB246'>SB 246 is the result of a bill Root=SB246'>SB 246 has had two hearings in the Senate Root=SB246'>SB 246 to the next committee of referral to SB 246 believe so." He s"> id="docLink">Open document in new windowX ght:100%;min-height:600px" id="docFrame"> width="105" height="107" bills, locate ist-whos-who.php">contact information. g.gov/webmaster.php">help

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04/28/2004 08:06 AM Senate JUD

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