HB 22 - CIVIL LIABILITY FOR BOOTLEGGERS CHAIRMAN JOE GREEN advised members they would first consider HB 22, "An Act relating to civil liability for illegal sales of alcoholic beverages; and providing for an effective date." It was sponsored by Representative Ivan Ivan. His committee aide, Tom Wright would provide comments on behalf of Representative Ivan. Number 101 TOM WRIGHT, Legislative Assistant to Representative Ivan Ivan, provided comments on HB 22 on behalf of the prime sponsor, Representative Ivan Ivan, who was ill. MR. WRIGHT advised members that current law appeared to exempt those who sell liquor without a license from any civil liability for damages that might be caused by their actions. The basis of the bill was to remove that exemption and make bootleggers strictly liable for his or her actions. MR. WRIGHT pointed out that Christopher Cooke, an attorney in Bethel, Alaska was responsible for bringing this matter to the attention of the Attorney General's Office. He noted that there had been an Alaska Supreme Court decision, Chokwak v. Worley, 912 P.2d 1248 (Alaska 1996), which stated that there might be a problem as far as civil liability was concerned, for those who sell liquor without a license. CHAIRMAN GREEN noted that individuals at two teleconference sites in Anchorage and Fairbanks were standing by to provide testimony on the proposed legislation. MR. WRIGHT advised members that Linda O'Bannon, Assistant Attorney General, would be able to respond to any technical questions posed by committee members. Ms. O'Bannon was the Attorney General who had corresponded with Christopher Cook and Representative Ivan's office, and also does legal work for the Alcohol Beverage Control Board (ABC) Board. CHAIRMAN GREEN requested testimony from Fairbanks. LISA JAEGER, Tanana Chiefs Conference, Inc. (TCC), advised members that TCC fully supported HB 22. She offered to fax down a position paper and also expressed that the TCC had adopted several resolutions during their annual conventions relating to alcohol issues. Ms. Jaeger advised members that alcohol was an excessive problem in the Fairbanks area. MS. JAEGER stated that not only did the TCC fully support the bill, but the Elders in the community had declared war on alcohol. She advised members that they had experienced problems bringing criminal charges because, basically, everyone's related, which was a major problem in the smaller villages. Representatives Jeannette James and Norman Rokeberg arrived. VICE CHAIRMAN CON BUNDE expressed his support of TCC in dealing with alcohol related problems. He asked Ms. Jaeger how the proposed legislation would affect neighbors and relatives if a criminal charge were imposed. MS. JAEGER did not know how the legislation would help with respect to people not wanting to testify against one another. However, felt it would be a great tool, in terms of waving a flag, that those people would be civilly liable for activities caused by other people that they illegally sell alcohol to. Number 606 VICE CHAIRMAN BUNDE questioned the ability of those being charged with bootlegging to pay a fine because of the lack of work in the smaller villages, as well as many people living a semi-subsistence lifestyle. MS. JAEGER felt it was known that the bootleggers were the individuals with money, and other people, in the remote areas, did have snow machines and property. REPRESENTATIVE ERIC CROFT referenced the "sell or barter" language of the proposed legislation and asked if a barter arrangement was typical. MS. JAEGER was not familiar with how bartering for alcohol worked. The transactions she was most familiar with involved money transactions. REPRESENTATIVE CROFT asked if it was generally known who, in the villages, the bootleggers were. MS. JAEGER responded that it was common knowledge who the bootleggers were in the villages. REPRESENTATIVE ETHAN BERKOWITZ asked what the estimated cost of a bottle of alcohol was that goes through a bootlegging operation. MS. JAEGER stated that the cost varied depending on the location, however a bottle of alcohol could range from double the shelf cost to 25 times the shelf cost. REPRESENTATIVE CROFT asked what types of efforts the TCC would make to publicize and alert the public of the legislation if it passed. MS. JAEGER felt they would run front cover stories in the local newspapers, as well as utilize the local radio stations to publicize the enactment of the legislation. LINDA O'BANNON, Assistant Attorney General and representative of the Alcohol Beverage Control Board (ABC) and their staff, pointed out that the proposed legislation would make clear that bootleggers are civilly liable for the harm they cause by the illegal sale of alcohol. She added that under the particular version, a bootlegger would be subject to strict liability. MS. O'BRANNON advised members that after the Alaska Supreme Court decision in Chokwak v. Worley concerning civil immunity, the ABC Board and staff felt it should be clarified in statute that civil immunity was not, and should not be extended to persons who unlawfully traffic alcohol. She noted that the ABC Board recommended a change to AS 04.21.020 by adding a paragraph to make clear that bootleggers were held responsible for damages they cause to other persons. Ms. O'Brannon noted that as the bill was currently written, it might include someone who purchased alcoholic beverages from the bootlegger and then was injured, or someone injured by the person who purchased alcoholic beverages from the bootlegger, such as an innocent victim of an automobile accident. Number 1270 REPRESENTATIVE NORMAN ROKEBERG advised members that he had a suggested amendment that he had received from the Alcohol Beverage Control Board and asked if the language had been drafted by Ms. O'Brannon. MS. O'BRANNON responded that she did draft that language, although that had been done some time ago and was slightly different than the language of HB 22. REPRESENTATIVE CROFT referenced the difference between a negligent standard and a strict liability standard and asked Ms. O'Brannon what the difference and practical effect would be between a negligent and strict liability standard. He questioned how someone would prove negligence in an act that was already criminal. MS. O'BRANNON agreed, pointing out that what they were talking about would be a criminal violation, and therefore, negligence per se. REPRESENTATIVE BRIAN PORTER recommended adding a new subsection to HB 22 which would read as follows: "(b) Notwithstanding (a) of this section, a person who sells or barters an alcoholic beverage to another person in violation of AS 04.11.010 is strictly liable for civil damages FOR PERSONAL INJURIES, DEATH, AND PROPERTY DAMAGES, resulting from the intoxication of the person receiving the alcoholic beverage IF THE INTOXICATION SUBSTANTIALLY CONTRIBUTED TO THE PERSONAL INJURIES, DEATH AND PROPERTY DAMAGES." MS. O'BRANNON advised members she did not see a problem with that language. She stated that AS 04.21.020 provides immunity to social hosts and people who hold liquor licenses if they do certain things. Ms. O'Brannon explained that by amending AS 04.21.020 that bootleggers would be responsible, no matter what, in a civil liability situation. REPRESENTATIVE JEANNETTE JAMES spoke in favor of the proposed language because it made more perfectly clear what an individual would be civilly liable for. Number 1980 REPRESENTATIVE BERKOWITZ preferred the more simple language over specifying certain incidences because a broader statement would more likely result in a civil liability case. REPRESENTATIVE ROKEBERG asked if a community or a law enforcement agency would be able to bring a cause of action against an individual for the illegal sale of alcoholic beverages. MS. O'BRANNON stated that for a criminal prosecution under the bootlegger statute, AS 04.11.010, the district attorneys office would have to prove the allegations beyond a reasonable doubt. However, in a civil context, the people who could bring civil law suits would be those who had actually been injured or were in some type of relationship with the injured party. In a civil liability case the standard of proof would be a preponderance of the evidence, as opposed to beyond a reasonable doubt, which is a much easier standard of proof. Ms. O'Brannon also pointed out that a criminal prosecution of the bootlegger would not be needed in order to bring a civil law suit against that person. VICE CHAIRMAN BUNDE asked if what was being said, was that a bootlegger could be acquitted on a criminal charge, but a civil suit could be brought because of certain results of his illegal selling of alcoholic beverages. Number 2245 MS. O'BRANNON fully agreed with Vice Chairman Bunde's understanding, noting that there was a very famous case being argued currently where that same type of situation occurred. REPRESENTATIVE BERKOWITZ asked if the state would have the ability to recover investigation costs as an economic damage in a bootlegging case. MS. O'BRANNON did not feel the proposed legislation would provide for that. She explained that the state or city would not be the directly injured party and specific language would be necessary to include that ability. Ms. O'Brannon went on to say that the proposed legislation would cover a situation even where an investigation had not been conducted by a governmental entity. REPRESENTATIVE PORTER felt that the cost of prosecution to a city or state should be added to personal injuries, death and property damages. Number 2430 LISA KIRSCH, Committee Aide to Chairman Green, referenced the language of, "substantially contributed" in the proposed amendment, and wondered if that would cause a problem with the causation standard in Title 9. TAPE 97-2, SIDE B Number 000 MS. O'BRANNON stated that the way the tort laws were currently written, she did not know if it was necessary to say "substantially contributed", because she felt the courts would automatically provide jury instructions that would apportion fault among the parties based on their percentage of the fault. REPRESENTATIVE PORTER requested that HB 22 be held over to further consider the ability of the state or city being able to recover monetary damages from acts of bootleggers and the need to investigate those types of cases. TOM WRIGHT, Committee Aide to Representative Ivan, advised members the sponsor would not object to holding the bill over for the purpose of considering additional amendments addressing the concerns voiced at the present hearing. Mr. Wright offered to work with the Chairman's staff, Representative Porter's staff and Representative Berkowitz staff to arrive at language that would accommodate their concerns. REPRESENTATIVE CROFT declared a possible conflict of interest advising members that he had worked with Christopher Cooke, the attorney from Bethel, Alaska, although it involved nothing to do with the proposed legislation, HB 22. REPRESENTATIVE ROKEBERG expressed his support of a community or state having the ability to file action. CHAIRMAN GREEN advised members that HB 22 would be held over for the purpose of considering additional language, and brought back before the committee at a later date. Number 660