Legislature(1999 - 2000)
03/31/2000 01:22 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 244 - UNFAIR TRADE PRACTICES/DEFAMATION Number 1140 CHAIRMAN KOTT announced the next order of business would be HOUSE BILL NO. 244, "An Act relating to disclosure of information by the attorney general about possible unfair trade practices; and relating to liability for allegations relating to unfair trade practices." Number 1158 REPRESENTATIVE CROFT, sponsor of the bill, noted that he and Representative Fred Dyson, cosponsor of the bill, have been interested in consumer protection issues for some time now. House Bill 244 is a small fix in two different areas. First, those who work with consumer protection complaints have been frustrated with the amount of information available to them from the Department of Law. The department is prohibited by statute from communicating with anyone about the status of an investigation. He thinks that is mainly to protect the business entity from disclosure about the complaint until probable cause has been determined. In other words, he said, "You don't want ... everyone using the fact that [there have] been complaints against Joe Green's roofing company until you know whether they're substantiated or not." There were good reasons for the statute, he said, but in his opinion it is too broad and it doesn't allow the Attorney General to communicate the status of a complaint, which leads to the feeling that a complaint has been thrown into a black hole to the point that even good work isn't apparent to the general public. REPRESENTATIVE CROFT said that second, there is a lot of worry among complainants that if they talk about the suit at all they might be subject to slander or libel actions from the affected business. In that type of case, he noted, that the complainants would probably win, because in slander-and-libel law when a matter is of public concern the courts have held under the Free Speech Clause that a person can't be held liable for making a mistake. In other words, if it is important enough for public discussion, which he thinks is the case with consumer protection, it is not a matter of making a mistake; it is a matter of knowing or having been reckless with regard to the truth. Number 1363 REPRESENTATIVE KERTTULA asked Representative Croft what happens with the information once the complainant gets it. Can the complainant divulge it? REPRESENTATIVE CROFT replied that according to Ms. Julia Coster [Assistant Attorney General, Commercial Section, Civil Division, Department of Law] that is a possibility, but it is not a client situation. It is not protected by the attorney-client privilege because the client is the state. He's trying to define an area where a complainant could get some information, but a complainant would not have an absolute right to everything that's going on. There is a worry that information the Attorney General tells a complainant could be deposed because often a complainant is a key witness. The intent of the bill is to give discretion to the Office of the Attorney General to communicate limited facts, which is why the language reads "may" instead of "shall" [page 2, line 1, of the bill]. He imagines that limited facts would be communicated rather than everything in order not to compromise the case. Number 1463 REPRESENTATIVE GREEN asked Representative Croft whether there would be any divulging of information that wouldn't be a matter of public record. REPRESENTATIVE CROFT replied that at this point, no information is a matter of public record until a determination has been made. The statute says that the Attorney General cannot communicate with anyone the identify of who was complained against, which is to protect a business until they are ready to file a case. He thinks it is a rational law, but he thinks that it is a little bit overly broad. REPRESENTATIVE KERTTULA asked Representative Croft whether the Attorney General could give the name of the person being investigated to the complainant, if so-desired, under the new law [Section 2, of the bill]. REPRESENTATIVE CROFT replied yes, the Attorney General could only communicate with the person who has filed a complaint - the complainant. REPRESENTATIVE KERTTULA pointed out that once the complainant gets the information, the complainant can divulge the information to anybody. REPRESENTATIVE CROFT replied, "They could." But the complainant has an interest in seeing the case brought to a successful completion. The complainant, he thinks, doesn't have an interest in ruining the case. A little bit of information helps the complainant feel like something is being done. He doesn't think that the risk of using that information to compromise the case is very significant. Number 1570 REPRESENTATIVE MURKOWSKI asked Representative Croft whether there would be any concern in relation to assigning rights to a claim, for example. In other words, would anybody be excluded that should not be? REPRESENTATIVE CROFT deferred the question to Ms. Julia Coster of the Department of Law. CHAIRMAN KOTT opened the meeting to public testimony. Number 1617 REGINA C. LEVY, Private Senior Citizen, testified via teleconference from Anchorage in support of HB 244. She has been waiting for "Lady Justice" to come her way for over five years now. She continues her long fight for justice in consumer protection issues despite the fact that she is almost 72 years old. She firmly believes that consumer protection, as well as the contracting laws of the state are inadequate at best. Instead, they protect the corrupt contractors and do nothing for their victims. MS. LEVY further stated that she has ambivalent feelings about testifying today. One side is eager to tell her story again, while the other side says, "What for?" It is nothing but a complete waste of time if the past is to prove true once again. But when common sense takes control of her she realizes that the committee members need to know what victims like herself have gone through. Only then can they debate the bill fully aware of the experiences that victims have endured, the lessons learned, and the horrors of the cost of litigation with nothing to show for it but a worthless piece of paper called a judgment. But, most importantly, she feels that the current laws in statute protect the corrupt contractors and leave the victims with no recourse whatsoever. That is a fact that leaves her angry, frustrated, helpless and mad against the current legal system and the legislators that support the system with no thought for the victims. MS. LEVY explained that she contracted-out with J&B Roofing in the fall of 1994, at which point she knew nothing about roofing or roofing contracts. The contractor came to her home and presented himself as an "expert," and put a $20,000 roof on her home with a rating of a 2 on a scale of 1 to 10, with 10 being the best rating. The price to her was $18,000 because of a senior citizen discount, and it will have to be completely redone at her expense. She filed an official complaint with the Better Business Bureau in the spring of 1995, which was taken to the Office of the Attorney General, but she never heard anything more about it. She asked: Doesn't the Attorney General want to do something to protect the people from being taken just like her? But at that point she was still very young and naive about the legal system, Ms. Levy said. MS. LEVY further stated that on December 1, 1998 she gave an in- depth testimonial at the very first consumer protection round table, at which time, she spoke to the assistant attorneys general in attendance - Julia Coster and Daveed Schwartz. When she asked about speaking out in fear of retaliation, Representative Dyson had clarified the concern with Mr. Schwartz, who indicated that it is a possibility. In support of HB 244, she feels that she has every right to know the status of her complaint, and what the Attorney General is doing, if anything, or did he just trash-can it? She spent more than $28,000 on attorney fees to get a judgment that is nothing more than a worthless piece of paper, and now that she has filed an official complaint she cannot know what's going on. Why not? MS. LEVY continued. After all this time, she has no idea what the courts have done in relation to her complaint. As the victim, there should be some means of disclosure by the Attorney General to keep her informed rather than push her to the side, wipe her off and take her out of the picture. In other words, treat her like she was nothing when in fact she is one of thousands of people in Anchorage who have been taken by corrupt contractors. She further noted that J&B Roofing has changed their name to avoid all accountability for their criminal actions, which left hundreds of creditors without any recourse to get what is rightfully due. The corporate veil that this company hides behind protects and shields them from all intruders. Corporation laws, she said, protect the criminal, for she can't reveal information on the company to anyone even if asked for fear of being sued. That is why she will not speak of their new name. She has had enough of the legal system and how it protects the corrupt contractors and leaves the victims with anger, frustration and out of funds. House Bill 244 would take some of the pressure off of those who have the courage to speak out, which would give victims who have judgments against corrupt contractors the ability to speak out to warn the innocent and unsuspecting without any fear of repercussions. She said, "Put yourself in my place. Wouldn't you be grateful that somebody who had a very unpleasant experience with a contractor speak out and save you years of litigation, many thousands of dollars in attorney fees, and also the cost that you along would have to bear to make good again the damage done to your property by a corrupt contractor?" MS. LEVY further stated that after she went public at the consumer protection seminar and the Senior Voice and the Eagle River Star published articles in the paper, she was immensely afraid that she would be found in some ditch or that her home would be fire bombed or that her tires would be slashed. The only reason that did not happen is because the contractor would be a prime suspect, for she has no enemies; she is a law-abiding senior citizen. Since this has happened she has been working as a researcher at the local court house, and has put together a database of lawsuits the company is involved with. The company has been involved in 26 lawsuits from September 1, 1994 to January 27, 1999 under different names. She often wonders how less litigation there might have been if HB 244 was in effect back then. It is imperative that the people have HB 244 in place and working for them. She has downloaded the various name changes the company has made trying to distances themselves from the Johnson name, but it is easy to see that the company remains the same regardless of how many name changes have been made. That information was faxed earlier to the committee. She hopes that it is used by the committee members when debating the bill, for it is imperative that victims are able to speak out. She's not talking about rocket science; it is just plain common sense. MS. LEVY further stated that since she started her quest for justice, she has become well known with local public officials and have written numerous letters to the Governor and on down to no avail. House Bill 244 is the first and only positive legal script dealing with consumer protection that has come out of Juneau in years. It would protect victims of corrupt contractors so that they can keep abreast of any complaints made to the Attorney General and can speak up freely without any fear of repercussions, and hopefully it would put the fear of God into some of the corrupt contractors. House Bill 244, she said, is not the answer to all consumer protection problems, but is a start in the right direction. She urged the committee members to pass the bill without hesitation. The people need it for their protection. She thanked Representative Eric Croft and Representative Fred Dyson for drafting the bill, and the committee members for listening to her. In closing, she has been a one-person campaign for over five years now to bring these creditors to the bar of justice and be held accountable for their criminal activity, yet despite her best efforts she has been left with bitter disappointment, total frustration and completely disillusioned with the legal system. She has found out the hard way that those who have the power and authority to do something just turn and look the other way. Thank you very much. Number 2406 CHAIRMAN KOTT thanked Ms. Levy for her excellent testimony. TAPE 00-44, SIDE A Number 0060 THOMAS WARD testified via teleconference from Anchorage in support of HB 244. The bill is long overdue to protect the citizens of Anchorage. First of all, contractors should have a better criteria for licensing. As an ex-real estate person, he had to take numerous classes and continuing education classes to make his job acceptable to the public. Contractors, on the other hand, only need to provide $25 for a license to be in business. There is also no way to cancel insurance after obtaining it, when it is a known fact that in the event of an accident the consumer is sued, if the contractor doesn't have insurance. He agrees with HB 244 in that the Attorney General should inform the consumer on what is going on. He further noted that it only takes a $500-bond for $10,000 and the contractor is in business. MR. WARD told members he also had testified in 1998, along with Ms. Regina C. Levy, because he had been trying for a year to get money back from a bond. He didn't get it all back, but it cost him only $8,000 to talk to an attorney at $150 an hour. It is important for the consumer to get his money in due time. He even threatened the insurance company with litigation to pass on the money that he was entitled to, for he too has a judgment against a contractor. He firmly agrees with HB 244. It is a small step for the legislature to take, but a large step for the citizens who should be informed at all times and who should have a way to investigate these contractors. It is a shame that more people aren't testifying. Ms. Regina C. Levy has a list indicating that there are $136,000 out of several contractors in the last year. Lord only knows, he said, how many thousands of dollars have been stolen from the people. Thanks you very much for listening. He hopes that this is a step in the right direction. Number 0383 JULIA COSTER, Assistant Attorney General, Commercial Section, Civil Division, Department of Law, testified via teleconference from Anchorage. She does not have formal testimony to present; she is prepared to answer any questions. Number 0407 REPRESENTATIVE KERTTULA asked Ms. Coster whether she feels comfortable that the Office of the Attorney General would have enough latitude to discuss the matter but that they would be careful enough not to provide too much information so that it could conceivably hurt a case later on [Section 2(c), of the bill]. MS. COSTER replied, "That's right." The Department of Law in concerned in that they would not want to disclose information that would compromise an investigation. She feels comfortable because the language in the bill is permissive as opposed to mandatory. She thinks that the department could disclose information on whether or not they were investigating [an act or practice], and that probably wouldn't compromise an investigation. Number 0480 REPRESENTATIVE ROKEBERG asked Ms. Coster what the practice is now legally in terms of warning the public about potential fraud. It seems to him that people may come to the state from outside, start their activities and move around the state, at which time, the Department of Law may become aware of them. Is the department restrained from warning the public because an action has been filed against an act or practice? How does the department reconcile that conflict with the same concept of not talking about an alleged perpetrator? MS. COSTER replied the confidentiality provisions in the Consumer Protection Act allow the Office of the Attorney General to issue a warning relating to conduct constituting an unlawful act or practice under the Act. The Department of Law uses that provision when they see conduct that is illegal on its face. She cited a telemarketer selling goods or services so that the department can tell the conduct is a violation of the Act as an example. In that case, the department may issue a warning relating to a systematic type of violation, but they probably would not disclose the name of the business; they may just disclose the type of conduct that is the violation. The department has that right, but they use it carefully. Number 0621 MS. LEVY said, according to her understanding, the criteria that the Attorney General sets forth to take on a case or initiate action is related to the number of people involved, the amount of money involved and the egregious behavior of those involved. The company that she had dealings with has more than met every one of the criteria. In fact, the company has exceeded every one of the criteria. She wondered what her recourse is after going to the Attorney General who responds negatively to pursuing a case. The people have a right to know and be protected from corrupt contractors, and the only way to do that is to get them out of business. CHAIRMAN KOTT deferred Ms. Levy's question to Representative Croft. REPRESENTATIVE CROFT stated the frustration is because the statute prohibits Ms. Julia Coster of the Department of Law from communicating to anyone the status of a complaint. He's not sure what to do about a complaint that has been rejected after the bill is passed and after the Office of the Attorney General is allowed to communicate to a complainant freely about the investigation of an act or practice. But the first thing to fix is to allow the Office of the Attorney General to communicate whether or not they are pursuing a complaint. Number 0797 MS. LEVY said she agrees with allowing the Office of the Attorney General to tell her the status of a complaint, but she would like to know what to do when they reply in the negative to pursuing a case. She wants to know for the people who are at risk. REPRESENTATIVE CROFT replied, "I think then we raise holly heck." MR. WARD stated, even though he and Ms. Levy are two small voices in the wilderness, he just talked with a woman the other day who got hoodwinked on her driveway because she trusted someone. He noted that he was a contractor for twenty-five years, but he can still walk in his hometown with his head held high. Number 0866 MS. LEVY stated a big problem for the state in relation to this issue is because there isn't a consumer protection agency. There are 1.5 attorneys working on consumer protection now, but when there was a consumer protection agency there were 15 attorneys and a full staff. Alaska, the largest and wealthiest state, is the only state without a consumer protection agency in the country. That is why the state is a haven for crooks and scammers. They know nobody will do anything about it. She cited the roofing company that she has been dealing with had been operating in the state since 1970. They just kept changing their name when things got too hot, or if things got really bad they left. But they always returned because they know that they can get away with it. The state needs a consumer protection agency. Number 0942 MR. WARD noted that AARP is behind this issue. He and Ms. Levy volunteer as part of a task force that is willing to work for free to help do research, the leg work. It wouldn't cost the state any money. MS. LEVY interjected and stated it would cost the state some attorneys, but the task force members would do the leg work. Her experiences have turned her into a mini-paralegal. CHAIRMAN KOTT commented that Ms. Levy is not a force that he would want to deal with based on what he has heard today. MS. LEVY replied nobody wants to come up against her because she believes in truth in justice. She treats the other person the way she wants to be treated. In this case, she is speaking for thousands of victims in the Anchorage area, not just for herself. Number 0990 REPRESENTATIVE ROKEBERG pointed out that both general and speciality contractors of the state have to be licensed with the Division of Occupational Licensing [Department of Community & Economic Development] but there is no board or method for a consumer to file a complaint to revoke a license. He noted that HB 418, which removes program receipts from the general fund and designates them as program receipts, gives future legislators the opportunity to enact a regulatory scheme that would allow for consumer protection. He also noted that the Alaska Association of Home Builders is very interested in establishing a board. REPRESENTATIVE CROFT suggested that he work with Representative Rokeberg on the issue. Number 1076 REPRESENTATIVE CROFT offered Amendment 1, which reads as follows: Page 1, line 13 after "about the", insert "status of the" REPRESENTATIVE CROFT explained that Amendment 1 would take care of Ms. Coster's concern in relation to the intent language being too broad. CHAIRMAN KOTT asked whether there was any objection. There being none, Amendment 1 was adopted. Number 1110 REPRESENTATIVE CROFT stated that Ms. Coster also wants language at the end of Section 3 to indicate that it doesn't limit any other defense. Section 3 reads as follows: Sec. 45.50.525. Limits on cause of action for statements. A person may not bring an action for defamation of character, libel, slander, or damage to reputation against a person who makes an allegation that an act or practice is or may be unlawful under AS 45.50.471 unless the person who made the statement knew that the statement was not true, made the statement with reckless disregard for the truth of the statement, or made the statement to obtain a competitive business advantage. MS. COSTER told members she wants language that says this section doesn't extinguish any existing defense in law to the actions listed in the section. REPRESENTATIVE CROFT made a motion to adopt the foregoing as a conceptual amendment [Amendment 2]. CHAIRMAN KOTT asked whether there was any objection to the conceptual amendment; there was no response. [Although the adoption of conceptual Amendment 2 was never ordered, no objection was ever stated.] Number 1165 REPRESENTATIVE MURKOWSKI asked Ms. Coster to comment on the reason why this is being limited to disclosing information to the complainant. MS. COSTER replied that it is a policy call that Representative Croft can address. She commented that the Department of Law really doesn't want to disclose information on an investigation to hardly anyone because it could be compromised. For instance, a witness could be contaminated for asking questions, or the defense could get rid of evidence as the result of the press asking questions. She believes that Representative Croft focused on the complainants so that they would know whether or not an investigation was being pursued. Number 1245 REPRESENTATIVE CROFT stated that the bill is narrow so that the Office of the Attorney General can only tell a narrow class of people - the complainant(s). Yes, that class of people could divulge the information, but they seem like the least likely to want to compromise the investigation. In that regard, he is comfortable in letting them have some information about the case. Number 1289 REPRESENTATIVE KERTTULA asked what the standard is for libel now. Number 1300 REPRESENTATIVE CROFT answered that, according to his understanding, there are two constitutional restrictions in relation to the statement of libel. There has to be some sort of malice. After that, if it is a matter of public concern, the New York Times standards apply. If it is not a matter of public concern, simple negligent standards apply. But, if it is a matter of public concern, it has to be a person knew of a falsehood and was reckless about the falsehood. In effect, the bill declares consumer protection a matter of public concern and apply the actions in Section 3, of the bill. Number 1367 REPRESENTATIVE GREEN made a motion to move HB 244, as amended, out of committee with individual recommendations and attached zero fiscal note. There being no objection, CSHB 244(JUD) moved from the House Judiciary Standing Committee.
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