Legislature(2001 - 2002)
04/27/2001 01:10 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 86 - CIVIL LIABILITY FOR IMPROPER LITIGATION Number 0100 CHAIR ROKEBERG announced that the first order of business would be HOUSE BILL NO. 86, "An Act relating to civil liability for certain false or improper allegations in a civil pleading or for certain improper acts relating to a civil action." Number 0143 SHELDON E. WINTERS, Attorney at Law, Lessmeier & Winters, Lobbyist for State Farm Insurance Company ("State Farm"), noted that over the years, his firm has litigated hundreds of "tort/ civil type cases." He said that State Farm supports HB 86 for the reasons articulated in the sponsor statement. He posited that HB 86 requires truthfulness and attorney responsibility, and enforces these requirements with meaningful consequences. In defense of the position that there is currently a problem with frivolous lawsuits, he referred to an article in The National Law Journal written by Michael Jones on 3/22/01. Mr. Winters opined that the article establishes two points: One, that the current system does not prevent lying, but instead encourages it in some instances because there are no meaningful consequences; and two, "lying in lawsuits is widespread." MR. WINTERS offered that those who "are in this day to day" see examples of lying everyday. He mentioned that another article, which referred to Alaska Airlines flight 261, noted that fraudulent claims were brought on behalf of children supposedly fathered illegitimately by four of the passengers. Those fraudulent claims were filed by U.S. attorneys and were determined to be false, but only after Alaska Airlines had been subjected to a lot of litigation and legal expenses. Mr. Winters opined that the problem of lying during litigation does exist. MR. WINTERS, referring to the hypothetical examples given at the last meeting on HB 86, said that virtually all of the examples that he heard ignored the safeguards in the bill. These safeguards will address a lot of the concerns expressed to date, he opined. He suggested that hypothetical examples should not be used as the basis for stopping legislation. He said it comes down to a policy call. Who will be protected? The people who make false statements, or the people who are the victims of the false statements? REPRESENTATIVE BERKOWITZ, referring to the example given by Mr. Cole at that last hearing on HB 86, asked whether Mr. Winters is asserting that all of the denial of claims that insurance attorneys make would be impermissible under HB 86. MR. WINTERS said he is not asserting that at all. He noted that when he heard Mr. Cole's hypothetical example, he thought of eight or nine different remedies to the situation. First of all, when an answer to a complaint is due, it is common practice (and the law in Alaska) that if "you need more time, you call up the other side and you get more time to answer the complaint." REPRESENTATIVE BERKOWITZ asked what incentive there is for the plaintiff to allow that additional time. He added that there would be every incentive to disregard that courtesy. Number 0658 MR. WINTERS answered that professional courtesy would be the incentive. If, however, extra time is not granted, a person would simply go to the trial court and ask for more time, which he has never seen denied. On another point related to Mr. Cole's example, Mr. Winters explained, "you don't have to have blanket denials"; other responses include "denied" or "can not answer for lack of information [and] knowledge," which is commonly [given]. There does not have to be a commitment in the answer if there is not enough information to respond. "If you are committed to a response," he pointed out, it can always be amended; the rules allow for an amendment without even going to court. He noted that motions to amend are liberally granted. Therefore, Mr. Winters asserted, Mr. Cole's premise that within a matter of days, a person has to file a denial that commits him/her to a certain position is just not the case. Mr. Winters noted that if someone wanted to file a lawsuit based on a blanket denial, he/she is required to send notice of that [intention] and give the other party an opportunity to amend the denial. REPRESENTATIVE OGAN, referring to an example given in the article provided by Mr. Winters, remarked that it is up to the attorneys to point out who is lying, and ultimately the judge or jury decides the case based on whom they believe the most. He noted that the standard of proof in civil litigation is "50 percent plus 1"; therefore, since there are always two sides to a story, one person merely has to be believed 1 percent more than the other person. Both parties could be lying, or both could be telling the truth to the best of their recollection; the truth could ultimately be determined on a 1 percent [margin]. MR. WINTERS argued that HB 86 is not trying to do away with the jury system; instead, it tries to discourage a "deliberate intentional false lie." Honest recollections that are under dispute will still go before a jury, he explained, but quite often there are "black and white" different stories in which one of the parties is lying. He added that the sanctions listed in HB 86 would not be imposed simply because someone doesn't prevail in a lawsuit. REPRESENTATIVE OGAN said he understands that point but noted that there is already a system in place to decide who is lying. "Why do we need more," he asked. MR. WINTERS opined that the purpose of HB 86 is to prevent the blatant lie to begin with, but if someone chooses to go through the jury system with a false allegation and he/she gets caught, then the sanctions would be imposed. He recounted that in many of his cases, although there may be a legitimate dispute about liability, these lawsuits often include preposterous damage claims as well, which drives up the cost of litigation. He opined that the meaningful sanctions imposed on a person should he/she be caught lying are incentive not to make false allegations to begin with. Number 1036 REPRESENTATIVE BERKOWITZ posited that the code of professional ethics, Civil Rule 11, criminal statutes, and professional courtesy already adequately address concerns about false allegations and false witnesses. He said he is uncertain why the addition of HB 86 is supposed to make all the difference, if proponents of HB 86 consider the current safeguards inadequate. MR. WINTERS argued that HB 86 is not directed towards witnesses, rather towards the parties and their attorneys. He opined that what is currently in effect is not working; Civil Rule 11 only applies to attorneys (not parties) and is rarely used. In Keen v. Ruddy, he noted, the trial court and the supreme court found that the underlying lawsuit was totally frivolous and brought in bad faith (and cost the defendant thousands and thousands of dollars), but the trial court issued a Civil Rule 11 sanction against the attorney of only $100, which was subsequently upheld by the supreme court as sufficient penalty against the attorney because it carried with it a stigma and a message of disapproval. REPRESENTATIVE BERKOWITZ, after noting that the representative from the state chamber of commerce was unable to provide any specific examples of frivolous lawsuits during the last meeting on HB 86, said such an inability belies the assertion that there is strong evidence of a problem. MR. WINTERS offered that the article he provided, Representative James' personal example, the letter from the City and Borough of Juneau Manager, and his own anecdotal cases are evidence that there is a problem. REPRESENTATIVE BERKOWITZ countered that the aforementioned article is merely anecdotal, just "war stories" from a trial lawyer, not quantifiable evidence of a problem, and, as pointed out by Representative Ogan, the weaknesses of the claims in the examples given were exposed by the attorneys through the existing legal system. The assertion that anecdotal evidence constitutes strong evidence does not change his position on HB 86, he stated. Number 1275 STEVE CLEARY, Alaska Public Interest Research Group (AkPIRG), testified via teleconference. He noted simply that the points raised by Representatives Berkowitz and Ogan constitute the main reasons why AkPIRG opposes HB 86. There are already safeguards in place, he said, and HB 86 would discourage people from having their day in court, even if their claims have merit, simply because they may be intimidated by the sanctions listed in HB 86. CHAIR ROKEBERG closed the public hearing, and announced that the committee would set HB 86 aside and return to it later in the meeting. HB 86 - CIVIL LIABILITY FOR IMPROPER LITIGATION Number 2230 CHAIR ROKEBERG announced that the committee would again take up HOUSE BILL NO. 86, "An Act relating to civil liability for certain false or improper allegations in a civil pleading or for certain improper acts relating to a civil action." Number 2206 REPRESENTATIVE COGHILL moved to report HB 86 out of committee with individual recommendations and the accompanying fiscal notes. Number 2199 REPRESENTATIVE BERKOWITZ objected. He said this is a bad idea according to Attorney General Cole and Wev Shea; it's bad for plaintiffs, it's bad for the defendants, it's bad for business, and the only one it seems to be good for is an individual who didn't testify here today and one other individual who did testify. "We heard no quantitative evidence that there is a rampant problem out there ..., and in fact, ... to the contrary, ... this bill will impose burdens on business and would impede on civil justice," he concluded. Number 2126 A roll call vote was taken. Representatives James, Ogan, Coghill, and Rokeberg voted to report HB 86 out of committee. Representatives Berkowitz and Kookesh voted against it. Therefore, HB 86 was reported from the House Judiciary Standing Committee by a vote of 4-2.
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