Legislature(2001 - 2002)

05/06/2001 05:08 PM House JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SB 176 - DISTRIBUTORSHIPS                                                                                                     
                                                                                                                                
CHAIR  ROKEBERG announced  the final  order of  business, CS  FOR                                                               
SENATE  BILL  NO.  176(L&C)  am,   "An  Act  prohibiting  certain                                                               
coercive activity  by distributors; relating to  certain required                                                               
distributor  payments  and  purchases;  prohibiting  distributors                                                               
from requiring certain contract terms  as a condition for certain                                                               
acts  related   to  distributorship  and   ancillary  agreements;                                                               
allowing  dealers   to  bring   certain  court   actions  against                                                               
distributors  for   certain  relief;   and  exempting   from  the                                                               
provisions  of  the  Act  franchises  regulated  by  the  federal                                                               
Petroleum Marketing  Practices Act,  situations regulated  by the                                                               
Alaska  gasoline   products  leasing  act,   and  distributorship                                                               
agreements relating  to motor vehicles required  to be registered                                                               
under AS 28.10."  [Before the committee was HCS CSSB 176(L&C).]                                                                 
                                                                                                                                
Number 2282                                                                                                                     
                                                                                                                                
JOHN HAXBY,  Waukesha Alaska Corporation,  came forth  to discuss                                                               
SB 176.  He  told members the company was started  in 1972 by his                                                               
father,  and he  himself has  been operating  the business  since                                                               
1984.    There  are  approximately 13  employees,  and  the  main                                                               
business involves the sale and  distribution of machinery for all                                                               
services throughout Alaska.  He stated:                                                                                         
                                                                                                                                
     Over  the last  30 years,  we've been  in relationships                                                                    
     with  manufacturers.   Relationships change  over time,                                                                    
     and  there are  occasions where  distributor agreements                                                                    
     are yanked  without warning.   In  many cases  this can                                                                    
     cause  irreparable  harm  financially.   Alaskan  small                                                                    
     businesses  see immediate  losses in  jobs and,  in our                                                                    
     case,  it  has  resulted  in some  $300,000  in  unsold                                                                    
     inventory, which remains on our shelf.                                                                                     
                                                                                                                                
     Basically, what SB 176 does  ... is it levels the legal                                                                    
     playing  field   in  Alaska.    Legal   challenges  are                                                                    
     extraordinarily  expensive,  and  in most  cases  deep-                                                                    
     pocketed Outside  manufacturers simply  run you  out of                                                                    
     money.   Cases like this  can and have easily  run into                                                                    
     hundreds   of  thousands   of  dollars.   ...  In   one                                                                    
     noticeable instance  ... legal  bills have  exceeded $1                                                                    
     million  and climbing,  even  in a  case  in which  the                                                                    
     local  Alaskan company  has won  in every  court that's                                                                    
     south  of the  9th  Circuit.   And  in that  particular                                                                    
     case, there are continuing appeals.                                                                                        
                                                                                                                                
     This  bill   also  keeps  manufacturers   from  forcing                                                                    
     unwanted or unordered  inventory on Alaskan businesses.                                                                    
     It's not uncommon to be  made part of quotas unknown to                                                                    
     yourselves, and  [be] told, "Hey, you're  going to take                                                                    
     this inventory  because you're  our distributor.   Take                                                                    
     it or we're  going to terminate you or  we're not going                                                                    
     to have a relationship anymore."                                                                                           
                                                                                                                                
     The  bill also  allows for  the orderly  disposition of                                                                    
     inventory  if  a  distributor   agreement  is  in  fact                                                                    
     yanked.     It  returns   precious  capital   for  that                                                                    
     inventory,  which would  be remaining  at  the time  of                                                                    
     termination  of   the  distributor  agreement,   to  be                                                                    
     returned.     The  inventory  would  go   back  to  the                                                                    
     manufacturer  and there  would be  a repurchase  by the                                                                    
     manufacturer of  that inventory.  This  allows Alaskans                                                                    
     to  take that  capital  and reinvest  it in  businesses                                                                    
     here in the state.                                                                                                         
                                                                                                                                
Number 2399                                                                                                                     
                                                                                                                                
MR. HAXBY continued:                                                                                                            
                                                                                                                                
     The bill also allows that in  the event of a death of a                                                                    
     distributor or  the death of  a dealer that  an orderly                                                                    
     and equitable  return of inventory can  be accomplished                                                                    
     quickly.   It's especially important in  these cases to                                                                    
     be  able to  have an  orderly disposition  of inventory                                                                    
     and/or  the  business,  because   many  times  the  IRS                                                                    
     [Internal Revenue Service] comes  in and they value the                                                                    
     business  according  to  the past  performance  of  the                                                                    
     business.                                                                                                                  
                                                                                                                                
     In the event  that a distributorship is  in fact yanked                                                                    
     -  and the  IRS comes  and says,  "We have  a tax  bill                                                                    
     because your  business is valued  at 'X'  dollars," and                                                                    
     they  assess  a  tax  value  - ...  the  value  of  the                                                                    
     business  may  in fact  go  to  zero  and ...  the  tax                                                                    
     liability  remains  with the  estate  of  itself.   So,                                                                    
     theoretically, it  has the possibility to  wipe out the                                                                    
     heirs after the death of a dealer.                                                                                         
                                                                                                                                
     I  read through  this committee  substitute and  I have                                                                    
     pretty much agreed  with the way it is  written at this                                                                    
     time, with  the exception ...  on page 6, ...  line 11,                                                                    
     where it talks about  distributor agreement [meaning] a                                                                    
     written agreement.  In the  original language ... three                                                                    
     other words  [were] in there, which  stated "expressed,                                                                    
     implied, [and]  oral".  And  I think it's  important to                                                                    
        note that oral agreements are, ... especially in                                                                        
     Alaska, relatively common.                                                                                                 
                                                                                                                                
TAPE 01-81, SIDE B                                                                                                              
Number 2472                                                                                                                     
                                                                                                                                
MR. HAXBY went on to say:                                                                                                       
                                                                                                                                
     I'd  like to  ask for  your support  of this  bill.   I                                                                    
     think that it's  good for Alaskan businesses.   I think                                                                    
     it's  good for  Alaskan employees,  and that  it should                                                                    
     treat everyone in Alaska similar.                                                                                          
                                                                                                                                
REPRESENTATIVE   BERKOWITZ  asked   whether  anyone   with  legal                                                               
expertise intended to testify.                                                                                                  
                                                                                                                                
CHAIR ROKEBERG answered no.                                                                                                     
                                                                                                                                
REPRESENTATIVE  JAMES stated  that she  understands the  conflict                                                               
between  big businesses  and the  little businesses,  and between                                                               
the supplier  and the  person who  is having  these distributors'                                                               
products  on his  or her  shelves.   She said  she has  a lot  of                                                               
experience with  this and wished this  had been law on  the books                                                               
when she was  a bankruptcy trustee.  Also, as  an accountant, she                                                               
has seen people who have  had a distributorship taken away, which                                                               
was disastrous.   She stated that she thinks this  is a good idea                                                               
to protect Alaskan  businesses.  She noted that  she is concerned                                                               
whether having an in-state distributor will be a problem.                                                                       
                                                                                                                                
CHAIR ROKEBERG responded  that [yesterday in the  House Labor and                                                               
Commerce Standing  Committee] the  testimony was that  many times                                                               
the manufacturers end  up being distributors.  He  stated that he                                                               
had  added  [to  the  bill],  "manufacturers  with  50  or  fewer                                                               
employees," which generally covers most manufacturers in Alaska.                                                                
                                                                                                                                
REPRESENTATIVE JAMES  said she has  also worked  with wholesalers                                                               
and knows  they have rules  and regulations about whether  or not                                                               
their  product is  being  properly displayed  and  managed.   She                                                               
stated that she doesn't think  that will affect people in Alaska,                                                               
and she  doesn't think anything  in the  bill would be  an unfair                                                               
trading practice.                                                                                                               
                                                                                                                                
Number 2285                                                                                                                     
                                                                                                                                
JANEECE HIGGINS,  General Manager, Alaska Rubber  & Supply, Inc.,                                                               
testified via teleconference.  She stated:                                                                                      
                                                                                                                                
     We  had  a  signed   dealer  agreement  in  place  ....                                                                    
     Regional sales  [representatives] made oral  changes to                                                                    
     that agreement  with regard to  volume discounts.   For                                                                    
     15  years we  followed  the instructions  of the  sales                                                                    
     [representatives],  and every  month the  paperwork was                                                                    
     filed,  accepted, and  discounts  were  applied to  our                                                                    
     account.                                                                                                                   
                                                                                                                                
     The  parent company  sold the  manufacturing plant  and                                                                    
     the variances were noted.   Because we had not followed                                                                    
     the original signed  document procedures, they demanded                                                                    
     we repay  all discounts,  and when  we refused  we were                                                                    
     terminated as a  dealer.  Since the  paperwork had been                                                                    
     mailed,  the distributor  also charged  the owners  and                                                                    
     previous   general   manager   with   RICO   [Racketeer                                                                    
     Influenced  and Corrupt  Organizations Act]  violations                                                                    
     and  criminal   charges.    These  were   very  serious                                                                    
     charges.                                                                                                                   
                                                                                                                                
     We have  prevailed at  every level,  and the  ruling by                                                                    
     the court  provided that the  oral changes made  by the                                                                    
     sales representative  and accepted for 15  years by the                                                                    
     distributor, in fact, became  the new dealer agreement.                                                                    
     This  case has  been to  the 9th  Circuit, and  we have                                                                    
     prevailed at that  level as well.   Oral agreements and                                                                    
     oral changes  to existing  agreements happen  every day                                                                    
     of the business world, and  I urge you to keep language                                                                    
     in this bill to cover that issue.                                                                                          
                                                                                                                                
     As  a  side  note,  we  also have  dealers  to  set  up                                                                    
     throughout the state.  We  support them with inventory,                                                                    
     training, and  technical data.   This bill  will affect                                                                    
     us   from   both   sides  of   the   distributor-dealer                                                                    
     agreement, and we feel it is fair.                                                                                         
                                                                                                                                
CHAIR ROKEBERG asked Ms. Higgins for  the name of the case in the                                                               
9th Circuit [Court of Appeals].                                                                                                 
                                                                                                                                
MS. HIGGINS  responded that it  was Aeroquip vs. Alaska  Rubber &                                                             
Supply,  Inc.  and the  partners  were  Don Adams,  Drennon  (ph)                                                             
Adams, Tom Moore  (ph), and Alaska Interior Rubber.   It is still                                                               
being   appealed,  and   the  legal   bills  are   $1.2  million.                                                               
Furthermore,  the 9th  Circuit  upheld the  ruling  of the  lower                                                               
courts.                                                                                                                         
                                                                                                                                
CHAIR ROKEBERG asked  whether the 9th Circuit had  remanded it to                                                               
Judge Singleton [of the U.S. District Court].                                                                                   
                                                                                                                                
MS. HIGGINS answered in the affirmative.                                                                                        
                                                                                                                                
CHAIR ROKEBERG asked whether the 9th Circuit talked about the                                                                   
oral or the implied contracts.                                                                                                  
                                                                                                                                
MS. HIGGINS answered that that was the basis of the whole thing                                                                 
being upheld.                                                                                                                   
                                                                                                                                
Number 2101                                                                                                                     
                                                                                                                                
DEBORAH LUPOR testified via teleconference.  She stated:                                                                        
                                                                                                                                
     This  is  an  important  concern.    [For]  many  small                                                                    
     businesses,  one  of  their major  complaints  is  that                                                                    
     [they  don't]   have  the  time,  the   staff,  or  the                                                                    
     resources  to respond  to  legal  challenges.   Whether                                                                    
     somebody slips and  falls on the sidewalk  and sues for                                                                    
     damages, or ... on the  other side, the big guys decide                                                                    
     to  yank a  distributorship  agreement,  ... they  just                                                                    
     don't have the resources to respond.                                                                                       
                                                                                                                                
     I  want to  mention  that  in talking  to  a number  of                                                                    
     business owners, what I discovered  is that yanking the                                                                    
     distributorship  agreement  has   nothing  to  do  with                                                                    
     performance in many, many cases.   It has everything to                                                                    
     do  with  developing  new  markets.   Or  maybe  a  new                                                                    
     management  comes  in or  maybe  a  big distributor  is                                                                    
     trying to sign up somebody  in Seattle, and the Seattle                                                                    
     guy goes,  "Well, I  will take your  product only  if I                                                                    
     get the  Alaska market as  well."  And before  you know                                                                    
     it, the Alaska business,  who has trained employees and                                                                    
     built infrastructure  and has come, in  fact, to depend                                                                    
     on  this product,  ... is  suddenly, with  sometimes no                                                                    
     notice, sometimes 30 days, ...  gone.  And they're left                                                                    
     with  inventory  that  here   in  the  Municipality  of                                                                    
     Anchorage they continue to pay inventory tax [on].                                                                         
                                                                                                                                
     ...  I'm also  very concerned  about what  happens when                                                                    
     the dealer  dies and  passes his  estate on  to family.                                                                    
     They're already dealing with a  horrific loss, and then                                                                    
     to  get stuck  with huge  IRS bills  that may  actually                                                                    
     leave them in  the red with no business at  all even to                                                                    
     pay that  bill is  beyond contemplation.   I  thank you                                                                    
     for hearing this bill [and] I urge you to pass it.                                                                         
                                                                                                                                
Number 1984                                                                                                                     
                                                                                                                                
CHAIR  ROKEBERG  announced  that  [the  committee]  has  received                                                               
suggestions  for [three]  amendments.   He  noted  that they  are                                                               
issues discussed the  day before at the House  Labor and Commerce                                                               
Standing   Committee  hearing.      He   offered  the   following                                                               
corrections:  the  first one should say page 3,  line 22, instead                                                               
of [line] 16; the second one,  page 3, line 26, instead of [line]                                                               
20; and the third one, page 6, line 11.                                                                                         
                                                                                                                                
CHAIR ROKEBERG made a motion  to adopt conceptual Amendment 1, on                                                               
page 3, line 22, to  insert "without cause" following "terminates                                                               
a  distributorship  agreement".   He  explained  that this  is  a                                                               
requirement that the distributor  actually purchases the business                                                               
if there is a termination.   He said this is whether it's willful                                                               
or not.  With termination, there  would be a statutory mandate to                                                               
terminate; however, it  seems to him that there would  have to be                                                               
a termination  without cause.  If  there is a breach  of contract                                                               
on the part of the dealer,  the distributor shouldn't have to buy                                                               
the business if the dealer didn't meet his or her bargain.                                                                      
                                                                                                                                
MR. HAXBY  remarked that he  understands; however, when  this had                                                               
been  discussed with  Legislative Legal  [and Research  Services]                                                               
new issues  regarding what is "cause"  were brought up.   He said                                                               
that  had  to be  taken  out  because  they couldn't  give  every                                                               
definition for cause.                                                                                                           
                                                                                                                                
CHAIR ROKEBERG  stated that it  troubles him and asked,  if there                                                               
is a  termination because the  dealer is not  performing, whether                                                               
the distributor has to buy the dealer out.                                                                                      
                                                                                                                                
MR.  HAXBY responded  that the  value  of the  business would  be                                                               
decimated.                                                                                                                      
                                                                                                                                
CHAIR ROKEBERG  asked whether the  "crucible" of  the marketplace                                                               
would take  care of the valuation,  which is why the  House Labor                                                               
and Commerce Standing Committee deleted "good will".                                                                            
                                                                                                                                
MR. HAXBY concurred.                                                                                                            
                                                                                                                                
Number 1826                                                                                                                     
                                                                                                                                
REPRESENTATIVE BERKOWITZ remarked that  [the committee] is trying                                                               
to itemize  what the harm is  in Sections 1 and  2, and suggested                                                               
that the distributor be liable for damages incurred.                                                                            
                                                                                                                                
CHAIR ROKEBERG  said he thinks  that is difficult because  of the                                                               
nature of the inventory and the assets in the inventory.                                                                        
                                                                                                                                
REPRESENTATIVE  BERKOWITZ  noted  that   the  bill  states,  "the                                                               
distributor shall be liable for damages incurred".                                                                              
                                                                                                                                
CHAIR ROKEBERG  replied that hopefully  being more  specific will                                                               
avoid litigation.                                                                                                               
                                                                                                                                
REPRESENTATIVE   BERKOWITZ  remarked   that  it   seems  if   the                                                               
distributor chose to  disregard any of these  requirements, he or                                                               
she would go to court.                                                                                                          
                                                                                                                                
Number 1768                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES stated that  she can support purchasing back                                                               
the  inventory,   since  it  is  her   experience  that  leftover                                                               
inventory  is worth  nothing.   She  added that  she agrees  with                                                               
Representative  Berkowitz's  statement   that  [the  distributor]                                                               
should pay the  damages; however, she thinks they need  to pay at                                                               
least 85 percent of the cost of inventory.                                                                                      
                                                                                                                                
CHAIR ROKEBERG informed Representative James  that on page 2 that                                                               
is  included under  "Disposition  of  merchandise remaining  upon                                                             
contract termination."                                                                                                        
                                                                                                                                
REPRESENTATIVE  BERKOWITZ pointed  out that  AS 45.45.710  is the                                                               
buy-back  provision, and  AS 45.45.740  specifies other  damages.                                                               
He stated  that itemizing like this  can also have the  effect of                                                               
being exclusionary.                                                                                                             
                                                                                                                                
CHAIR ROKEBERG responded that it is  not damages per se; it's the                                                               
valuation of the business.                                                                                                      
                                                                                                                                
REPRESENTATIVE BERKOWITZ  replied that, for example,  there could                                                               
be  costs that  have nothing  to do  with assets,  good will,  or                                                               
machinery; it  could be the  time the individual  spent pursuing.                                                               
He  suggested  just  saying [the  distributors]  are  liable  for                                                               
damages.                                                                                                                        
                                                                                                                                
CHAIR  ROKEBERG   remarked  that   there  is  a   "without  cause                                                               
termination" and [the committee] wanted to narrow it.                                                                           
                                                                                                                                
Number 1640                                                                                                                     
                                                                                                                                
MR. HAXBY suggested  that the change not be made.   Typically, he                                                               
said, in a business valuation there  are all kinds of things that                                                               
are  taken into  account at  that time.   He  said good  will was                                                               
eliminated specifically  because it  was thought to  be something                                                               
that  was  not definable.    Most  of  the  time, in  a  business                                                               
valuation, growth  rates and  growth curves  of the  business are                                                               
looked at.   If  it is  gaining 25 percent  year over  year, then                                                               
that may have a multiple of earnings  for one business.  If it is                                                               
in  decline, however,  it would  have a  more limited  valuation.                                                               
Rather  than addressing  damages, which  are tough  to define,  a                                                               
methodology like this allows it to be accomplished more quickly.                                                                
                                                                                                                                
REPRESENTATIVE  JAMES remarked  that good  will can  be measured;                                                               
people buy businesses, including good will.                                                                                     
                                                                                                                                
CHAIR  ROKEBERG agreed  that it  can be  recognized; however,  if                                                               
there is a  termination with or without cause,  the statute would                                                               
force the distributor to pay.                                                                                                   
                                                                                                                                
REPRESENTATIVE  BERKOWITZ stated  that it  can't be  done without                                                               
cause.   He  expressed that  every agreement  is governed  by the                                                               
covenant of good faith and fair dealing.                                                                                        
                                                                                                                                
CHAIR ROKEBERG  responded that he  thinks the contract has  to be                                                               
respected here.                                                                                                                 
                                                                                                                                
REPRESENTATIVE  BERKOWITZ stated  that a  distributor can't  just                                                               
cut somebody off  without suffering consequences.   When there is                                                               
a breach of the implied covenant,  then the question arises as to                                                               
what the damages are.  In  most instances when there are disputes                                                               
between  parties, the  parties are  allowed to  "hammer out"  the                                                               
differences amongst  themselves.  [The legislature]  tries not to                                                               
mandate,  through   the  legal   system,  specific   results  for                                                               
instances between types  of parties.  Here,  [the legislature] is                                                               
trying to  deal with  a contract dispute,  and should  be careful                                                               
about prescribing a result.                                                                                                     
                                                                                                                                
CHAIR ROKEBERG remarked that he  thinks [the committee] is trying                                                               
to narrow the issues.                                                                                                           
                                                                                                                                
Number 1499                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES stated that  Chair Rokeberg is talking about                                                               
a small business  in Alaska with a  huge distributorship Outside,                                                               
and this  small business has no  opportunity to go to  court.  If                                                               
something is  in state  law, [the  distributors] will  change the                                                               
way they do business with Alaska.                                                                                               
                                                                                                                                
CHAIR ROKEBERG agreed and said  that is why [the committee] wants                                                               
to add machinery and assets into the bill.                                                                                      
                                                                                                                                
MR. HAXBY noted that other states have laws similar to this.                                                                    
                                                                                                                                
REPRESENTATIVE  BERKOWITZ  remarked  that   this  is  what  "tort                                                               
reform" was  about.  [The  legislature] took away  some "hammers"                                                               
from the small businessperson by limiting punitive damages.                                                                     
                                                                                                                                
Number 1416                                                                                                                     
                                                                                                                                
CHAIR ROKEBERG withdrew conceptual Amendment 1.                                                                                 
                                                                                                                                
[Amendment 2, which  was not offered, would have  amended page 3,                                                               
line  26; it  read:   "Insert  the words  'good will,'  following                                                               
'including'".]                                                                                                                  
                                                                                                                                
CHAIR ROKEBERG made a motion to adopt Amendment 3, which read:                                                                  
                                                                                                                                
     Page 6, Line [11]                                                                                                          
                                                                                                                                
     Delete the words "a written agreement"                                                                                     
                                                                                                                                
       Insert the words "an agreement, whether expressed,                                                                       
     implied, oral, or written,"                                                                                                
                                                                                                                                
[The foregoing  was corrected  regarding the  change to  line 11,                                                               
and   would  place   the  language   following  "'distributorship                                                               
agreement' means".]                                                                                                             
                                                                                                                                
REPRESENTATIVE  BERKOWITZ   suggested  that   it  say   "a  valid                                                               
agreement".                                                                                                                     
                                                                                                                                
CHAIR  ROKEBERG offered  that the  amendment could  read, "to  be                                                               
consistent  with  a  valid  agreement   that's  enforced  by  UCC                                                               
[Uniform Commercial Code]".                                                                                                     
                                                                                                                                
REPRESENTATIVE BERKOWITZ stated, "within parameters."                                                                           
                                                                                                                                
CHAIR ROKEBERG  remarked that he  is concerned about  that, given                                                               
the history of this case from Ms. Higgins.                                                                                      
                                                                                                                                
REPRESENTATIVE BERKOWITZ  responded that  with her case  there is                                                               
implied contract and there is detrimental reliance.                                                                             
                                                                                                                                
CHAIR ROKEBERG stated  that there is some type of  an addition to                                                               
the contract because of the implied actions of the parties.                                                                     
                                                                                                                                
Number 1335                                                                                                                     
                                                                                                                                
REPRESENTATIVE MEYER  stated that  [the House Labor  and Commerce                                                               
Standing Committee]  spent a lot of  time on this, and  he was on                                                               
the  opposite side  from  Chair  Rokeberg.   He  noted that  [the                                                               
committee] thought  if a person were  to go into business  with a                                                               
large corporation, it should be in writing.                                                                                     
                                                                                                                                
CHAIR  ROKEBERG responded  that according  to the  witness today,                                                               
this common business activity doesn't  necessarily mean "you have                                                               
to go  around and amend your  contract every time you  have a ...                                                               
long-term relationship."                                                                                                        
                                                                                                                                
REPRESENTATIVE  MEYER said  this is  supposed to  be written  for                                                               
future events,  and he thinks  [the legislature] would  want more                                                               
people  to put  their agreements  in writing,  rather than  doing                                                               
them orally and by handshake.                                                                                                   
                                                                                                                                
REPRESENTATIVE JAMES stated:                                                                                                    
                                                                                                                                
     You  wouldn't  get one  because  the  salesman has  the                                                                    
     right.   He's on  the grounds  to make  this agreement,                                                                    
     has the  rationale, ... and  is authorized to do  it in                                                                    
     this particular case.   And then he  notifies that this                                                                    
     has been  changed and this  is happening.  If  that had                                                                    
     gone  back to  the  place where  they  got the  written                                                                    
     agreement, they'll never get one.                                                                                          
                                                                                                                                
REPRESENTATIVE KOOKESH  remarked that  he doesn't have  a problem                                                               
with [Chair Rokeberg's] valid agreement with the UCC.                                                                           
                                                                                                                                
Number 1222                                                                                                                     
                                                                                                                                
REPRESENTATIVE COGHILL said [the  committee] should study how the                                                               
UCC  deals with  contracting some  of  the oral  agreements.   He                                                               
suggested  adding  the  expressed, implied,  oral,  [or  written]                                                               
language.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  MEYER objected  to  Amendment 3  [as written  and                                                               
provided in committee packets].                                                                                                 
                                                                                                                                
CHAIR ROKEBERG remarked  that he thinks this is the  right way to                                                               
go, and is willing to go to UCC language.                                                                                       
                                                                                                                                
REPRESENTATIVE BERKOWITZ  asked, assuming Amendment 3  passes and                                                               
[the committee] finds that it  crosses wires with the controlling                                                               
case law, whether [Chair Rokeberg]  would help repair the problem                                                               
on the [House] floor.                                                                                                           
                                                                                                                                
CHAIR ROKEBERG answered  that he would, but  doesn't think [there                                                               
will be a problem].                                                                                                             
                                                                                                                                
REPRESENTATIVE MEYER  stated that he  thinks it is  poor business                                                               
practice to not have an agreement in writing.                                                                                   
                                                                                                                                
Number 0940                                                                                                                     
                                                                                                                                
A roll call vote was  taken.  Representatives Berkowitz, Kookesh,                                                               
James,  Coghill, and  Rokeberg  voted in  favor  of Amendment  3.                                                               
Representative Meyer voted against  it.  [Representative Ogan was                                                               
absent.]  Therefore, Amendment 3 was adopted by a vote of 5-1.                                                                  
                                                                                                                                
Number 0925                                                                                                                     
                                                                                                                                
REPRESENTATIVE  JAMES  moved  to  report HCS  CSSB  176(L&C),  as                                                               
amended,  out of  committee with  individual recommendations  and                                                               
the accompanying  zero fiscal  note.   There being  no objection,                                                               
HCS CSSB 176(JUD) was reported  from the House Judiciary Standing                                                               
Committee.                                                                                                                      

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