Legislature(2001 - 2002)
04/17/2002 03:25 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 460-ANTITRUST CIVIL COURT ACTIONS CHAIR MURKOWSKI announced that the final order of business today would be HOUSE BILL NO. 460, "An Act relating to actions for monopolies and restraint of trade, including proof of damages; amending Rule 82, Alaska Rules of Civil Procedure; and providing for an effective date." Number 1468 REPRESENTATIVE ERIC CROFT, Alaska State Legislature, testified as the sponsor of HB 460. He began by informing the committee that HB 460 is an Illinois Brick repealer. He explained that in the late 1970s the U.S. Supreme Court issued an opinion saying that under the federal antitrust laws one could only sue for direct purchases. Therefore, the attorney general can't sue for indirect purchases without a statute allowing such, which is what HB 460 would accomplish. This legislation would allow suit to be brought for indirect purchases of consumer fraud and allows the attorney general to stand in parens patriae. Thirty other states have done this. Had this been in place during the recent vitamin litigation in which there was a [federal] suit against vitamin manufacturers on the basis of too high charges, the attorney general's office believes [Alaska] would've received more money. CHAIR MURKOWSKI asked if this was before the legislature in the past couple of years. REPRESENTATIVE CROFT said he didn't recall such legislation, but deferred to the attorney general's office. In further response to Chair Murkowski, Representative Croft related his belief that the language in HB 460 is modeled after Alaska's current consumer fraud statute, including the language related to indirect suits and [parens patriae]. REPRESENTATIVE ROKEBERG inquired as to why the language "and the trier of the fact finds that the defendant's conduct was wilful" is being deleted in Section 1(1). REPRESENTATIVE CROFT answered that it models what "we've already done." In further response to Representative Rokeberg, Representative Croft couldn't recall whether this only affects antitrusts. Number 1230 CLYDE (ED) SNIFFEN, JR., Assistant Attorney General, Fair Business Practices Section, Civil Division (Anchorage), Department of Law, testified via teleconference. Due to the lack of this statute, the [department] believes the state lost out on $700,000-$1 million in recovery. Mr. Sniffen said that he didn't believe this statute has been before the legislature before. Mr. Sniffen informed the committee that he is responsible for several multi-state cases involving antitrust claims against drug manufacturers. In each of those cases, the ability of Alaska to make claims for indirect purchases has been limited due to the lack of this type of legislation, although he argues that Alaska has the ability to recover for indirect purchasers. States with the statutes proposed in HB 460 usually get a larger recovery, he related. MR. SNIFFEN informed the committee that the language [was developed] after review of the Illinois Brick repealer statutes and Idaho statutes. He noted that Idaho's language was developed after reviewing the language of other states and incorporates what was viewed as the good language from other states. Alaska has done the same. Number 1119 CHAIR MURKOWSKI recalled Mr. Sniffen's statement that although Alaska doesn't have this Illinois Brick repealer language, he attempts to argue that Alaska should be able to bring actions on behalf of direct and indirect purchasers. She asked if Mr. Sniffen had ever prevailed. MR. SNIFFEN said that there hasn't been a decision from a court saying that Alaska has this authority. The cases with which he was familiar have been settled before the court makes a decision regarding whether the state has the authority to bring suit for indirect purchasers. He noted that he argues that antitrust violations are also consumer protection violations and the Consumer Protection Act has language suggesting that the state may have this authority. Having the language in HB 460 would clarify the situation, he said. CHAIR MURKOWSKI turned to page 3, subsection (j), which refers to recovery of aggregate damages using statistical sampling. She inquired as to what that refers. MR. SNIFFEN explained that there are times in which it's difficult to determine the exact amount of damages an individual indirect purchaser may have suffered. The language in subsection (j) allows the court to consider statistical sampling and other methods in order to determine a damage amount that approximates what the actual individual consumer damages might have been. In further response to Chair Murkowski, Mr. Sniffen said that a consumer could make arguments to the attorney general's office that he/she should receive a larger share. However, under these type of actions there are many people with small individual damages that amount to a large sum in the aggregate. To the extent a consumer believes their damages to be significantly greater than the whole, the consumer would have the ability to opt out of the lawsuit and bring their own case. The statute requires the attorney general to provide notice of the action and provide consumers with the opportunity to bring their own case. CHAIR MURKOWSKI characterized this as a class action [suit]. MR. SNIFFEN said that it's a modified class action [suit] that can be brought only by the attorney general. Number 0942 REPRESENTATIVE HAYES asked if the tobacco settlement would be an example of the type of lawsuit at which HB 460 is aimed. MR. SNIFFEN related his belief that in the tobacco settlement there were many direct damages suffered by consumers. However, he said he believes there is probably room for the tobacco companies to argue that the settlements should've been different for those states lacking the authority to collect or bring claims on behalf of the indirect purchasers. REPRESENTATIVE ROKEBERG returned to his question regarding the reason behind the deletion of the language in Section 1(1) of HB 460. MR. SNIFFEN answered that the language was deleted to bring this statute in line with other federal antitrust statutes that don't require a showing of wilfulness before recovering treble damages. The Clayton Act allows the U.S. government to recover treble damages for a violation of federal antitrust law without a showing that the conduct was wilful. Mr. Sniffen related his belief that it's a policy decision [whether] this kind of conduct is egregious enough to warrant that penalty. REPRESENTATIVE ROKEBERG maintained concern with the deletion of the wilful conduct language. He asked if chapter 45 addresses only antitrust suits. MR. SNIFFEN replied yes. REPRESENTATIVE ROKEBERG turned to Section 4, AS 45.50.586, and asked why that is included. MR. SNIFFEN pointed out that the language in Section 4 is amended to clarify the statute and make the new section consistent by specifying nonstate governmental entities. Generally, [Section 4] merely codifies common law and allows final judgments rendered in civil actions to be used as evidence by those defendants in other actions for the same conduct. REPRESENTATIVE ROKEBERG asked if provisions such as this aid the attorney general's office in making settlements rather than going to final judgment because a myriad of lawsuits could ensue. MR. SNIFFEN related that he didn't know whether this section has been a help or a hindrance in settlement action. Even without this statute there is common law that suggests that the final judgments can be used against the defendants in other cases under certain collateral (indisc.) contexts. Mr. Sniffen said that he didn't have a firm answer. REPRESENTATIVE ROKEBERG noted that there is case law about criminal adjudicated crimes being prima facie evidence for civil judgments in some jurisdictions. MR. SNIFFEN said he believes the reverse to be true if one can obtain a final judgment in civil actions. With regard to the antitrust context, judgments rendered in antitrust cases are generally used as evidence against the defendants in other kinds of consumer protection matters. Number 0621 STEVEN CONN, Executive Director, Alaska Public Interest Research Group (AkPIRG), testified via teleconference. Mr. Conn announced AkPIRG's support of HB 460. He noted the appropriateness of giving the attorney general's office all the authority it needs to serve Alaska and its consumers. Number 0496 REPRESENTATIVE HAYES moved to report HB 460 out of committee with individual recommendations and the accompanying indeterminate fiscal note. There being no objection, HB 460 was reported from the House Labor and Commerce Standing Committee.
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