Legislature(1995 - 1996)
04/04/1996 09:25 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 158(FIN) am(ct rls pfld)(efd fld)
An Act relating to civil actions; amending Alaska
Rule of Civil Procedure 95.
Co-chairman Halford directed that CSHB 158 (Fin)am (ct rls
pfld)(efd fld) be brought on for discussion and referenced
SCS CSHB 158 (Jud). JOHN SUDDOCK, Trial Lawyers'
Association, testified via teleconference from Anchorage.
He suggested that the "overall drift" of the legislation is
to benefit people charged with wrongdoings and to
disadvantage victims of crime. In that sense, the bill is
at odds with the current philosophy of individual
responsibility. Legislative tightening of criminal and
welfare provisions are intended to make wrongdoers and
welfare recipients more responsible. The proposed bill
appears to swim against that stream in that it makes
corporate and insurance interests less responsible.
Mr. Suddock voiced his understanding that there would be an
attempt to "try to amend out one of the few saving graces of
the bill"--the insurance rate rollback. The proposed bill
represents poor legislation against the broad interest of
public policy. Inclusion of the rollback at least ensures
that the public gets something in return for giving up its
rights.
Mr. Suddock next addressed a technical provision relating to
an offer of judgment which he termed "widely misunderstood."
Provisions currently penalize a person who receives an
offer, does not take the offer, and then does less well at
trial. As a penalty, the party pays partial attorney fees
to the other side and receives a severely reduced rate of
interest on the judgment. That causes attorneys for
plaintiffs considerable fear. The proposed bill contains a
"far more Draconian, severe form of offer of judgment that
in many cases will make the court system unavailable to
injured people . . . ." It raises the ante for failure of
prediction. Unless the plaintiff guesses "what's going to
happen with 95 percent accuracy," the plaintiff will have to
pay the actual attorney fees of the other side even if the
plaintiff wins the case. The other side is often large
institutions. These are well-funded corporate interests
(insurance companies etc.) that can afford to sit down with
those stakes on the table and afford to win and lose. The
average individual will be disadvantaged by inability to
predict what the award might be. Entry into the criminal
justice system will place one's home and retirement at peril
(even if the individual is injured, is right, and his
attorney is a 93 percent "good guesser").
Mr. Suddock noted the Senate Judiciary Committee attempt to
ameliorate the foregoing provision by requiring evaluation
of only one joint-offer in cases of multiple defendants. He
encouraged retention of that provision if the current plea
to eliminate offer of judgment provisions is not heeded.
Speaking to punitive damages, Mr. Suddock said that the bill
places an arbitrary limit on ability of juries to punish the
type of corporate interest that makes money by "stealing
small amounts from lots of people." It also allocates 50
percent of the punitive damage recovery to the state. He
referenced an amendment by Senator Rieger to increase the
amount of punitive damages flowing to the state to 90
percent. If that increase is adopted, the legislature might
as well eliminate punitive damages since the additional
expense and risk of pursuing them would not be justified.
Following Mr. Suddock's testimony, Co-chairman Halford
directed that the meeting be briefly recessed pending
arrival of the sponsor of the legislation.
RECESS - 10:10 A.M.
RECONVENE - 10:30 A.M.
Senator Rieger directed attention to Amendment No. 1 which
he explained was prepared by Mike Ford, a Legislative Legal
Services Attorney, to correct a drafting error within SCS
CSHB 158 (Jud). The error would have inadvertently repealed
the collateral benefit section under medical malpractice.
He then MOVED for adoption. No objection having been
raised, Amendment No. 1 was ADOPTED.
Senator Rieger advised that he would not offer Amendment No.
2 since it would effect the same change made by Amendment
No. 1.
Senator Rieger advised that Amendment No. 3 relates to
punitive damages. He voiced concern over ability of the
civil liability system (intended to make whole, individuals
who have been damaged by the action of others) to apply
punitive damages which are "almost the same as criminal
fines." The proposed bill would thus deposit 90 percent of
punitive damages to the general fund. Senator Rieger then
MOVED for adoption. No objection having been raised,
Amendment No. 3 was ADOPTED.
Senator Rieger directed attention to Page 2, line 29, and
noted references to construction, design plans, etc. It
appears that the body of statutes relates to construction of
a facility. The statute of limitations at the bottom of
Page 2 appears to apply more broadly than that. It says
that one cannot bring any action based on construction-
related activity. Amendment No. 4 attempts to clarify that
the statute of repose refers to design, planning,
construction--improvements to real property. That parallels
language used elsewhere.
DANIELLA LOPER, aide to Representative Porter, came before
committee. She raised concern regarding placement of
wording within the amendment, suggesting that there may be
other kinds of property damage unrelated to construction.
Senator Rieger explained that his amendment attempts to
clarify that the actions being brought via the introductory
clause are the same as the causes and circumstances referred
to in the remainder of Sec. 2. Ms. Loper said she had no
problem with Amendment No. 4.
Senator Rieger MOVED for adoption of Amendment No. 4.
Senator Donley OBJECTED. Co-chairman Halford called for a
show of hands. Amendment No. 4 was ADOPTED on a vote of 4
to 2.
Senator Rieger noted that Sec. 7 of the bill would reverse
existing law which says that the court may not require
security to be posted and would instead require that
security be posted. He said that while he had no problem
with the general policy, the provision as presently worded
leaves no ability for all parties, including the court, to
agree that posting of security is not advisable because of
associated expenses or for other reasons. Amendment No. 5
provides some flexibility for this new policy. Mr. Loper
advised of no objection to the change. Co-chairman Halford
called for a show of hands on adoption. Amendment No 5 was
ADOPTED on a vote of 4 to 2.
Senator Rieger directed attention to Amendment No. 6 and
explained that it clarifies language at Page 5, line 16,
referring to specification of increases in future payments
for anticipated inflation. A reading of existing language
raises questions concerning whether "someone might be put in
a position of having to estimate what future inflation is
and then actually specify the dollar amount of the payment."
The amendment clarifies that an order could specify the way
that inflation is calculated rather than the actual result
of that calculation. The amendment also provides more
latitude in choosing the index.
Brief discussion followed between Senator Donley and Ms.
Loper regarding the source of the original language.
In response to a question from Co-chairman Frank, Senator
Rieger advised that the court could decide on the index on a
case-by-case basis or adopt a court rule most practical for
implementation.
Discussion followed among members concerning whether
adoption of Amendment No. 6 should be divided into two
questions. Additional discussion ensued regarding selection
of a particular formula versus the formula specified in
language to be deleted by the amendment. Ms. Loper voiced
support for the amendment. Co-chairman Halford called for a
show of hands. Amendment No. 6 was ADOPTED on a vote of 4
to 2.
Senator Rieger directed attention to Amendment No. 7 and
explained that it addresses the question of what happens
when a party is partially at fault for damages, but suit
cannot be brought against that person. Can a jury or judge,
in allocating fault, determine how much fault applies to
that person (even though they cannot be sued) and allocate
the remainder of the fault to defendants? Or, do defendants
have their share of fault proportionately increased to bear
100 percent of the fault? As presently written, the bill
incorporates the latter approach. The proposed amendment
applies the former approach and deletes Sec. 9, which
allocates 100 percent fault to remaining defendants.
Co-chairman Halford cited an example of a 20-year old hanger
roof which fails and damages a helicopter and asked how
fault would be apportioned between those responsible for
design, construction, ownership, and maintenance should
those responsible for design be liable but protected from
suit by the statute of limitations. JEFF BUSH, Deputy
Commissioner, Dept. of Commerce and Economic Development,
came before committee. He explained that the bill as
presently written would assign 100 percent of liability to
"whatever defendants are in the court." That would
presumably be the owner who provided maintenance.
Mr. Bush said that if the foregoing provision is removed and
allocation against the designer is allowed but no liability
is attached, an "empty chair" situation is created. That
guarantees that defendants will point to that empty chair
and claim that the design defect was responsible for the
injury. If the designer was 60 percent responsible and the
owner 40 percent responsible, the likelihood is that the
jury will eventually find it was 80 or 90 percent the
responsibility of the designer because no one was there to
say that it was not. Co-chairman Halford suggested that the
same thing happens under current law in cases where the
designer is judgment proof because of death, bankruptcy,
etc.
Senator Rieger acknowledged that the alternative proposed by
Amendment No. 7 might not be better than existing language
within the bill. Both have flaws. He advised that he would
not offer the amendment, but he reiterated that there is a
problem in the bill as presently drafted.
Senator Donley noted need to attend the Senate Floor
Session. SCS CSHB 159 (Jud) was HELD in committee for
further review.
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