HB 42 - CIVIL LIABILITY FOR IMPROPER LITIGATION CHAIRMAN KOTT announced that the committee would hear SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 42, "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; amending Rule 82(b), Alaska Rules of Civil Procedure; and providing for an effective date." He pointed out the new proposed committee substitute (CS) [Version H] provided to members. Number 0060 REPRESENTATIVE ELDON MULDER, Alaska State Legislature, sponsor of SSHB 42, told members the new proposed CS was crafted in response to concerns expressed by committee members and the Office of the attorney general. He offered to have Michael Lessmeier, who had worked with him on addressing those concerns in the legislation, speak to those issues. Number 0165 REPRESENTATIVE JAMES made a motion to adopt as a work draft the proposed CS for SSHB 42, Version H [1-LS0264\H, Ford, 3/17/00]. CHAIRMAN KOTT asked if there was any objection. Hearing none, he announced that Version H was before the committee. He asked the committee aide whether the Legislation Information Offices (LIOs) had been provided a copy of Version H, which she affirmed. Number 0197 REPRESENTATIVE CROFT asked Representative Mulder whether he believes Version H is an improvement over SSHB 42. REPRESENTATIVE MULDER said yes. REPRESENTATIVE CROFT referred to subsection (g) and inquired about the reasons for exempting those areas. Subsection (g) read: (g) This section does not apply to an action (1) brought by a person incarcerated by the state; (2) involving divorce or dissolution; or (3) involving adoption, custody, support, or visitation of a child. REPRESENTATIVE MULDER said he believes a good case could be made why each category shouldn't be included in the provisions here, but the Department of Law could better address the reasons for listing incarcerated felons. As to divorce and dissolution, the issues are a bit different and contentious, and it didn't seem appropriate to have a punitive side in a divorce. "In essence, in my mind, there's enough punishment going on in a divorce," he stated. "And the same thing with custody and support. It was within a family itself." REPRESENTATIVE CROFT indicated the exceptions all make some sense in different ways. He agreed that one probably doesn't want to determine what happens to a child based on who lied; that should be based on the best interests of the child. REPRESENTATIVE MULDER concurred. REPRESENTATIVE CROFT mentioned civil litigation about the constitutionality of various legislation passed by the Alaska State Legislature, particularly regarding abortion. He asked: If the lawyer representing the state, or one of the intervenors defending that statute, made a misstatement of fact - defending the abortion statute but mischaracterizing the number of abortions, for example - should a judge enter judgment against the state, that the law is unconstitutional, based on a misstatement in court? Number 0454 REPRESENTATIVE MULDER answered that first, the misstatement in that hypothetical situation would have to regard the main point of the argument. But if that were the case, it should be thrown out because it is factually incorrect. He pointed out that there is a remedy, with notification required and 21 days to respond. At the crux is whether [a statement] is true or not, and how important it is to the overall outcome or decision. REPRESENTATIVE CROFT agreed that it must be a material fact. The question is whether it is important on that issue, whether it is central or not. He turned attention to civil commitments, where somebody acts strangely and a family member tries to get that person committed and to take control of that person's assets. Representative Croft asked whether the court should commit a person based on a misstatement or whether it should be based on the underlying question of whether that person should be managing his or her own finances. REPRESENTATIVE MULDER said that is an interesting hypothetical. However, the central point of this bill is that there should be no tolerance of misrepresentations of fact. "So to the end that this allows for the person who is being harmed to be ... further protected by forcing truth to come forward, I think that you've probably got your answer," he concluded. Number 0690 REPRESENTATIVE CROFT pointed out that subsection (b) relates to a knowing misstatement of a material fact within litigation, for which the court shall enter judgment on that issue, and that subsections (a) and (c) have notice provisions. Subsection (b), within the trial, is where his hypothetical situations relate; if he made a false statement of a material fact in his own defense in a civil commitment trial, he believes the judge would have to commit him because it says "shall enter judgment on that issue." REPRESENTATIVE CROFT said that while he agrees that there should be zero tolerance for false statements in court, the question is how to punish that. Should it be by determining the facts of the lawsuit, regardless of whether it relates to a commitment, constitutional issues or other areas? Or should it be with increased fines, for example? REPRESENTATIVE MULDER continued with the hypothetical civil commitment, saying Representative Croft is assuming that the trier of fact is going to only make that decision upon the misrepresentation of fact. He stated: I don't think that's necessarily the case. I think that the trier of fact is going to look at the bigger picture. You can be held accountable - financially so - for the misrepresentation of fact. But I don't think it's a foregone conclusion that just because you lied in your defense that your whole case is going to be lost if there are greater or other issues in it. Certainly, if your only defense was a lie, you're not doing a very good job of defending yourself, and I guess I don't think there's ... much of an argument about this bill or any other bill that should defend you. ... This is meant to try and protect those people who tell the ... truth, and encourage people and ... force people to tell the truth. REPRESENTATIVE CROFT said he thinks it does that. However, the method is to enter judgment on that issue. A jury faced with that decision on a civil commitment, with an instruction from the judge that read like subsection (b), could find that a person is competent but has made a false statement of material fact; under the jury instruction, the jury would be mandated to enter judgment against that person. REPRESENTATIVE MULDER deferred to Mr. Lessmeier. Number 0923 MICHAEL LESSMEIER, Attorney at Law, Lessmeier & Winters, and Lobbyist for State Farm Insurance Company, told Representative Croft he believes a couple of things implicit in his questions aren't necessarily correct. Subsection (b) applies only to statements made by a party, not by a representative of the party; at least one of Representative Croft's hypotheticals dealt with statements made by an attorney. Mr. Lessmeier pointed out that many other sections of the bill deal with representatives of a party as well as a party or people acting behalf of the party. That distinction was made intentionally, he added. MR. LESSMEIER continued. He said it also applies to statements that are intentional, false and material; then the action relates only to those claims directly related to the false statement. Although not that familiar with the civil commitment procedure, Mr. Lessmeier said he understands that that decision is made by a judge, not by a jury. Furthermore, the statement has to be material to the issue, and there is great discretion - purposely so - under this language as to what is material to the issue, what is intentional, and what the issue is to which it directly relates. In application, there is great discretion to not take a frivolous false statement and turn the sanction into something that nobody would ever contemplate, and to reach a fair, equitable result while sending message that says, "We don't want people to come into the courtroom and make intentional false statement of fact that are material." Number 1087 REPRESENTATIVE CROFT returned to the hypothetical constitutional issue he had posed earlier, with the state defending a law in civil court. He asked who the party would be, then, because the attorney general would be making representations on behalf of the State of Alaska. He commented that there is no physical entity of the government. MR. LESSMEIER responded that in a sense they are talking about semantics. The lawyer is not the party, and the attorney general would take issue as to being the party in any litigation representing the state. Second, if it were the governor or somebody representing the state, Mr. Lessmeier said it is difficult to see how one could make a single statement that would rise to the level of being material in the context of litigation that involves all of the citizens of the state, particularly for a constitutional issue; those issues are seldom decided on specific facts before the court but more generally involve issues of policy, precedent and interpretation, for example. "It is hard to imagine a situation where discretion would be invoked under this provision to decide a constitutional argument," he added. "I just don't see that as being realistic, and I don't think that's the intent of this." Number 1201 REPRESENTATIVE CROFT indicated the House Judiciary Standing Committee tries to ensure that the words in statutes have a predictable result that members can feel comfortable with. As to Mr. Lessmeier's discussion of the discretion under subsection (b) on page 2 of Version H, lines 8-13, Representative Croft said it uses the phrase "shall enter judgment," and "shall" is a word that the legislature uses when there isn't discretion. If something is found to be intentional, false and material, he doesn't see where there is any discretion left; this says the penalty is meant to be that the person loses the lawsuit, as opposed to all kinds of other penalties that the legislature could describe. The penalty clearly is taking away the ability of the judge and jury to make a result according to law and the facts; they have to make it now on the alleged perjury. MR. LESSMEIER agreed that when one presupposes that there is a finding that something is material, intentional and false, and that it relates to the issue in question, then the discretion is taken away. However, he submits that there is great discretion in determining what is material, what is intentional, what is false, and what those issues relate to. There is also a message: "We want to protect people from those that would intentionally make false statements of material fact." Number 1375 REPRESENTATIVE KERTTULA requested confirmation that the remedy if one lies - that the case goes against the party - may often impact other people as well. She said that is a legitimate fear. REPRESENTATIVE ROKEBERG asked whether that means lying is okay. REPRESENTATIVE KERTTULA answered no, that it goes to the remedy. She cited the Cleary case, regarding overcrowding of prisons, as an example where the ramifications would have created a weird situation if there had been a lie about the numbers - which would have been a material fact regarding the existence of overcrowding - and a subsequent finding against the state because of that. She suggested perhaps there needs to be an exemption [for the state]. She asked whether that conceivably could be a problem. MR. LESSMEIER responded that he thinks the answer has to do with the issue of materiality. He suggested that there is a different standard of materiality when the lie goes beyond simply the person making the lie and has to do with a statewide issue. He further suggested that there is a much different standard of materiality there, which anyone making that determination would recognize. REPRESENTATIVE KERTTULA asked, "What is it?" MR. LESSMEIER answered: I don't think that ... a judge, for example, that would be making that determination would find that because somebody on behalf of the state lied about an issue involving numbers, that that reached, given the context of that particular case, a material issue, a level of materiality that was sufficient to end the litigation with respect to that issue. I think ... that the concept of materiality ... is one that is not necessarily rigid, that purposely was put in here to allow consideration of the statement in the context that it was made, in relation to the case that it is made in. ... And that's why ... we came up with this. ... It is intended not to be a rigid concept. REPRESENTATIVE KERTTULA replied that she isn't comfortable with that. She has dealt with material facts, and if a case were all about the numbers, she thinks probably one would have to say that was material. REPRESENTATIVE MULDER suggested that the numbers in the Cleary case really weren't the issue. There was a question of what overcrowding is. There is no standard for overcrowding, he added, although there may be a national corrections standard. He said the point gets back to what is material. REPRESENTATIVE KERTTULA replied that if it were material, though, then they would wind back in the problem. She indicated she sees the point, however. Number 1695 REPRESENTATIVE JAMES expressed frustration with the dialogue. She said they would be talking about an attorney general making the case based on numbers. She would fire somebody the next day who had the wrong numbers, and she doesn't know why this argument is being made, although it might have some bearing as just an example. REPRESENTATIVE KERTTULA explained that she was giving the example because [the state] would lose the case and have judgment entered against it; that is the remedy. With those examples, when the state is involved, she isn't sure an exemption isn't needed. Although she would fire the person too, this is a problem. REPRESENTATIVE CROFT agreed that the remedy should be to fire that person and sanction that person in court for lying, for example, but not to determine policy for the entire corrections system based on it. The premise of this bill, however, is that the proper sanction for lying in court is determining the law and the facts and everything about a lawsuit, and entering judgment based on that issue, instead of using other penalties such as firing, having penalties or disbarring. The fundamental issue is whether that is the direction to go. There could be a bill that increases penalties or requires mandatory disbarment or increases sanctions. This bill, however, says that instead of determining lawsuits as they have always been decided, they will be determined based on who lied, which would be a fundamental change in English and American jurisprudence. REPRESENTATIVE JAMES responded that the system doesn't work. This giant change is needed to ensure that people don't do that [lie in legal proceedings], which she believes attorneys and people will continue to do if they can get away with it. Number 1740 ANNE ADASIAK-ANDREW, Acting Executive Director, Alaska Visitors Association (AVA), testified via teleconference from Anchorage. She informed the committee that the AVA board had voted in support of HB 42 at their last meeting in February. The largest statewide nonprofit trade association, representing all facets of the tourism industry and having more than 500 member businesses, AVA has a full range of member businesses from small local rafting operators, wilderness guides and kayaking companies to large airlines and cruise lines; 90 percent of AVA members are small businesses with fewer than ten employees and, therefore, AVA believes that the majority of members would benefit from protection against frivolous lawsuits. MS. ADASIAK-ANDREW explained that many [AVA] members live in fear of frivolous lawsuits because of the time and money it takes to fight them, which can severely cripple a business or put someone out of business. Some small businesses have paid off a fraudulent claimant in order to avoid a drawn-out and expensive legal battle, and to prevent their insurance rates from rising as a result. Having to pay off a fraudulent claimant is simply not a fair way to do business, and it impedes the growth of new businesses in Alaska. Tourism is growing. Small family-owned tourism operations are opening each year, including bed-and-breakfasts, restaurants, kayaking companies and hiking companies. There is a need to encourage their development and success, and to make it easier to do business. This bill will help Alaskan businesses get back to business and will force others to think twice before trying to make a profit on false claims. Number 1860 ROBERT A. MINTZ, Attorney at Law, testified briefly via teleconference from Anchorage. He emphasized that in subsection (b), judgment is entered only on the issue to which the false statement relates, not to the entire claim unless the false statement relates to the only claim in the action; furthermore, if the action involves multiple claims and the false statement doesn't apply to all claims, the judgment entered under that section only applies to the claims to which the false statement directly relates. Number 1926 REPRESENTATIVE KERTTULA asked Mr. Mintz if he believes there should be any concern about the State of Alaska or if there should be an exemption for the state regarding the remedy. MR. MINTZ said he believes it is a political question. Litigation in which the state is a party is not often where this type of conduct arises. On the one hand is the argument that the state ought not to be exempt, but on the other hand, shouldn't the state philosophically be held to the same standard of conduct? He said it is a judgment call. Number 1990 KAREN COWART, General Manager, Alaska Support Industry Alliance testified via teleconference from Anchorage in support of HB 42 (version unspecified), noting that her organization has served as a statewide nonprofit trade organization for businesses that provide products and services to the oil and gas industry. The 350-plus members employ more than 29,000 people in Alaska, 25,000 of whom are permanent state residents. Ms. Cowart stated: The Alaska Support Industry Alliance appreciates legislative efforts to address the escalating misuse of legal actions against responsible development in Alaska. If Alaska is to continue encouraging resource development, then the state must have an environment that is at least equitable and fair to investors, and certainly within our courts of law. We understand that House Bill 42 would require litigating parties to research their claims to assure accuracy, or pay the consequences of suing without just cause. The Alliance supports such measures. Alaska has suffered significant economic losses as a few individuals successfully circumvent public processes through litigation. It seems that nearly every proposal or plan to develop the state's natural resources or to enhance its infrastructure is met with a lawsuit, regardless of whether there are reasonable grounds to sue. We believe many such legal actions only serve to delay developments that are important to Alaskans' quality of life and our state's economic well-being. House Bill 42 creates an obligation in statute for litigants and attorneys to make reasonable efforts to ensure their claims have a factual bearing before filing a lawsuit. The bill would also make those that filed a frivolous suit responsible for assessed damages. Further, the bill would assign financial liability to those who try to cloud the issue with false or misleading claims in hopes of finding a party willing to settle rather than spend dollars to litigate. We believe each party in a lawsuit has the responsibility to present factual and legitimate information. A system that allows deceit to be awarded is just not right and needs to be changed. Thank you for the opportunity to provide the Support [Industry Alliance's] view on this issue. Number 2093 CHAIRMAN KOTT asked Ms. Cowart whether, as a result of the more in- depth evaluation and research required in a case, the cost of doing business for [legal] representation will increase. MS. COWART replied that when looking at opportunities for investment in Alaska, the parties that are prepared to invest have already looked at what is legal and what is proper. Obviously, if someone comes in and litigates to stop economic development, then the party that has to protect itself and its future opportunity will have to go into a lawsuit situation, and it will cost more. Number 2141 DALE BONDURANT asked a question via teleconference from the Kenai LIO: Does a person who hires a representative that presents a falsehood lose? He expressed concern about individuals keeping their liability down. CHAIRMAN KOTT answered that he doesn't believe that is the case because there are protections in the bill for that. MR. LESSMEIER elaborated, noting that that was an issue specifically addressed, in part in response to Representative Croft's concerns expressed at the last hearing. Paragraphs (c)(2) and (c)(3) apply only against the person who wrongfully initiated or signed, or who wrongfully participates. Under (c)(2) and (c)(3), it has to be wrongful conduct. Under paragraph (c)(1), it only applies to the person who signs a pleading that has an intentional false statement that is material. Under subsection (b), it applies only to a party who makes an intentional false statement of material facts. So there is no situation under this bill where an innocent party would be penalized. Number 2231 CHAIRMAN KOTT asked whether anyone else wished to testify; there was no response. He announced that he was closing public testimony. Number 2240 REPRESENTATIVE ROKEBERG noted that he had a further question for Mr. Lessmeier. He indicated he assumes the word "initiates" refers to the party who is bringing the action. He asked whether the attorney or the person bringing the action would sign the pleading. MR. LESSMEIER answered that in most instances, the attorney signs it. Although there are some instances where a party will sign a pleading, it is not required under Alaska law. REPRESENTATIVE ROKEBERG posed a situation in which the person who has initiated the lawsuit lies, and his or her legal counsel accepts that at face value and signs the pleadings. Representative Rokeberg stated his understanding that both would be liable under this. MR. LESSMEIER said that isn't correct. That is addressed specifically in paragraph (c)(2), which indicates that the action for recovery can only be brought against the person who wrongfully initiated or signed the pleading. "So they have to wrongfully initiate or wrongfully sign, and that means signing without the reasonable investigation, and not having a reasonable basis in fact or law," he concluded. Number 2304 REPRESENTATIVE JAMES asked: When the sanction against the person who lied is implemented, and it wasn't the person who brought the case but the attorney, does that just get rid of the attorney and the case is not dismissed? MR. LESSMEIER answered that if it is the attorney who makes the wrongful statement, and the attorney doesn't correct it, then that attorney would be subject to an action for damages later on, assuming that the defending party prevailed on that claim. So if the attorney makes the wrong statement, the case is not dismissed but the attorney remains responsible for damages caused by that. Number 2344 CHAIRMAN KOTT referred to the discussion about the attorney general hypothetically making wrongful statements that result in the State of Alaska losing a case. He asked Mr. Lessmeier whether there had been discussions relating to the original bill or the sponsor substitute as to whether the attorney general or state representatives in such matters should be exempt. MR. LESSMEIER answered: I don't think we had that discussion. ... Representative Mulder will have to speak for himself, but it was not my contemplation to apply the policies of this bill to the State of Alaska involving issues that affect the state, beyond the two litigants, in other words, to statewide issues. ... I certainly think that all parties, regardless of the issues, should follow the precepts of this bill. But ... I think, going back to your question and Representative Kerttula's and Representative Croft's point, it really boils down to a policy issue; and I think Mr. Mintz laid that out for you. I think that's a policy issue as to whether you do want to exempt the state ... from this. Number 2410 REPRESENTATIVE KERTTULA asked what would happen with a case with precedential value, where a material fact that goes to the central issue were lied about, even though the party was in the right. It would result in a finding against the party, who would lose. If there were a great precedence for the rest of the industry, for example, she suggested the judgment would somehow have to be structured to ensure that it didn't impact everybody else. She asked Mr. Lessmeier whether that is how he saw it. MR. LESSMEIER replied, "I think that you would never reach the precedential issue." REPRESENTATIVE KERTTULA responded, "Just dismissal." Number 2449 REPRESENTATIVE MURKOWSKI noted that within subsection (b), the only remedy available is entering judgment, which is very limiting; it is the policy call that the sponsor has made. She asked Mr. Lessmeier whether, in his conversations in helping to craft this, there was any discussion of the availability of other remedies out there, depending on the circumstances. TAPE 00-32, SIDE B Number 0001 MR. LESSMEIER answered: I think when we were crafting this provision the overriding issue that we were concerned with is ... when you have a party that has engaged in lying and making an intentional false statement of fact, and you discover that, first of all, it's the rare case that you're actually going to discover; and when you discover it, it is probably not the only statement of that type that ... is going to be made. And so the policy call here was made to send a message of a definite and clear sanction to those that actually will get caught engaging in the kind of conduct that we're trying to prevent here. And it is very specific, and it is very clear: it's intentional, it's false and it's material. And that's a pretty high standard to meet. And the reason that the sanction is definite is because once that conclusion is made, we wanted to send a message that there would be a definite sanction, just for purposes of deterrence, so that basically people would understand that the judicial system is not going to allow this kind of conduct. If you do anything other than that, then, in our view, you're not sending that clear message, and you may be sending no message at all. And it is difficult to come up with another kind of a sanction here that would have the same impact. So that was the policy call that we made. The flip side of that is that there is great discretion in making the determination of whether the statement is intentional, whether - more importantly - it is material, and whether it, indeed, is false, and what it relates to. Number 0110 REPRESENTATIVE MULDER said he appreciates the question, then stated: ... We had some debate about the inclusion or exclusion of (b). I think it gets to the heart of the question because you've got to break it down to ... those first two sentences. If a party intentionally makes a false statement of material fact, they knowingly lied to win their case, that's wrong. ... And that's what's wrong with the system. If you intentionally lie to win, [you] should be punished and penalized. That's the heart of the whole issue. That's what it's all about. So, why should there be discretion about that? ... There's discretion about, "Well, did they intentionally do it? Was it a material fact or not?" That's the discretion. That's working around the edges .... The judge has to make [that] determination: Was it intentional, and was it material to the case? ... It is a policy call, and I really fell down the side [of] this is what it's about. This is saying you're lying, and it's not acceptable to win a case based upon a lie. CHAIRMAN KOTT asked whether there was further discussion; none was offered. Number 0184 REPRESENTATIVE JAMES made a motion to move HB 42 [proposed CS for SSHB 42, Version H] from the committee with individual recommendations and attached fiscal note(s). REPRESENTATIVE CROFT objected. He explained that the committee is trying to determine the impact on judicial cases in Alaska. The only way to do that is to talk about what might happen, the hypothetical cases. Referring to discussion of the Cleary case, he said he believes that if the Department of Corrections came back and wrongly said there are only "x" number of prisoners, within the limits, that would be material. Additionally, if somebody falsely said there are no partial-birth abortions performed in Alaska, that would be material and could lead to a determination of unconstitutionality based on something besides the law or the facts; it would be based on, in effect, the conduct of the parties. REPRESENTATIVE CROFT referred to Representative Kerttula's mention of precedential cases and pointed out that usually another court can look at the same factual situation and legal challenges in another case and say, "This is the same issue," and that the issues don't have to be relitigated. With this, however, one doesn't know what has been decided anymore, because it isn't the issue itself that is being decided. REPRESENTATIVE CROFT further pointed out that often an environmental impact statement (EIS) comes before the court, with a challenge to its sufficiency and a question regarding whether there is a significant impact on the environment. Sometimes that can have dramatic consequences for development. For example, there may be an EIS where the main issue is the impact on a caribou herd from opening ANWR (Arctic National Wildlife Refuge); the people defending it may say there is no significant impact, which would be a lie if a report shows some small or moderate impact. If that were found out, under this bill, judgment shall be entered on that issue that there is a significant environmental impact, for example, and that [the development] cannot proceed; the decision would be taken away from the court. This bill takes away the ability to have a "determination on the facts and the law" mean that. REPRESENTATIVE CROFT emphasized that he agrees lying in court is wrong. However, there are a number of ways this can be approached. The question is whether the approach that says this determines the result of litigation is the appropriate one. Alternatives such as mandatory minimum sanctions or another tribunal for review aren't before the committee. Rather, this bill takes away the result of a lawsuit that used to be based on the law and facts but which now would be based upon something else. Number 0350 REPRESENTATIVE CROFT restated his agreement with excluding child custody cases, where the higher goal is the placement decision in the best interests of the child. Other areas, however, have higher goals as well: the judgment on the facts and the law. Noting Mr. Lessmeier's mention at an earlier hearing that he had never seen Rule 11 sanctions used, Representative Croft restated that he himself had only practiced for two years and yet had seen Rule 11 used twice, once winning significant amounts of attorney fees and costs when somebody didn't properly use the process. He believes Rule 11 has teeth and perhaps needs to be strengthened, rather than taking away the ability of the judge to make a determination on the merits of a case. REPRESENTATIVE CROFT reiterated that there is no discretion in subsection (b), which says "shall." Furthermore, findings on materiality, falsehood and relatedness aren't discretion but are findings of facts or law, made by the judge or jury. He noted that Mr. Lessmeier had testified in a prior hearing that the most likely outcome of subsection (b) is a general instruction to the jury that looks very much like subsection (b): "If you find that somebody lied on an issue and that's a material fact, and they did so intentionally, you shall enter judgment based on that." REPRESENTATIVE CROFT indicated that conversations with attorneys have suggested that at least subsections (a) and (c) would result in a lot of collateral litigation, costing money. The final and fundamental point, however, is whether, in reevaluating whether they are doing enough to punish and prevent falsehoods in court, [the legislature] should choose this or another method. Noting that this method determines the result of a lawsuit, often with dramatic consequences for other parties, he said he doesn't believe this is the proper course to punish this admittedly bad conduct. For those reasons, he objects. Number 0505 REPRESENTATIVE JAMES said she can't believe they are having this argument. She indicated the caribou issue was a bad example because she can't believe that anyone, of any intelligence, would say there is no effect, because there is no way to prove that; furthermore, she doesn't want to hear more examples. If someone purposely tells an untruth and it affects the case because it is a material fact in the case, and if the case would or could have gone differently if it weren't for the lie, then by all means the penalty must be severe. As far as the game attorneys play, she has no problem with that, but she does have a problem if they make a purposely incorrect statement in order to win the case. REPRESENTATIVE JAMES said this is a policy issue, and it is a policy she supports. She understands the fears but believes telling the truth is the best way to behave. Having had direct experience with someone purposely lying about a material fact in a case, perhaps she has a different attitude than other members; however, it also has happened to some of her friends and other people. This isn't a frivolous issue, and she thinks this is a good piece of legislation, amended in many ways to make it even better. This will at least let people know that they must tell the truth or the penalties will be pretty high. Number 0688 REPRESENTATIVE KERTTULA remarked that she doesn't believe attorneys take something like this lightly at all, and as past president of the bar association, she can say that the bar doesn't. That isn't how she was taught, and it isn't how the people she works with behave; people who behave differently get punished for it and can be disbarred. She advised fellow members that she is struggling with the fact that she sees situations where there is lying but where the overall picture is that the case should be won. This bill hampers that kind of discretion. REPRESENTATIVE KERTTULA said she is for as strong a sanction as possible up to that point but doesn't think that is necessarily the right remedy. She has seen judges throw cases out because of lying, she noted. Furthermore, there still could be frivolous litigation under this, but there would be more of an argument at the end. She doesn't condone any form of lying in a lawsuit, and has sat on the board that sanctions people who have done it. However, she thinks this just edges out a little far. "I could support it, I think, without section (b), but that's where I bog down," she concluded. Number 0780 REPRESENTATIVE ROKEBERG commented that he would hope that the triers of fact in Alaska can tell the difference between a false statement and an opinion, or materiality. He offered his opinion that the bill sends a message to people that they shouldn't lie; it sends a message to society "that we're too litigious"; and it sends a message to the bar that the legislature - and the people, he believes - don't have confidence that [attorneys] are policing themselves properly. He indicated that if what Representative Kerttula says is correct, attorneys need a better public relations firm to let people know that they are policing themselves. Number 0826 REPRESENTATIVE MURKOWSKI pointed out that a responsible attorney who has a question about ethics or propriety would call Stephen Van Goor, counsel for the Alaska Bar Association, for example, regarding where that attorney stands with a piece of legislation. Representative Murkowski agreed that attorneys don't do a very good job of promoting themselves or letting the world know that they are policing themselves and doing a good job of it, although occasionally one sees a newspaper notice saying an attorney has been disbarred from practice for the next year. She suggested perhaps attorneys need to look at [public relations] a little more carefully. "But you always want to assume that when you are in a profession that you will just do good work, and your good work will be recognized," she commented. "Obviously, that's not the case oftentimes." REPRESENTATIVE MURKOWSKI noted the focus that day on subsection (b), including what it does or doesn't do, and whether it is fatal to the bill; she expressed concern that it is very narrow, with only one remedy. She agreed that this is a policy call and suggested the committee needs to decide how strong a message to send. She said she has come a long way on this legislation; when first looking at it, she didn't like it, in part because of the light it casts upon the legal profession as a whole. However, society is far too litigious, although whether this legislation is the panacea for that, she doesn't know. Some of her concerns with previous drafts of the bill have been addressed, and she believes many of the unforeseen consequences mentioned by Representative Croft a couple of hearings ago have been addressed in a workable way. She concluded, "It kind of reminds me of the budget this morning. It's not perfect. Is it the best we can do? I don't know." Number 1011 CHAIRMAN KOTT commented that he wants to give attorneys the benefit of the doubt, but if there are any individuals who perhaps make intentional false statements, a provision here certainly takes care of that particular problem. He confirmed that Representative Croft maintained his objection. REPRESENTATIVE ROKEBERG directed Representative Murkowski's attention to "shall" on page 2, line 10. He said it seems that the trier of fact makes the determination that there is a falsehood first, before acting upon the mandate. He asked whether there is adequate flexibility or discretion on the part of the trier of fact in the process of making the determination before acting. REPRESENTATIVE MURKOWSKI replied to Representative Rokeberg that she disagrees with Representative Croft that there is no discretion in making a determination as to the materiality and whether it was intentional. She thinks the judge has certain discretion to say whether or not something is truly material and goes to the heart of the issue; there is that flexibility. But once the trier of fact has made that determination, there is no option to use other sanctions. The only remedy that subsection (b) allows is entering judgment against the party on any issues that relate to the material false allegation. REPRESENTATIVE CROFT responded that discretion usually means that when one has made a determination, there is a range of options. This isn't discretion but is what trial courts do all the time: if they find that somebody was negligent and it caused the injury, and if there are no defenses, then that person is liable. It is factual and legal determination. Here, three factual determinations have to be made: Was it a false statement, intentionally made? Is it material to this litigation? And is it related to the issue being addressed? After those three determinations are made, there isn't any discretion left if all three factors are found. Posing a situation where both parties are lying, he expressed concern about how juries would resolve these situations, which he believes may be confusing or contradictory. Number 1307 REPRESENTATIVE JAMES responded that if both parties were lying, the correct decision would be to throw the whole thing out. REPRESENTATIVE ROKEBERG asked to hear Mr. Lessmeier's opinion on changing it. Number 1350 CHAIRMAN KOTT suggested that Representative Rokeberg have that discussion later. He requested a roll call vote. Voting to move the bill [proposed CS for SSHB 42, Version H] from the committee were Representatives Rokeberg, James, Murkowski and Kott. Voting against it were Representatives Croft and Kerttula. Therefore, CSSSHB 42(JUD) was moved from the House Judiciary Standing Committee by a vote of 4-2.