CS FOR HOUSE BILL NO. 56(L&C) "An Act relating to the award to the state of actual reasonable attorney fees and costs, including costs of investigation, in certain court actions relating to unfair trade practices; and amending Rules 54(d), 79, and 82, Alaska Rules of Civil Procedure." This was the first hearing for this bill in the Senate Finance Committee. Co-Chair Wilken stated that this bill would allow the State to recover enforcement, investigation, and court costs when the State prevails in a Court case against a party that has violated Alaska Consumer Law. He noted that a Department of Law fiscal note accompanies the bill. REPRESENTATIVE LES GARA, sponsor of the bill, informed the Committee that Alaska, with three half-time attorneys, has the smallest Consumer Protection Agency in the nation, and that, due to insufficient funding, the Agency is limited in what it is able to accomplish. He reminded the Committee that in 1997, Senator Dyson had filed a bill with the intent of boosting Agency funding without increasing the demand for additional State funds. Version 23- LS0300\I of this bill, he stated would further the intentions of that earlier bill by allowing the State, when it prevails in a consumer fraud case under the State's consumer protection laws of the Unfair Trade Practices Act, to collect reasonable attorney costs as determined by the Court, as well as the investigation expenses associated with the case. Representative Gara explained that, currently, beyond the fines that are levied when the State prevails in a case, the State receives an average of 20-percent of its attorney expenses and none of its investigation expenses. Passage of this legislation, he declared, would assist in offsetting Agency expenses by collecting funds from individuals who have violated consumers' trust or who have, through dishonest means, undermined a law abiding business competitor. These funds, he communicated, would be used to support and expand the program. Therefore, he concluded that were the bill adopted, the State would be allowed when it prevailed in a case, to recoup expenses and thereby demonstrate that the Agency is a cost effective function. In addition, he attested, that the funds generated by this legislation could be used to expand staffing in order to pursue more cases with "no net cost to the State." He pointed out that the Department of Law's zero fiscal note, Fiscal Note #1, specifies that the bill would not incur any additional expenses to the State and could generate an indeterminate amount of revenue. Senator Dyson understood that the State currently only prosecutes cases in which a consumer fraud case involves a pattern of multiple victims. Continuing, he asked whether any mechanism is in place through which to protect small businesses from frivolous lawsuits. Representative Gara affirmed that, due to staffing constraints, the Agency currently pursues cases in which there is a pattern of abuse such as a situation involving a senior care facility in which there are multiple victims as opposed to a single situation in which, for example, a used car salesman makes untrue statements about a vehicle he sold someone. Representative Gara clarified that the components of this bill would be limited to those situations involving the State rather than being applicable to business against business lawsuits. He stated that were the State involved in what might be a frivolous lawsuit, a determination regarding the merits of the case would be made. He assured that those administering the State's Unfair Trade Practices Act do a "pretty good job" in regard to which cases are processed and that Legislators would "express some outrage" were the State to undertake a frivolous lawsuit. CYNTHIA DRINKWATER, Assistant Attorney General, Commercial/Fair Business Section, Consumer Protection Unit, Department of Law, spoke in favor of the bill. Senator Dyson voiced appreciation for the efforts involved in the bill. He noted that, when similar legislation was proposed in the past, it proposed to "empower" both the private sector and the public sector to recover costs were they to prevail in a consumer fraud lawsuit; however, he noted that the time, that language was eliminated from the bill. He expressed delight in the fact that language enabling the State to recoup damages is being pursued through this legislation. Co-Chair Wilken asked regarding a suggestion offered by Senator Ralph Seekins to amend the bill, during its Senate Judiciary Committee hearing. Representative Gara explained that Senator Seekins proposed to amend the bill in a manner similar to a federal anti-trust law that would hold the State responsible for expenses in a consumer fraud lawsuit were it to not prevail. He stated that while this might sound like "a balanced deal," it would serve "to kill the consumer protection function" in the Department of Law. Continuing, he stressed that these cases are pursued to address consumer fraud situations to which "we all abhor," and were the State, with its limited staff and funding, to lose a case based on a technicality or due to an unreliable witness, it would serve to create "hesitancy" on the part of the Agency to take a case and might "set back the function" of the Agency. Therefore, he urged the Committee not to further that amendment. Senator Dyson moved to report the bill from Committee with individual recommendations and accompanying fiscal notes. There being no objection, CS HB 56(L&C) was REPORTED from Committee with indeterminate fiscal note #1, dated April 21, 2003 from the Department of Law.