HB 86-INJUNCTIONS AGAINST PERMITTED PROJECTS  REPRESENTATIVE HUGH FATE, prime sponsor of HB 86, told members that for too long, properly permitted projects have been delayed before ground is ever broken. Projects are often put on hold because our current [legal] system allows individuals or entities to stop projects without a legitimate reason and without any serious consequences. Adding the language in HB 86 to the code of civil procedure means that those who file malicious or bad faith claims in an attempt to stop a project must realize that the economic effects of their actions will be increased. This bill is written to give the defendant a cause of action and to provide guidance to the court when determining damages. REPRESENTATIVE FATE said in most cases, when a project is permitted, the contractor begins the process of purchasing materials, hiring subcontractors and employees, and essentially commits to go to work. The economic damage of even a temporary forced work stoppage far exceeds attorney and court fees. This bill requires the responsible party or plaintiffs to assume economic responsibility for their actions if the court determines the action was improper. He said this legislation has been closely scrutinized and has been determined to be constitutional, legally clear, and it contains no provisions that will violate due process. He emphasized the court will determine whether the cause or action was improper. SENATOR THERRIAULT asked if a court would have to dismiss a case and declare it to be malicious and ungrounded before the permittee could initiate the civil action. MR. JIM POUND, staff to Representative Fate, said this would happen at the injunctive part of the process. If an injunction were granted, which is an extensive process, the cause of action would fall into place when the determination was made that the case was based on unfounded, bad faith, or malicious claims. SENATOR THERRIAULT asked if he was granted a permit through the agency process and someone moved for an injunction, which the court denied, whether he would then make a claim in civil court that the filing for injunctive relief was a bad faith action or whether the court would have to make a proclamation on the request for injunctive relief before he could initiate a civil action. REPRESENTATIVE FATE said his understanding is that a plaintiff's filing for injunctive relief will not be granted by the court if the court finds the cause of action was filed in bad faith. If injunctive relief is not granted, the project continues. However, that does not stop the court from determining the plaintiff had just cause in filing the cause of action for injunctive relief. In that event, it is likely the court would rule for injunctive relief, in which case there would either be a delay or the project would be stopped. The beauty of this piece of legislation is that it actually allows the court to determine whether the cause of action was filed in bad faith or was malicious. CHAIR SEEKINS said under normal circumstances, if a court determines that the plaintiff is liable under this law, the court would initiate damages at a damages hearing. If not, it would be incumbent upon the defendant's attorney to file a motion for damages. He said he has observed that when lawsuits are determined by the court to be frivolous, damages are assessed at meetings with the clerk of the court. REPRESENTATIVE FATE said this legislation should act as a deterrent because the liability for filing a lawsuit in bad faith will increase. SENATOR FRENCH offered an amendment [Amendment 1] and told members the U.S. Supreme Court has provided some good direction in this area. His amendment is an attempt to comport with the U.S. Supreme Court's position on these lawsuits. Second, he believes the amendment will help shift the focus to the legal merit of a claim and away from the subjective intentions of the person filing it. SENATOR FRENCH moved to adopt Amendment 1. CHAIR SEEKINS objected. SENATOR FRENCH said the amendment would make a small modification to page 2, line 8, by changing the language to read: the person initiates or maintains an objectively baseless legal or administrative claim. He said that he and Representative Fate discussed the difficulty of defining "objectively baseless" but the U.S. Supreme Court has defined that term as a case in which no reasonable litigant could reasonably expect success on the merits. He said if a person brings a lawsuit on grounds with no legal merit, that person should be held accountable. His amendment would clarify that the court first looks at the legal merits of the case and then look at the intention of the person who filed the case. He noted that Amendment 1 comports with the U.S. Supreme Court decision written by Justices Scalia, Thomas, Rehnquist, White, Blackmun, Kennedy, and Souter. CHAIR SEEKINS asked Senator French if he means that if Amendment 1 is not adopted, a person's rights would be violated under the U.S. Constitution. SENATOR FRENCH said his intent is to get the bill as close as possible to what he sees as "the state of the law." CHAIR SEEKINS continued, "The state of the law regarding that particular case that is cited, in other words." SENATOR FRENCH replied, "Exactly. The case where you sue - where you assess damages against somebody who has gone to court under a [indisc.] citizen." CHAIR SEEKINS asked if the state could maintain these conditions under paragraph (c) without running afoul of the U.S. Supreme Court. SENATOR FRENCH said he is just trying to make the bill a little bit better. SENATOR THERRIAULT questioned how the amendment would fit on page 2, line 8. SENATOR FRENCH said he was referring to CS SSHB 86(JUD) am, version W.A. CHAIR SEEKINS asked Representative Fate his opinion of the amendment. REPRESENTATIVE FATE told members his only concern is that he is not aware of the U.S. Supreme Court case that Senator French referred to. He expressed concern that using two adjectives, "baseless" and "objectively," will add confusion. CHAIR SEEKINS maintained his objection to adopting the amendment. SENATOR THERRIAULT asked Senator French if it is necessary to include the word "objectively." SENATOR FRENCH said he believes including the word "objectively" will force the court to look at the legal arguments and stay one step removed from the person filing the claim. He explained that he is concerned about separating the legal argument from the person who filed it. He said the person who files a lawsuit may have an irrational hatred of asphalt but if that person has a sound legal reason for his argument, that person should not be forced to pay damages. CHAIR SEEKINS said that person would not have to pay damages according to paragraph (c)(4), because that person was not acting with malice. SENATOR FRENCH said he believes a person could argue the contrary and wants to keep the focus on the strength of the legal argument. CHAIR SEEKINS called for the question. The motion to adopt Amendment 1 failed with Senators French and Ellis voting in favor and Senators Ogan, Therriault, and Seekins voting against. SENATOR FRENCH moved an amendment to add the word "baseless" to page 2, line 8, and said he believes that is a fair compromise. SENATOR FRENCH explained the word "baseless" would be inserted in front of the word "legal" on page 2, line 8. CHAIR SEEKINS objected to the motion to adopt Amendment 2. TAPE 03-47, SIDE A  9:40 a.m.  CHAIR SEEKINS noted that all claims are based on something so that if a lawsuit were based on, for example, a hatred of oil drill rigs, the claim would not be baseless. SENATOR FRENCH replied: I guess that is why the word 'objectively' was important, because it gets you back to the legal merits and not to the mind of the person who's bringing it. Once you step into the mind of the person who is bringing it, you're into a hall of mirrors and I think you're somewhere where you just can't win. Any judge can look at the quality of a legal argument and say that's a joke. That's when it's objectively baseless. CHAIR SEEKINS said a judge would have to determine that the plaintiff acted in bad faith. REPRESENTATIVE FATE said he would prefer that "bad faith claim" be used. CHAIR SEEKINS noted that language is already included in paragraph (c)(3). SENATOR OGAN commented that determining malice is subjective; therefore he feels that including the word "baseless" will help to quantify the malice. He questioned how one would determine the legal standard for the culpability of "malice." CHAIR SEEKINS pointed out that legal precedence has been set for "malice." SENATOR THERRIAULT said he understands Senator French's argument in that a person might have a "legal hook" to hang the claim on but is filing the claim for the sole reason of delaying the project. Senator French is trying to focus the liability on cases in which there is no legal valid argument that is filed with bad intentions. CHAIR SEEKINS stated: I think that - what we're trying to get to there is that, Senator Therriault if I understand is, you could still bring the action on a legally valid point or it probably would be defeated in summary judgment right up front, but the question is was that legally valid complaint done in bad faith and I think that's what the sponsor is trying to get to is that - am I not correct? REPRESENTATIVE FATE said that is correct. CHAIR SEEKINS continued: So, if it has no basis under the law, if it's baseless under the law, more than likely it would be disposed of in a very short period of time with summary judgment because someone has not brought any basis to bring the action. And I think what he's trying to get to is the element of bad faith. He's not trying to keep someone from bringing an action that would otherwise be legally allowed. SENATOR THERRIAULT said a person can bring an action to get an injunction against a project and the court can refuse to grant that injunction by saying if the project goes ahead, no one will be harmed. The injunction was not dismissed because the claim had no basis; it was dismissed because no one will suffer if the project goes ahead. He questioned whether under (2) on page 2, line 12, the claim would be considered to be the request for an injunction. CHAIR SEEKINS said the claim to get injunctive relief would be rejected; he referred to the language on lines 6 and 7. SENATOR FRENCH said he believes it could be either. A person could get an injunction and later fail on the merits, when the injunction would be lifted. That would be a far more expensive hurdle for a company to get over because the company could suffer a three-month project delay. He said the risk for the plaintiff is that the plaintiff gets the injunction and then loses the case three months later and is liable for $3 million in damages. He said a person who may be considered an agitator could be on the hook for millions of dollars of damages even though that person had a valid legal reason for filing the claim. That is the reason he preferred including the words "objectively baseless." CHAIR SEEKINS called for a roll call vote. The motion to adopt Amendment 2 carried with Senators French, Ogan, Therriault and Ellis in favor and Chair Seekins opposed. CHAIR SEEKINS announced that he would hold CS SSHB 86(JUD) in committee until the next hearing. SENATOR THERRIAULT informed members that he might propose an amendment to this legislation at the next meeting. CHAIR SEEKINS adjourned the meeting at 10:02 a.m.