HOUSE JUDICIARY STANDING COMMITTEE February 28, 2000 1:25 p.m. MEMBERS PRESENT Representative Pete Kott, Chairman Representative Joe Green Representative Norman Rokeberg Representative Jeannette James Representative Lisa Murkowski Representative Eric Croft MEMBERS ABSENT Representative Beth Kerttula COMMITTEE CALENDAR HOUSE BILL NO. 318 "An Act relating to property disposal by law enforcement agencies." - MOVED CSHB 318(JUD) OUT OF COMMITTEE HOUSE BILL NO. 385 "An Act relating to search warrants." - HEARD AND HELD 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." - HEARD AND HELD HOUSE JOINT RESOLUTION NO. 52 Proposing an amendment to the Constitution of the State of Alaska relating to certain public corporations. - HEARD AND HELD PREVIOUS ACTION BILL: HB 318 SHORT TITLE: RETURN FOUND PROPERTY TO FINDER Jrn-Date Jrn-Page Action 1/26/00 2006 (H) READ THE FIRST TIME - REFERRALS 1/26/00 2007 (H) JUD, FIN 1/31/00 2049 (H) COSPONSOR(S): DYSON 2/09/00 (H) JUD AT 1:00 PM CAPITOL 120 2/09/00 (H) Heard & Held 2/09/00 (H) MINUTE(JUD) 2/11/00 2189 (H) COSPONSOR(S): CROFT 2/28/00 (H) JUD AT 1:00 PM CAPITOL 120 BILL: HB 385 SHORT TITLE: ISSUANCE OF SEARCH WARRANTS Jrn-Date Jrn-Page Action 2/16/00 2215 (H) READ THE FIRST TIME - REFERRALS 2/16/00 2215 (H) JUD 2/28/00 (H) JUD AT 1:00 PM CAPITOL 120 BILL: HB 42 SHORT TITLE: CIVIL LIABILITY FOR IMPROPER LITIGATION Jrn-Date Jrn-Page Action 1/19/99 29 (H) PREFILE RELEASED 1/15/99 1/19/99 29 (H) READ THE FIRST TIME - REFERRAL(S) 1/19/99 29 (H) JUD, FIN 2/16/00 2206 (H) SPONSOR SUBSTITUTE INTRODUCED 2/16/00 2206 (H) READ THE FIRST TIME - REFERRALS 2/16/00 2206 (H) JUD, FIN 2/16/00 2206 (H) REFERRED TO JUDICIARY 2/28/00 (H) JUD AT 1:00 PM CAPITOL 120 BILL: HJR 52 SHORT TITLE: CONFIRM PUBLIC CORP BD MANAGING ASSETS Jrn-Date Jrn-Page Action 2/02/00 2059 (H) READ THE FIRST TIME - REFERRALS 2/02/00 2060 (H) STA, JUD, FIN 2/17/00 (H) STA AT 8:00 AM CAPITOL 102 2/17/00 (H) Moved Out of Committee 2/17/00 (H) MINUTE(STA) 2/18/00 2234 (H) STA RPT 3DP 3NR 2/18/00 2234 (H) DP: JAMES, WHITAKER, OGAN; 2/18/00 2234 (H) NR: SMALLEY, KERTTULA, GREEN 2/18/00 2234 (H) FISCAL NOTE (GOV) 2/28/00 (H) JUD AT 1:00 PM CAPITOL 120 WITNESS REGISTER JONATHAN LACK, Staff to Representative Andrew Halcro Alaska State Legislature Capitol Building, Room 418 Juneau, Alaska 99801 POSITION STATEMENT: Presented HB 385 on behalf of sponsor. REPRESENTATIVE ELDON MULDER Alaska State Legislature Capitol Building, Room 507 Juneau, Alaska 99801 POSITION STATEMENT: Sponsor of SSHB 42. ROBERT A. MINTZ, Attorney at Law 550 West 7th Avenue, Suite 1540 Anchorage, Alaska 99501 POSITION STATEMENT: Testified in strong support of SSHB 42. PAMELA LaBOLLE, President Alaska State Chamber of Commerce 217 Second Street, Suite 201 Juneau, Alaska 99801 POSITION STATEMENT: Testified in support of SSHB 42. MICHAEL LESSMEIER, Attorney at Law Lessmeier & Winters, and Lobbyist for State Farm Insurance Company 431 North Franklin Street, Number 400 Juneau, Alaska 99801 POSITION STATEMENT: On behalf of State Farm Insurance Company, encouraged passage of SSHB 42. JAMES BALDWIN, Assistant Attorney General Civil Division (Juneau) Department of Law P.O. Box 110300 Juneau, Alaska 99811-0300 POSITION STATEMENT: Testified on HJR 52. ACTION NARRATIVE TAPE 00-22, SIDE A Number 0001 CHAIRMAN PETE KOTT called the House Judiciary Standing Committee meeting to order at 1:25 p.m. Members present at the call to order were Representatives Kott, Green, Rokeberg and Croft. Representatives Murkowski and James arrived as the meeting was in progress. HB 318 - RETURN FOUND PROPERTY TO FINDER CHAIRMAN KOTT announced that the first order of business would be HOUSE BILL NO. 318, "An Act relating to property disposal by law enforcement agencies." Chairman Kott reminded members that the bill had been heard previously. He noted that a new proposed committee substitute (CS) [work draft 1-LS1294\G, Luckhaupt, 2/18/00] had been prepared. However, there was also a memorandum from Gerald Luckhaupt of Legislative Legal Services; Chairman Kott said as he reads that and compares it with the original bill, he recommends against adopting the new proposed CS. He suggested returning to the original bill, saying he believes that requirements already in law will allow the various things to occur without more language being added. Number 0143 REPRESENTATIVE ROKEBERG pointed out that Version D still exists [adopted as a work draft on 2/9/00]. CHAIRMAN KOTT affirmed that. He announced that Version D was before the committee. He called an at-ease from 1:27 p.m., and called the meeting back to order at 1:30 p.m. Number 0220 REPRESENTATIVE CROFT made a motion that the proposed CS for HB 318, Version D [1-LS1294\D, Luckhaupt, 2/8/00] be advanced from the committee with individual recommendations and the attached zero fiscal note. There being no objection, CSHB 318(JUD) was moved from the House Judiciary Standing Committee. HB 385 - ISSUANCE OF SEARCH WARRANTS CHAIRMAN KOTT announced that the next order of business would be HOUSE BILL NO. 385, "An Act relating to search warrants." He advised listeners that there were no testifiers other than the sponsor's representative that day, but that the bill would be taken up again on Wednesday, March 1. Number 0428 JONATHAN LACK, Staff to Representative Andrew Halcro, Alaska State Legislature, came forward to explain the bill on behalf of the sponsor. He informed members that Representative Halcro had introduced HB 385 because of a decision by a Juneau magistrate in early January that dismissed a search warrant for a violation. Mr. Lack pointed out that AS 12.35.020, which grants authority for judges and judicial officers to issue search warrants, says search warrants can only be issued for crimes; although that section of the code does not distinguish between "crimes" and "violations," that distinction is made elsewhere in the code. The Juneau magistrate had grabbed onto that distinction and found that search warrants could not be issued for violations. To Mr. Lack's understanding, the state is appealing that decision. However, the statute leads to the ability to make that distinction. Therefore, HB 385 is offered to clarify legislative intent by providing that search warrants can be issued for violations. MR. LACK told members two people had planned to be online to testify: Duane Udland, Chief of Police for the Anchorage Police Department and President of the Alaska Association of Chiefs of Police, who had submitted a letter in support of this legislation; and Lieutenant Howard Starbard, Division of Fish and Wildlife Protection, Department of Public Safety (DPS). Mr. Lack stated his belief that those two individuals support HB 385 for two reasons. First, a couple of years ago the legislature reduced the penalty for alcohol consumption by a minor so that it is no longer a crime, thereby removing the possibility of jail time; in effect, because of the magistrate's ruling, search warrants can no longer be issued for minor consumption. MR. LACK said second, there are a number of violations of state law in the fisheries, wildlife and hunting categories; for instance, there are fairly severe financial penalties - up to $100,000 for the first offense - for intercepting salmon on the high seas, but no jail time is associated with that. In talking to him that morning, Mr. Lack said Lieutenant Starbard had indicated the need for an ability to seize or inspect a vessel that is doing high-seas fishing; he had also indicated that if this doesn't pass, there is a possibility that the DPS will have to investigate all violations as crimes, which will push up the penalties. The DPS would still be able to get search warrants for some of these things because the requirements of the violation and the crime are similar; however, now they will have to prosecute and investigate those as crimes, not violations, because they need the search warrant ability. Mr. Lack noted that Paulette Simpson, who also had been prepared to testify, had submitted written testimony to committee members. CHAIRMAN KOTT acknowledged receipt of Duane Udland's letter and Paulette Simpson's written testimony, both in support of the bill, which would become part of the permanent record. Number 0750 REPRESENTATIVE GREEN inquired whether going from a crime to an offense opens a Pandora's box. He pointed out that a myriad of things fall under the "offense" category, including speeding and parking violations, for which a search warrant would be an invasion of privacy if issued on that basis. MR. LACK replied, "Absolutely." He referred to AS 12.35.020 and said the search warrant only can be issued to seize property. For a speeding violation, as with many violations, no search warrant would ever be issued. Before a search warrant can be issued, both federal and Alaskan constitutional law require that probable cause must be established. A police officer, for example, must go before the court and state why he or she believes a search warrant needs to be issued; that includes why the officer believes a crime has been committed and that the property which he or she is looking to seize or search will be evidence of that crime. There are procedural safeguards. Police throughout Alaska have been obtaining search warrants to investigate and prosecute violations at least since statehood. This doesn't expand the law or the ability of the police. Rather, this one [magistrate's] decision has created a situation where law enforcement officers can no longer do what they were doing. Number 0901 REPRESENTATIVE MURKOWSKI, acknowledging that a newspaper shouldn't be a source of legal information, mentioned an article in the Juneau Empire that referenced the arguments presented before the Juneau magistrate. She said apparently the Department of Law had argued, in its petition, that the court has upheld the use of arrest warrants for traffic infractions. Like Representative Green, she is wondering whether this opens a Pandora's box. MR. LACK specified that the only applicable traffic offense, because there is a property situation, is where a driver does a hit-and-run, for example, then proceeds directly home and shuts the garage door; the police officer would still have to go before the magistrate or judge to get a search warrant to search the house and to seize that vehicle. Mr. Lack commented that the article talks about the state's petition, which he had read. The issue of traffic violations decided by the Alaska Supreme Court deals with arrest warrants, which are similar to search warrants, but the issue of search warrants hasn't been taken to that court yet. In State v. Clayton, the Alaska Supreme Court established the concept of a quasi-criminal act, something punishable by only a fine and not jail time. He said that would be traffic violations. Number 1034 REPRESENTATIVE CROFT asked whether there is no crime so small that the state shouldn't authorize the search of a home to find evidence of that crime. He asked if there is any theoretical limit to this. MR. LACK answered that theoretically there is not, but the question becomes whether there is property involved and whether there will be physical evidence of that crime. Under this bill, a police officer could conceivably obtain a search warrant to search a house for a packet of chewing gum that had been shoplifted. However, Mr. Lack had spoken with a municipal prosecutor that morning, who said the fine is $300 and it would cost $1,000 to get a search warrant; therefore, they probably won't do it for a pack of gum or even for minor traffic violations. MR. LACK said the focus is minor consumption - a serious problem in Alaska, especially in rural communities where alcohol use is rampant among youngsters - and fishing and hunting violations. He emphasized the need to be able to enforce the laws of the state. The bottom-line question isn't whether the laws themselves are good but whether Alaska's police, state troopers and other law enforcement officials are able to enforce the laws that exist. Number 1135 REPRESENTATIVE CROFT asked under what section of AS 12.35.020 the search warrant is authorized. MR. LACK answered that subsections (1) through (4) all talk about searching for a specific piece of property that either was used in the crime or is evidence of the crime. REPRESENTATIVE CROFT stated his understanding that "property" is not a house but beer, for example. The search warrant, then, describes the places to be searched. MR. LACK affirmed that. He pointed out that committee members had been given copies of Criminal Rules 4 and 37 of the Alaska Rules of Court. Criminal Rule 37 provides when a search warrant can be issued; the specifics of what must be in the warrant are on page 370, the second page of the handout. Number 1224 REPRESENTATIVE ROKEBERG expressed concern about deleting the word "crime." He asked whether this is a "greater included definition." MR. LACK explained that "offense" has been defined in AS 11.81.900, and it includes a crime and a violation. Therefore, "crime" has been replaced with "offense" in the bill, so it is all-inclusive. Number 1262 REPRESENTATIVE GREEN asked whether it would be better, if concerned as a society about minor consuming and fish and game violations, to modify it so search warrants are allowed for those, rather than opening a Pandora's box. MR. LACK noted that the legislature, either two or four years ago, had decided to take away the possibility of jail for minor consumption; he believes the intent was to reduce the stigma associated with minor consumption and to give people an ability to move forward without one mistake ruining their ability to get into college or to get jobs. For example, a person who has done jail time may not be able to become an Alaska State Trooper or a foster parent. REPRESENTATIVE GREEN indicated he recalled that legislation. However, he is concerned that it may be better, under subsection (2), to have it say "a crime and the offenses of," listing the offenses included. That way, one could get a search warrant for minor consumption or for fish and game violations, even though those aren't crimes subject to jail time. MR. LACK indicated he would make two points. First, prior to the Juneau magistrate's decision it wasn't a question of the ability to get a search warrant for all violations. Alaskan prosecutors and police officers had that ability until the end of January, and in many cases, they may still be doing it because the decision only affects the one case. Mr. Lack indicated HB 385 is an attempt to prevent it from affecting all cases. Second, from his personal experience with legislation and drafting, every year somebody will have a new violation to add to the list; the statute itself will become unworkable. Mr. Lack cited an example of legislation with more than 30 exceptions listed. He restated that the statute, both now and with HB 385, deals with seizing specific property, and most violations aren't covered anyway because there is no property involved. He believes that distinction is sufficient. Number 1442 REPRESENTATIVE MURKOWSKI asked whether perhaps this legislation is a bit premature because the courts could decide to not uphold the magistrate's ruling. MR. LACK agreed HB 385 is possibly premature in a judicial sense. However, because it was a magistrate's decision, it is currently being appealed to the superior court. State resources will be used to plead this case, and the young gentleman involved will have to plead his case as well. Then it can be appealed to the Court of Appeals, and then to the Alaska Supreme Court. For perhaps four to six years, law enforcement personnel will be out on the streets without knowing what the law is, a situation the legislature shouldn't allow. In that sense, it isn't premature. Number 1538 REPRESENTATIVE MURKOWSKI asked what Anchorage is doing now. For example, are they issuing search warrants for underage drinking parties? MR. LACK replied that he can't say about Anchorage, but he has spoken to a prosecutor from another jurisdiction, where they are just "upping" what they are looking for, making it not only minor consuming, for example, but also contributing to the delinquency of a minor or trespass issues. If HB 385 isn't passed, the response will be "upping" the penalties for juveniles. Number 1593 REPRESENTATIVE JAMES referred back to Representative Green's suggestion. She indicated she doesn't see any problem with having a list including minor consuming and fish and game violations, plus others, because [lists] occur throughout the statutes. Oftentimes the legislature cannot write a "blank check" and must list exceptions. To her, this bill particularly begs for some exceptions. She requested a response. MR. LACK reiterated that law enforcement officers have had the ability to obtain search warrants for violations "forever" anyway, without any problem that he is aware of. Also, the statute itself talks about obtaining a search warrant to seize property; however, there is no property involved with most violations, so those are already excluded by the wording of the statute, and there is no need to list them. Furthermore, this weekend he came up with an eight-page list of violations in the statutes before his computer went down and he lost the list. Number 1692 REPRESENTATIVE GREEN expressed confusion as to why, if most violations don't apply, Mr. Lack objects to listing the two to which it does apply. MR. LACK explained that there are more than two. They would need to list perhaps 8 or 10 tobacco violations, minor consuming, and probably 15 statutes on fish and wildlife, for example. He acknowledged that it is the committee's decision to list them or not, but said HB 385, as written, would be simpler. REPRESENTATIVE GREEN asked how much of a problem it would be to let the committee know what would be included on that list now for search warrants. MR. LACK said he could put it together. He'd spent 14 hours on it over the weekend to get to eight pages, and he wasn't finished then. Alphabetically, he was at "F." REPRESENTATIVE GREEN said he believes that justifies the concern even more. MR. LACK reiterated that for most of those, because there is no property involved, this doesn't really apply. REPRESENTATIVE GREEN said it would be nice to know what does apply. Number 1764 REPRESENTATIVE JAMES expressed concern about someone getting a search warrant because of a tobacco infringement. Although Mr. Lack had said it has been working fine and the police haven't been over-reactive or creating problem, she said that doesn't comfort her much. If presumably the legislature adds intent language, she has a sneaky feeling it provides law enforcement more authority. She concluded that she has a real problem with coming into somebody's home if there isn't something serious going on there. MR. LACK expressed his understanding - with which he said Representative Halcro would agree - that the situation with tobacco is not so much minor possession of tobacco but wanting a search warrant if a store sells it out of the back room to minors, for example. Right now, the answer is "no" under the magistrate's decision. Mr. Lack noted that a number of people had telephoned with concerns that the bill allows warrantless searches, which it does not. However, no concern has been heard about whether there is an abuse of the search warrant process. Because one must establish probable cause, one must establish, before a magistrate or a judge, that there is evidence that a crime is either going on or is going to be committed, and that property used in that crime needs to be seized. This does not give carte blanche to search somebody's home. Also, if a search warrant has been issued without probable cause, anything discovered under that search warrant is thrown out anyway as "fruits of the poisonous tree." Protections are built into the constitution and the statute already. Number 1913 REPRESENTATIVE JAMES surmised that law enforcement must do a lot of searching, however, before finding that particular property. She expressed concern about privacy. MR. LACK said he understands Representative James' concern. Alaska, which has a specific privacy clause [in the constitution], guarantees a lot more protections than otherwise would be guaranteed. For instance, a Federal Bureau of Investigation (FBI) agent who wanted a search warrant would have to look for the specific item. And there are size requirements. For example, someone looking for a double-barrel shotgun cannot look in a briefcase because it doesn't fit there. The Alaska Supreme Court has outlined "closed-container rules" on searches. In Alaska, the privacy clause has already been used to protect Alaskans against even the broad use of search warrants that is granted under the federal constitution. Number 1978 REPRESENTATIVE CROFT compared the Fourth Amendment [to the U.S. constitution] and [Article I,] Section 14 of Alaska's constitution. The former read: Searches and seizures. The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized. Article I, Section 14 of Alaska's constitution read: SEARCHES AND SEIZURES. The right of the people to be secure in their persons, houses and other property, papers, and effects, against unreasonable searches and seizures, shall not be violated. No warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized. REPRESENTATIVE CROFT commented that it seems to imply that even a search with a warrant that is unreasonable can be constitutionally prescribed. MR. LACK agreed. REPRESENTATIVE CROFT asked whether there are any reported cases of crossing a constitutional line by getting so "small" that it is unreasonable, constitutionally. MR. LACK explained that the concept of "reasonable" has been applied strictly to whether probable cause exists, not to the crime itself or the level of the crime. Alaska's constitution is even more specific, as interpreted by the supreme court, because it also has the privacy clause adopted in 1973. Number 2054 CHAIRMAN KOTT thanked Mr. Lack. Noting that others may want to testify at the next hearing, he announced that HB 385 would be held over until Wednesday, March 1. HB 42 - CIVIL LIABILITY FOR IMPROPER LITIGATION CHAIRMAN KOTT announced that the next order of business would be 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." Number 2096 REPRESENTATIVE ELDON MULDER, Alaska State Legislature, sponsor, acknowledged that he had been before the committee four or five times with similar legislation. He suggested that members read the sponsor statement but said he would talk about his reasons for continuing to bring this bill forward. He believes that there is a crisis of confidence among Alaskans regarding the ability to defend oneself in court, and that people are frustrated with the inability to make themselves whole in this process. There is not much opportunity to recover the expense of defending oneself in court, he said, even though the claims being made are incorrect. Most times, these issues are settled out of court for the costs, the deductible, or the limits of the insurance policy, because of the ease of doing so and the savings in time and money. REPRESENTATIVE MULDER told members he is troubled because he believes that lying is an acceptable tool to be utilized in the court system today; he cited a movie about a lying attorney as an example. He restated the desire to have people be able to defend themselves against a factually inaccurate claim and to make themselves whole, which he doesn't believe is possible currently. Therefore, the bill allows two new actions to occur. A person can file for recovery against an attorney who has knowingly put forward a case based upon factual inaccuracies, or if the case has been brought forward without due diligence to research the information to ensure that it is factual. Currently under Rule 11 that ability exists, but it can only be utilized by the judge. REPRESENTATIVE MULDER specified that he isn't trying to pick a fight with the judicial system or judges, then pointed out that judges are attorneys who have come through the legal system; they are forced to sit and make judgments against their own. From a practical standpoint, Representative Mulder said he doesn't believe that Rule 11 can practically be utilized, and hence it isn't properly utilized to its fullest extent. This bill expands the ability of the trier of the case - the judge or jury - to allow that trier to apply those same standards against an attorney or the plaintiff in the case. REPRESENTATIVE MULDER told members that he believes there are precautions built into the bill. If the defendant believes there are inaccuracies in the case, this bill requires that the defendant has to put forward a counterclaim that states the defendant's belief that the case is based upon false information, what the inaccuracies are, and the reasons for the belief; after those are put forward, there are 21 days to respond. A plaintiff who knows the information to be correct would continue forward with the case; however, if the attorney didn't know all the facts, this gives that attorney the opportunity to take appropriate corrective action. REPRESENTATIVE MULDER said this bill doesn't totally tip the balance of the scales toward the defendant, and he believes this counter-step is both reasonable and appropriate. People who tell the truth have nothing to fear from this bill, which is aimed at those who base a case on inaccuracies or the failure to properly pursue the action necessary to discover what the truth is. He noted that Bob Mintz was on teleconference and Michael Lessmeier was available to answer technical questions. Acknowledging that he himself isn't an attorney, he indicated his belief that it would be difficult for an attorney to present the bill because of possible repercussions. Number 2454 REPRESENTATIVE JAMES recalled that she had once believed the judicial system is perfect and attorneys are wonderful. However, as a plaintiff in a case, she had listened to a deposition in which an absolutely false statement was made about a meeting that supposedly occurred. TAPE 00-22, SIDE B Number 0001 REPRESENTATIVE JAMES noted that in the instance discussed above, she had asked her attorney what she could do about it, and the attorney had said she could do an affidavit about it; that would have been one person's word against the other's. She asked whether this [bill] does anything for circumstances such as that. REPRESENTATIVE MULDER replied that he believes it would allow her to try to substantiate that claim. Certainly, there would be an ability to get statements or testimony from others at the meeting, for example, to support her statement that she hadn't attended that meeting, and to support her claim that the statement was factually inaccurate; if that were the basis of the claim, Representative James could then countersue. Number 0057 REPRESENTATIVE MURKOWSKI commented that the discovery process is about finding out things that perhaps the client didn't tell the attorney or about which the client didn't tell the whole story. In discovery, there is a requirement to go ahead and correct the responses to any interrogatories that have come in because of the new information available. If the trial were going on, however, what would happen to the trial? Would it be somewhat derailed by an allegation that a few counts of the claim were perhaps inaccurate and were false representations? She asked whether this would slow the process down because of having a "mini-trial" within a trial. REPRESENTATIVE MULDER suggested either Mr. Lessmeier or Mr. Mintz, who are attorneys, could answer better. Number 0153 ROBERT A. MINTZ, Attorney at Law, testified via teleconference from Anchorage. He responded to Representative Murkowski's question by referring to subsection (a), which requires signed civil pleadings; he said it wouldn't pertain to testimony given at trial. Under subsection (c), he said, there is a codification and liberalization of the "malicious prosecution common law"; he said he thinks that would be an applicable provision and that Mr. Lessmeier would address the applicability of subsection (b). MR. MINTZ continued with "malicious prosecution." He said that someone who takes an active part in a continuation for an improper purpose after learning that there is no probable cause for the civil proceeding would become liable under the Act as if that person had initiated the proceeding. This raises the bar. One expects an ethical person who learns that the basis for an action or defense no longer exists would act on that; in reality, however, that occasionally doesn't happen. This bill, therefore, creates consequences that don't exist today for failure to do the right thing. Mr. Mintz asked Representative Murkowski whether that helps with her question. Number 0248 REPRESENTATIVE MURKOWSKI replied that it does and it doesn't. In a limited procedural sense, she asked, does the case get sidetracked from the main issues of the trial if there is, for instance, one count that has been misrepresented? MR. MINTZ answered no. In the strict procedural sense, it doesn't sidetrack the underlying trial, because the claims under this bill cannot be brought until after final judgment is entered. However, it does create tension in the heart of the person who is prosecuting the claim that the person now knows is not justifiable. In that sense, it may disrupt the procedure because it creates an incentive to come forward. Number 0310 MR. MINTZ turned attention to how the bill differs from current law. He first referred members to his letter in support of SSHB 42, contained in packets, and said he didn't want to repeat what he had written. He then explained that this bill allows people who are injured by misconduct to seek compensation. Currently, the rules and the legal system give the court discretion to redress the wrongs which are addressed by this bill; however, this bill gives that power to the injured party and doesn't rely on the judicial system to be self-correcting. The bill also expands the consequences by allowing punitive damages in those rare cases where it can be proved that somebody knowingly and intentionally lied. MR. MINTZ surmised that attorneys won't like this bill because it will require some of them to do more up-front work before asserting the claim. Furthermore, it exposes their personal pocketbooks if it can be shown that the up-front work wasn't done, or if it can be proven that they acted unreasonably or maliciously. This bill is a measured step that for the most part uses existing standards of conduct or creates a claim where there is knowing and intentional falsification going on. He said he strongly supports it. Number 0380 REPRESENTATIVE MURKOWSKI referred to Civil Rule 82. She then referred to subsection (e) of the bill, which says a court shall award actual reasonable attorney fees and which deviates from the rule. She asked whether the legislature can get away with just an indirect court rule amendment or whether there is a need to amend Civil Rule 82 to provide for "actuals." MR. MINTZ answered that absent the three-quarters' vote, that section probably won't become law. He said the intention of the bill is to try to make people as whole as possible, including the cost of prosecuting these claims. "Even if we can't go the whole mile, the rest of the provisions go a long way towards making people more whole than they can be made today," he added. Number 0450 PAMELA LaBOLLE, President, Alaska State Chamber of Commerce, came forward to testify, noting that her organization has been active over the years in trying to make the judicial system more responsive to business people who are too often held hostage by false litigation or a system that just doesn't work without a great deal of expense. She pointed out that many times an individual has to decide whether to fight a claim or just settle out of court based on the expense. Civil litigation has always been a real problem for business people, especially those in small businesses. MS. LaBOLLE reminded members that defending against false allegations is no less costly than defending against the true ones. This bill says that people who intentionally provide false information that is material to a case will pay if that is found to be the fact; it also applies if people use invalid claims or counterclaims to intentionally cloud a case, which may happen when one's case isn't that strong; furthermore, it applies when someone is hoping to force someone else to settle out of court. She said this isn't about honest errors or ethical people, and she believes most attorneys are ethical people. This is about people who would unethically use the system to their own will and benefit, at significant expense to honest, ethical people. This bill would put a cost on those who try to use the system to their own benefit while harming others. Number 0599 MICHAEL LESSMEIER, Attorney at Law, Lessmeier & Winters, and Lobbyist for State Farm Insurance Company, came forward to testify on behalf of State Farm Insurance Company. He stated: We call this bill "the truth and responsibility bill," because those are the principles that it seeks to recognize. And I think we would hope that while those principles would be recognized by everyone, and in fact the importance of those principles in our civil justice system would be heightened by what's in this bill, our hope is that the actual tools that this bill places in the system would be used rarely, because under this bill there would be definite and certain sanctions for a very narrow kind of conduct that does occur, and the cost of that conduct is high. And the purpose of this bill is to raise the recognition of everyone that there are certain things that you shouldn't be doing in a court of law, and we're not going to allow them anymore. And as an example, Representative Murkowski, you had a question about what happens ... in the middle of a trial. For example, do we get sidetracked on an issue of credibility when we shouldn't be? And that really ... is the purpose of subsection (b). The purpose of subsection (b) is, in a case, to require the jury to be instructed with the principles set forth in subsection (b). In other words, ... if a party comes to court and knowingly makes a false statement of material fact, they lose. And what that should do is that should encourage a very candid discussion between counsel and their client, at the very outset of the case, that if you're trying to take advantage of the judicial system, there will be a definite and certain sanction. This doesn't sidetrack the trial. There's no action the judge has to take. It is simply an instruction that is submitted to the jury, and you continue with the trial and the jury makes its finding. It is self-implementing, and so it won't impose any additional cost on the system. It won't impose any additional cost on the parties. It simply is a recognition that if you come to court and you lie, you're going to lose on that claim. It is not designed to address situations where people make a mistake or people discover information after the fact that they didn't have before, but a knowing false statement of material fact. And so, that's the purpose of subsection (b). The other provisions of this bill are designed to impose some responsibility on people that participate in the system. And we think that is a healthy thing. We think that the goals that this bill seeks to further are really laudable goal, and we would encourage the passage of this legislation. Number 0771 REPRESENTATIVE MURKOWSKI acknowledged that she was perhaps asking for an explanation on the record. She referred to Civil Rule 11, the "attorney sanction rule," and requested that Mr. Lessmeier explain to the committee how Rule 11 would tie in or whether it would still be significant if this legislation were to pass. She further asked why Rule 11 isn't adequate to make the parties whole, as Representative Mulder has indicated. MR. LESSMEIER answered that he has been practicing law in Alaska for a little more than 20 years, and he doesn't know that he has ever seen Rule 11 used. The work he does is civil litigation, almost exclusively. The judicial system is focused on resolving cases, not disputes between lawyers under Rule 11. Whether that is a function of limited judicial resources, he doesn't know. But Rule 11 hasn't been a practical sanction. Mr. Lessmeier added that the responsibility provisions of the bill, as he reads them, are a little broader and are self-implementing; they extend not just to a lawyer but also to a party or a participant in the process who is intentionally misusing the process. Mr. Lessmeier said that if there has been action taken in that kind of situation, he certainly doesn't recall it. REPRESENTATIVE MURKOWSKI followed up by asking whether, in Mr. Lessmeier's opinion, what SSHB 42 does is a far better solution than beefing up Rule 11 and the sanctions within it. MR. LESSMEIER affirmed that, adding that he believes that the idea of beefing up the sanctions in Rule 11 has already been tried once. Number 1058 REPRESENTATIVE ROKEBERG asked whether the legal profession has a name for a "conspiracy of silence" where members of the profession don't want to police themselves regarding incompetency or dishonesty. He also asked whether Mr. Lessmeier could provide an example where this would have come into play in his experience. MR. LESSMEIER elaborated on the example mentioned by Representative James, saying that if she had been able to corroborate that she had been elsewhere and to provide evidence to the satisfaction of a jury, then the person who made the claim would lose that claim and be subject to damages for the consequences of that act. The damage award would be in a separate action, Mr. Lessmeier noted, with the option of pursuing damages assuming the dictates of the bill were followed, which would include writing a letter giving written notice that the statement was false and that it hadn't been corrected. He said the purpose is to prevent this sort of activity from occurring. MR. LESSMEIER returned to Representative Rokeberg's first question and said attorneys are advocates for both sides. Although he believes that the vast majority of attorneys are honest and ethical, some attorneys and parties misuse the system; they are the focus of this bill, which is carefully and narrowly drafted to catch the people who misuse the system. The fact that the stakes go up is the true benefit of this. This requires a contemplation and a discussion that is not necessarily required right now in terms of attorney-client discussions. Furthermore, some clients do try to take advantage of the system without the knowledge of their attorneys. The intent of the bill is to prevent that. Number 1058 REPRESENTATIVE ROKEBERG referred to a consumer protection bill from a couple of years ago, and he asked whether anything in the statutes prohibits frivolous or vexatious lawsuits. MR. LESSMEIER answered: Nothing to this degree. One of the things that we did do, in 1987, is we raised the attorneys fees that would be awarded to a prevailing party if an offer of judgment is entered. But there is nothing that addresses in this fashion the issue of not just a frivolous lawsuit but a frivolous position that is taken by either party, because this bill swings both ways. ... It applies equally to a defendant who engages in this kind of conduct as well as a plaintiff. So it applies to both sides. REPRESENTATIVE ROKEBERG asked whether there is nothing in law, then, except for court rules, that prohibits a frivolous or vexatious lawsuit to occur. MR. LESSMEIER said that is correct. REPRESENTATIVE ROKEBERG remarked that it is most extraordinary, saying they rely entirely on the bar to police itself and its own court rules, with nothing statutorily protecting the public from a dishonest counselor. MR. LESSMEIER restated that the only thing is the offer of judgment provision. Number 1153 REPRESENTATIVE ROKEBERG directed Mr. Lessmeier's attention to the beginning of subsection (c), beginning on page 2, line 9, which read, "(c) A person may not, on the person's own behalf or as a representative of a party ...." He asked what happens if an attorney detrimentally relies on the statements of a client and then finds himself or herself in a trap. He further asked how one makes the separation if there is a cause of action against both the attorney and the party. MR. LESSMEIER answered that he thinks the attorney has a right, within a reasonable limit, to rely on what the client tells him or her, but also has an obligation to investigate it. And when the attorney receives from the other side the "21-day letter" - the prerequisite to any cause of action, which says that something isn't true and the reasons why - at that point, the attorney needs to do the right thing and not propagate the lie. Ethically, an attorney cannot do that anyway, Mr. Lessmeier added. REPRESENTATIVE ROKEBERG asked whether an attorney wouldn't breach a code of ethics by not representing the client otherwise. MR. LESSMEIER responded, "He would breach his code of ethics if he continues to propagate a lie, having known that it is a lie or having discovered that it is a lie." REPRESENTATIVE ROKEBERG asked what the code would call for then. MR. LESSMEIER answered that the code would call for the attorney to withdraw and to counsel the client to correct the [misrepresentation]. REPRESENTATIVE ROKEBERG stated his understanding that that is why the statute has self-enforcement provisions, because it puts people on notice and gives everybody a chance to own up to it. MR. LESSMEIER affirmed that. Number 1284 REPRESENTATIVE MURKOWSKI countered Representative Rokeberg's assertion that there is a secret code of brotherhood that attorneys use to take care of their own. She said there is none. In fact, attorneys and the officers of the court are not afraid to police themselves, and they do have an ethical code of conduct. Furthermore, within the bar there is an ethics review panel and a disciplinary panel. An attorney who goes too far is disbarred and subject to disciplinary actions through the bar. She said she didn't want this insidious rumor to be perpetuated that attorneys won't police themselves; they do, and they do a good job of it. She said perhaps there is a very, very small number that this bill is addressing, but she had wanted to stand up for the profession. REPRESENTATIVE ROKEBERG agreed about the profession in total, but said he would be curious to know whether the bar has had any disciplinary actions as a result of vexatious or frivolous litigation and/or dishonesty in pursuing lawsuits. REPRESENTATIVE MURKOWSKI indicated the committee could probably get that information. REPRESENTATIVE ROKEBERG suggested perhaps the bill sponsor could look into that. He also asked whether the bar association may be breaching its own ethics to divulge that information. REPRESENTATIVE MURKOWSKI indicated that information is published. REPRESENTATIVE CROFT said there are some [attorneys], who have been disbarred or otherwise sanctioned. Number 1420 MR. LESSMEIER added that he believes the intent regards everyone in the civil justice system, not just lawyers. Returning attention to the provision regarding actual attorney fees, he said that addresses a situation where somebody brings an action claiming that there was a violation of this statutory scheme. A person who accuses another of filing a false action and loses will have to pay that other person's actual costs and attorney fees. This is intended to be something that people do not engage in lightly. Number 1507 CHAIRMAN KOTT asked whether anyone else wanted to testify, then specified that the public hearing was still open. He announced that SSHB 42 would be held over until Wednesday, March 1. HJR 52 - CONFIRM PUBLIC CORP BD MANAGING ASSETS CHAIRMAN KOTT announced that the final order of business would be HOUSE JOINT RESOLUTION NO. 52, proposing an amendment to the Constitution of the State of Alaska relating to certain public corporations. He invited Representative James to explain the resolution. Number 1580 REPRESENTATIVE JAMES, speaking as the sponsor, advised members that HJR 52 is similar to a proposed constitutional amendment that she had introduced previously. At that time, the target was trying to protect the continuity of the members of the Alaska Permanent Fund Corporation board, which had been replaced entirely by both Governor Hickel and Governor Knowles when they came into office. Representative James offered her continuing personal opinion that those board members, who manage the biggest pot of money in Alaska, ought to have some continuity, which is why there is a revolving board. She believes those members should only be removed for cause. REPRESENTATIVE JAMES explained that although similar to the previous legislation, HJR 52 is a little more expansive. Article II, Section 26, of the constitution already states that when a board or commission is at the head of a principal department or regulatory or quasi-judicial agency, its members shall be appointed by the governor, subjection to confirmation by the legislature and may be removed as provided by law. This resolution adds, "or at the head of a public corporation that manages State assets," and, "With respect to public corporations, the legislature may by law exclude the applicability of this section based on the type or value, or both, of the State assets that are managed by the public corporation." REPRESENTATIVE JAMES said she would bet that the constitutional drafters never envisioned so many public corporations managing so much wealth in the state. She believes that adding these provisions will allow removal of board members only for cause. Public corporations now manage a lot of assets. She believes this is a good change to the constitution because it takes care of something that the original constitutional scholars had not foreseen. She emphasized its importance and urged members' support. Number 1796 REPRESENTATIVE MURKOWSKI referred to the language that says the applicability can possibly be excluded, based on the type or value of that public corporation. She asked what other public corporations are out there. REPRESENTATIVE JAMES at first indicated she had a list, then said she didn't. She said it is AIDEA [Alaska Industrial Development and Export Authority], the Alaska Housing Finance Corporation (AHFC), the Alaska Railroad Corporation and, she thinks, the Alaska Commission on Postsecondary Education (ACPE), for example. There are a lot of both large and small corporations, but the Alaska Permanent Fund Corporation is the only one that she knows of which has had a problem with having a governor wipe out the board and then start over. She expressed concern about continuity of that board in particular, noting that revolving boards exist so that there is always someone experienced on the board. She said it seems that the permanent fund should be run on more than philosophy, and she believes protection is needed in this area, as the permanent fund is Alaska's biggest asset. REPRESENTATIVE JAMES told members that if there is going to be an amendment to the constitution, all those corporations should be covered at once, which HJR 52 does. She alluded to the Alaska Science and Technology Foundation (ASTF), saying she believes that is a corporation also, and she isn't sure of all [the corporations] that are out there. She restated the need to have the option to ensure that the people put on [the boards] are the ones that the legislature would approve; she noted that usually appointees are approved. She again emphasized the need for continuity and respect for the revolving terms that these members have. In response to a question of Representative Rokeberg, she indicated that appointees to the boards in question don't need legislative approval now. Number 2055 REPRESENTATIVE ROKEBERG surmised that the chief executive officers would be board members of those corporations. REPRESENTATIVE JAMES said she doesn't know that that is always the case. REPRESENTATIVE ROKEBERG suggested they would at least have to be approved by the legislature to be in that position, which he said isn't unreasonable. REPRESENTATIVE JAMES pointed out that when the legislature does [a confirmation], there is a public hearing. That never happens in these cases now. Number 2235 REPRESENTATIVE CROFT indicated the Alaska Permanent Fund Corporation seems to be the one for which this makes the most sense and for which the most danger exists if there are bad appointments. He said at least having confirmation and a hearing on that board makes a lot of sense, as there is too much money there anymore to have that done, even by good people, without any limits. However, he doesn't know about some other corporations that [HJR 52] would affect, and he has some questions about the way it is written. He indicated he would wait until after Mr. Baldwin's testimony. REPRESENTATIVE JAMES clarified that she has no complaints about any appointees to the board of the Alaska Permanent Fund Corporation. REPRESENTATIVE ROKEBERG emphasized that these public corporations sometimes have literally billions of dollars in assets, and he believes that Alaskans can be viewed as shareholders in these corporations. Number 2409 JAMES BALDWIN, Assistant Attorney General, Civil Division (Juneau), Department of Law, came forward to testify, noting that a similar resolution in the Senate had been introduced by Senator Halford and that a draft committee substitute is pending there. TAPE 00-23, SIDE A Number 0001 MR. BALDWIN mentioned the balance between continuity and having someone be responsible for the decisions made by a the governing body of a public corporation. He asked: If members of that body aren't elected by the people but are appointed with overlapping terms, and if they can only be removed for cause, then who are they responsible to, ultimately, when they make errors in judgment? He answered that if all those things are in operation, they aren't responsible to anyone. With the current system, if the board of trustees makes an error in judgment or is unethical or incompetent, the governor can remove them and must stand and be responsible for that action at an election every four years; that is the system in place now, and there is something to be said for that, as well. MR. BALDWIN told members that the system built into the constitution is to have very few elected officers, who are responsible for almost everything in the executive branch of state government, including the permanent fund; if something goes wrong, then that officer will be held responsible at the upcoming election to the voters. That is an outgrowth from the territorial days. Mr. Baldwin explained: We're very inventive people, and the way we dealt with the absentee federalism and the absentee congressmen and absentee governors and boards was to create a bunch of boards ... that were populated by our own people; and that worked to undercut federalism, but it also was very frustrating because there wasn't anybody you could hold responsible. And then the framers came out with a new constitution that said, "We want an end to that. We want responsibility for the people who make important decisions." So, having said that, that's basically the underlying reason. MR. BALDWIN explained that the confirmation power is a shared executive power in which the legislature shares some of the governor's power of appointment. Generally, the rule in the constitution is that the governor has the appointment power within the executive branch; that power is shared through the exercise of the right to confirm, which is specifically granted in a number of places in the constitution. However, under the case known as Bradner v. Hammond, that power is only shared when expressly provided for in the constitution; it cannot be implied or assumed. Mr. Baldwin noted that a lawsuit had involved the legislature's attempting to make confirmation extend to deputy directors and lesser officers of that nature; that was found to be invalid. MR. BALDWIN indicated this resolution can be viewed, by those who do not favor this approach, as the legislature trying to share in the appointment of members of the Alaska Permanent Fund Corporation, if that is the focus. He said that can be advocated as being either a good thing or a bad thing regarding whether it is appropriate to have the legislature be involved in those appointments. Number 0324 MR. BALDWIN advised members that there are some technical problems with the resolution's wording. He believes it is apt in its description of determining a public corporation that manages state assets because the Alaska Permanent Fund Corporation is basically an overseer of a bunch of other investment managers; although it does some in-house investment, it mostly oversees what others do. The assets given to other public corporations like AHFC and AIDEA, however, may well not legally be considered state assets; rather, they may be considered their own assets, as those entities are political subdivisions of the state. The reason is to insulate the state treasury from any liability for debt. There is even a statute in AIDEA's title that says that their property, their money, is not state money but is their own. Mr. Baldwin pointed out that AIDEA or AHFC may itself be a state asset; he isn't sure how those are carried on the state's balance sheet. He said this is his legal outlook on this, and maybe this language in the resolution isn't that accurate for reaching AHFC or AIDEA. Number 0468 REPRESENTATIVE MURKOWSKI commented that it is difficult to accept that the legislature takes on the responsibility of confirming appointees to the boards related to opticians and hairdressers, for example, and yet they aren't involved in the process of something as significant as the Alaska Permanent Fund Corporation board. She said she hadn't made that step up as to why the legislature shouldn't be involved in that confirmation process. REPRESENTATIVE JAMES said she understands the delineation that Mr. Baldwin is talking about in a corporation, but to her understanding, there cannot be a public corporation that isn't owned by somebody. There are shareholders, the state as a whole. There has to be a nexus between the [legislature] and state ownership. She said those are state assets, and the legislature, to her belief, can dismantle that corporation, by statute, and therefore can manage those assets, although she doesn't know that they plan to do that. She agreed it is probably more of a legal issue than an accounting issue. MR. BALDWIN indicated he isn't disputing that the legislature, in its lawmaking capacity, has substantial powers over public corporations. He pointed out that some public corporations are more closely held than others under Alaska law; therefore, it is hard to generalize about all of the public corporations because they cover the spectrum: some are closely held, with three principal department heads sitting on the actual boards, whereas some are not at all closely held, such as the Alaska Railroad Corporation, which has one department head and a lot of verbiage in the statutes about how independent it is. But most all of them carry the language that they have a separate and independent legal existence; that basically is to insulate the state from their debt. Mr. Baldwin added: When you go to terminate one of these corporations, ... we always get into a long debate up in the Finance Committee about whether the legislature can just dip into the treasury of AHFC or something of that nature and pull out dollars and take them directly to the state treasury. And there's always sort of a process we go through so that we're not doing that directly; there's always a process so that it is appearing that the board is actually voluntarily giving us this money. And that's the reason that we want to maintain that separateness. So I think there is a legal issue here about whether these are, in fact, state assets. ... They are not assets in a typical sense. ... These corporations can be dissolved and sold off and liquidated, and that's the typical way of getting the value out of them. But ... once we give them, like the Ketchikan shipyard, or we give them an asset like that, it becomes, really, no longer a state asset. It becomes an asset of the corporation. And so that's why I think that this language here may not be hitting the mark. Number 0740 REPRESENTATIVE JAMES remarked that, on the other hand, if they truly are separated and not state assets, one wonders why [the state] is appointing board members anyway. She repeated that the legislature could dissolve these entities, by statute, and then determine where the money would go after selling everything. She indicated that although there may be some insulation, if there were a huge error and loss, for example, she doesn't feel comfortable that that line could not be crossed. Number 0825 CHAIRMAN KOTT thanked Mr. Baldwin. Noting that no other testifiers were signed up, he closed public testimony. REPRESENTATIVE CROFT alluded to the last sentence of Section 1 of the resolution, which read: "With respect to public corporations, the legislature may by law exclude the applicability of this section based on the type of value, or both, of the State assets that are managed by the public corporation." He asked Representative James what the intent is. REPRESENTATIVE JAMES answered that the intent is that the legislature may list, in law, who this doesn't apply to, such as small corporations or "the people that do the space thing over in Kodiak," for example. She said it would be a decision by the legislature to exempt any; right now, all are included. She cited the ASTF and the ACPE as further examples, asking whether the legislature wants to confirm their appointees. She restated the need to go down the list and see what the legislature wants to do. CHAIRMAN KOTT suggested it is all-inclusive now, and the legislature would have to pass a statute that would exclude those entities. He said he doesn't know how many there are in total, but he would assume there are 15 or 20. REPRESENTATIVE CROFT reminded fellow members of the need to be careful with constitutional language. He read from the proposed language, in part, "may be law exclude the applicability of this section based on". He stated: And so, then, it will be those are the only two things that you can exclude based on, and if you exclude based on anything else, it would be unconstitutional. And exclude based on the type or value of the state assets: ... it seems like if we're giving carte blanche to exclude, we should say that, rather than saying "based on specific things." "The legislature may by law exclude the applicability of this section to public corporations." ... It would be a weird question if somebody came back and said, "You excluded this student loan program but not the other, and there's another smaller one or something, and I can't find any distinction between the two based on type of value." Number 0976 REPRESENTATIVE JAMES said she believes Representative Croft is correct on that, and that it is pretty hard to define. She added: I think maybe we should have just a carte blanche authority ... to exclude them, if we so chose. It's kind of like the permanent fund issue, where it says that the permanent fund itself cannot be spent, but the earnings are up to the legislature to determine by law ... how they'll be used. So, we have it periodically throughout the constitution of "the legislature will provide by law" certain things. But this gives us authority, and then the legislature could provide exemptions by law, if it happened to be their choice to do that. REPRESENTATIVE CROFT suggested it could be given to the drafters as an idea that the legislature may by law exclude the applicability of this section to public corporations. Number 1020 CHAIRMAN KOTT pointed out the other issue brought out by Mr. Baldwin, which was to ensure that it applies only to those corporate heads or board members or commission members. REPRESENTATIVE JAMES said she thinks it is clear, but it might be easy to put it in there, if there is a need to be more specific. Number 1054 REPRESENTATIVE CROFT asked whether it should be "opt in" or "opt out." REPRESENTATIVE JAMES answered that she personally believes it should be "opt out," and it should cover everything, because it is unknown what other kinds of corporations will exist in the future. REPRESENTATIVE CROFT replied, "Or we could say the legislature has the power to, by law, require that the governing body of a public corporation be subject to this section." He commented that if written correctly, opting in or out would have the same effect. However, if [the legislature] hadn't excluded something that could be described as a corporation by statute, for example, somebody could bring a lawsuit and say that the governing board isn't legal. With the "opt in" language, the legislature knows that five specific entities are included, for example. In contrast, with the "opt out," there is a big group out there not yet defined. REPRESENTATIVE JAMES responded that she is comfortable including all public corporations at this point, and then determining which ones aren't necessary to include, more so than saying it is for certain ones only and that more could be included. She isn't certain which ones she would list right now, although she is very interested in the Alaska Permanent Fund Corporation; she also is thinking seriously about AIDEA and AHFC because they are huge, and she believes [the legislature] should have a hearing on those board members. She mentioned the Alaska Railroad Corporation as well, asking whether that should be included. She believes those are things that the legislature should decide about, one at a time. She suggested "opting them out" would be easier politically than the reverse. Number 1225 CHAIRMAN KOTT asked Representative James whether, if she had the list of public corporations, she would be willing to entertain legislation that would deal specifically with opting those entities out at the same time, to establish a nexus between the legislation and passage of the amendment. REPRESENTATIVE JAMES said she believes it is less confusing like this [to voters] than if there were specifics. CHAIRMAN KOTT clarified that he wasn't suggesting putting the specifics in the constitutional amendment. REPRESENTATIVE JAMES said she thinks it is too late in this session for the legislation, although she believes the legislature will have to determine whether there are any exceptions if this resolution passes. Number 1295 CHAIRMAN KOTT said he would like to see the list. He asked whether there were additional comments, then announced that HJR 52 would be held over so that he could work on language to incorporate the two areas discussed, to clarify that they are talking about the heads and the board members of the public corporations, and to make it clear what they are getting at with "public corporation" on page 1, lines 12-14. [HJR 52 was held over.] CHAIRMAN KOTT recessed the House Judiciary Standing Committee meeting at 3:22 p.m.