HOUSE JUDICIARY STANDING COMMITTEE April 5, 2000 1:19 p.m. MEMBERS PRESENT Representative Pete Kott, Chairman Representative Joe Green Representative Norman Rokeberg Representative Jeannette James Representative Lisa Murkowski Representative Eric Croft Representative Beth Kerttula MEMBERS ABSENT All members present COMMITTEE CALENDAR CONFIRMATION HEARINGS Commission on Judicial Conduct Sharon Nahorney - Anchorage - CONFIRMATION ADVANCED Alaska Judicial Council Gigi Pilcher - Ketchikan - CONFIRMATION ADVANCED Board of Governors of the Alaska Bar Anastasia Cooke Hoffman - Bethel - CONFIRMATION ADVANCED Select Committee on Legislative Ethics Shirley McCoy - Juneau - CONFIRMATION ADVANCED CS FOR SENATE BILL NO. 193(FIN) "An Act relating to the payment of wages and claims for the payment of wages." - HEARD AND HELD HOUSE BILL NO. 182 "An Act relating to charitable gaming and to gaming on state ferries; and providing for an effective date." - ASSIGNED TO SUBCOMMITTEE CS FOR SENATE BILL NO. 123(FIN) "An Act relating to public interest litigants and to attorney fees; and amending Rule 82, Alaska Rules of Civil Procedure." - HEARD AND HELD; ASSIGNED TO SUBCOMMITTEE HOUSE BILL NO. 425 "An Act relating to misrepresentation and false claims made against the state or a municipality; and providing for an effective date." - SCHEDULED BUT NOT HEARD PREVIOUS ACTION BILL: SB 193 SHORT TITLE: COLLECTION OF UNPAID WAGES/WAGE PAYMENTS Jrn-Date Jrn-Page Action 1/14/00 1977 (S) READ THE FIRST TIME - REFERRALS 1/14/00 1977 (S) L&C, FIN 2/08/00 (S) L&C AT 1:30 PM BELTZ 211 2/08/00 (S) -- Rescheduled to 2/10/00 -- 2/10/00 (S) L&C AT 1:30 PM BELTZ 211 2/10/00 (S) Moved CS(L&C) Out of Committee 2/10/00 (S) MINUTE(L&C) 2/11/00 2272 (S) L&C RPT CS 4DP SAME TITLE 2/11/00 2272 (S) DP: MACKIE, TIM KELLY, DONLEY, LEMAN 2/11/00 2272 (S) ZERO FISCAL NOTE (LABOR) 2/22/00 (S) FIN AT 9:00 AM SENATE FINANCE 532 2/22/00 (S) Heard & Held 3/06/00 (S) FIN AT 9:00 AM SENATE FINANCE 532 3/06/00 (S) Moved CS(Fin) Out of Committee 3/06/00 2529 (S) FIN RPT CS 7DP 1NR SAME TITLE 3/06/00 2530 (S) DP: TORGERSON, PARNELL, PHILLIPS, 3/06/00 2530 (S) GREEN, PETE KELLY, LEMAN, WILKEN, 3/06/00 2530 (S) NR: ADAMS 3/06/00 2530 (S) PREVIOUS ZERO FN (LABOR) 3/07/00 (S) RLS AT 12:00 PM FAHRENKAMP 203 3/07/00 (S) MINUTE(RLS) 3/08/00 2562 (S) RLS TO CALENDAR 03/08/00 3/08/00 2567 (S) READ THE SECOND TIME 3/08/00 2567 (S) MOVE TO BOTTOM OF CALENDAR 3/08/00 2576 (S) FIN CS ADOPTED UNAN CONSENT 3/08/00 2576 (S) ADVANCED TO THIRD READING UNAN CONSENT 3/08/00 2576 (S) READ THE THIRD TIME CSSB 193(FIN) 3/08/00 2577 (S) PASSED Y19 N- E1 3/08/00 2577 (S) TORGERSON NOTICE OF RECONSIDERATION 3/15/00 2614 (S) RECONSIDERATION NOT TAKEN UP 3/15/00 2615 (S) TRANSMITTED TO (H) 3/15/00 2481 (H) READ THE FIRST TIME - REFERRALS 3/15/00 2481 (H) L&C, JUD 3/29/00 (H) L&C AT 3:15 PM CAPITOL 17 3/29/00 (H) Moved CSSB 193(FIN) Out of Committee 3/29/00 (H) MINUTE(L&C) 3/30/00 2786 (H) L&C RPT 6DP 1NR 3/30/00 2786 (H) DP: HARRIS, CISSNA, BRICE, SANDERS, 3/30/00 2786 (H) HALCRO, ROKEBERG; NR: MURKOWSKI 3/30/00 2786 (H) SENATE ZERO FISCAL NOTE (LABOR) 2/11/00 4/05/00 (H) JUD AT 1:00 PM CAPITOL 120 BILL: HB 182 SHORT TITLE: CHARITABLE GAMING & GAMING ON FERRIES Jrn-Date Jrn-Page Action 4/08/99 690 (H) READ THE FIRST TIME - REFERRAL(S) 4/08/99 690 (H) TRA, JUD, FIN 2/01/00 (H) TRA AT 1:00 PM CAPITOL 17 2/01/00 (H) Heard & Held 2/01/00 (H) MINUTE(TRA) 2/15/00 (H) TRA AT 1:00 PM CAPITOL 17 2/15/00 (H) Meeting Postponed to Thurs 2/17/00 2/17/00 (H) TRA AT 1:00 PM CAPITOL 17 2/17/00 (H) Failed To Move Out Of Committee 2/17/00 (H) MINUTE(TRA) 2/24/00 (H) TRA AT 1:00 PM CAPITOL 17 2/24/00 (H) Heard & Held 2/24/00 (H) MINUTE(TRA) 3/02/00 (H) TRA AT 1:00 PM CAPITOL 17 3/02/00 (H) Moved CSHB 182(TRA) Out of Committee 3/02/00 (H) MINUTE(TRA) BILL: SB 123 SHORT TITLE: ATTY FEES:APPORTIONMT/PUBLIC INT.LITIGANT Jrn-Date Jrn-Page Action 3/26/99 700 (S) READ THE FIRST TIME - REFERRAL(S) 3/26/99 701 (S) JUD, FIN 4/09/99 (S) JUD AT 1:30 PM BELTZ 211 4/09/99 (S) MOVED OUT OF COMMITTEE 4/09/99 (S) MINUTE(JUD) 4/12/99 875 (S) JUD RPT 2DP 1NR 4/12/99 875 (S) NR: TAYLOR; DP: DONLEY, HALFORD 4/12/99 875 (S) ZERO FISCAL NOTE (COURT) 4/21/99 (S) FIN AT 8:00 AM SENATE FINANCE 532 4/21/99 (S) SCHEDULED BUT NOT HEARD 4/27/99 (S) FIN AT 9:00 AM SENATE FINANCE 532 4/27/99 (S) SCHEDULED BUT NOT HEARD 2/02/00 (S) FIN AT 9:00 AM SENATE FINANCE 532 2/02/00 (S) 2/10/00 (S) FIN AT 9:00 AM SENATE FINANCE 532 2/10/00 (S) Scheduled But Not Heard 2/17/00 (S) FIN AT 9:00 AM SENATE FINANCE 532 2/17/00 (S) Heard & Held 2/22/00 (S) FIN AT 9:00 AM SENATE FINANCE 532 2/22/00 (S) Moved CS(Fin) Out of Committee 2/22/00 2376 (S) FIN RPT CS 6DP 2NR SAME TITLE 2/22/00 2377 (S) DP: TORGERSON, PARNELL, PHILLIPS, GREEN 2/22/00 2377 (S) PETE KELLY, DONLEY; NR: ADAMS, WILKEN 2/22/00 2377 (S) ZERO FISCAL NOTE (COURT) 2/23/00 (S) RLS AT 12:00 PM FAHRENKAMP 203 2/23/00 (S) MINUTE(RLS) 2/25/00 2425 (S) RLS TO CALENDAR AND 1 OR 02/25/00 2/25/00 2426 (S) READ THE SECOND TIME 2/25/00 2426 (S) FIN CS ADOPTED UNAN CONSENT 2/25/00 2426 (S) ADVANCED TO THIRD READING 2/28 CALENDAR 2/28/00 2451 (S) READ THE THIRD TIME CSSB 123(FIN) 2/28/00 2451 (S) HELD IN THIRD READING TO 2/29 CALENDAR 2/29/00 2464 (S) BEFORE THE SENATE IN 3RD READING 2/29/00 2465 (S) PASSED Y15 N4 E1 2/29/00 2465 (S) COURT RULE(S) Y15 N4 E1 2/29/00 2465 (S) ELLIS NOTICE OF RECONSIDERATION 3/01/00 2478 (S) RECON TAKEN UP - IN THIRD READING 3/01/00 2479 (S) PASSED ON RECONSIDERATION Y14 N5 A1 3/01/00 2479 (S) COURT RULE(S) SAME AS PASSAGE 3/01/00 2480 (S) TRANSMITTED TO (H) 3/03/00 2382 (H) READ THE FIRST TIME - REFERRALS 3/03/00 2382 (H) JUD, FIN 3/03/00 2382 (H) REFERRED TO JUDICIARY 4/05/00 (H) JUD AT 1:00 PM CAPITOL 120 WITNESS REGISTER KRISTOPHER KNAUSS, Staff to Senator Drue Pearce Alaska State Legislature Capitol Building, Room 111 Juneau, Alaska 99801 POSITION STATEMENT: Presented SB 193 on behalf of sponsor. J.R. "RANDY" CARR, Chief/Labor Standards & Safety Wage & Hour Division of Labor Standards & Safety Department of Labor & Workforce Development P.O. Box 107021 Anchorage, Alaska 99510-7021 POSITION STATEMENT: Testified on SB 193. AL DWYER, Director Central Office Division of Labor Standards & Safety Department of Labor & Workforce Development P.O. Box 21149 Juneau, Alaska 99802-1149 POSITION STATEMENT: Testified on SB 193. MARGARET BAUMAN 8100 Lamplighter Court Anchorage, Alaska 99502 POSITION STATEMENT: Testified in support of SB 193. DARWIN PETERSON, Staff to Senator John Torgerson and the Senate Finance Committee Alaska State Legislature Capitol Building, Room 516 Juneau, Alaska 99801 POSITION STATEMENT: Presented SB 123 on behalf of the Senate Finance Committee, sponsor. JOSEPH CIZEK 30545 Eagle River Road Anchorage, Alaska 99577 POSITION STATEMENT: Testified on SB 123. WEV SHEA, Attorney at Law 329 F Street, Number 222 Anchorage, Alaska 99501 POSITION STATEMENT: Testified that SB 123 does the state a real disservice if this law is changed with regard to public interest litigation relating to voting rights. ROBIN SMITH 14100 Jarvi Anchorage, Alaska 99501 POSITION STATEMENT: Testified in opposition to SB 123. DALE BONDURANT 31864 Moonshine Drive Soldotna, Alaska 99669 POSITION STATEMENT: Testified in opposition to SB 123. ACTION NARRATIVE TAPE 00-48, SIDE A Number 0001 CHAIRMAN PETE KOTT called the House Judiciary Standing Committee meeting to order at 1:19 p.m. All members were present at the call to order. CONFIRMATION HEARINGS Number 0054 CHAIRMAN KOTT announced that the committee would consider the confirmations of three individuals appointed by the Governor to the following: the Commission on Judicial Conduct, the Alaska Judicial Council, and the Board of Governors of the Alaska Bar. [Also addressed briefly, although not formally scheduled, was the reappointment of Shirley McCoy to the Select Committee on Legislative Ethics.] CHAIRMAN KOTT indicated he would not try to reach these appointees by teleconference. He reminded members that packets include a copy of each person's resume. He stated his understanding that each board, commission or council has six members, and each of these appointees is filling a public member position, with no prerequisites of specific educational background. Chairman Kott announced that unless there were questions that the committee wanted to field from these three appointees, he would like to move their names forward. He added that if there were concerns or questions, the committee could certainly hold the names over and get those people on the teleconference line. In answer to a question by Representative James, he specified that just one person [Sharon Nahorney] is being reappointed. Number 0170 REPRESENTATIVE GREEN asked whether there is any significance to the fact that two appointees are "glamor queens." He noted that [Ms. Hoffman] had held the titles of Miss World Eskimo Indian Olympics and Miss National Congress of American Indians, and [Ms. Nahorney] had held the title of Runner-Up, Miss Fur Rendezvous. REPRESENTATIVE MURKOWSKI said she certainly wouldn't hold it against them. Number 0210 REPRESENTATIVE JAMES told the chairman that she isn't pleased to not be able to talk to these people, although she wouldn't make a big issue of it. She suggested the purpose of having these people come before the legislature is to talk to them, at least, because this is the only chance to hear from them at all. However, she expressed willingness to move these names forward, at Chairman Kott's request. CHAIRMAN KOTT restated that if anyone wants to hold these in committee to ask questions, he feels that the committee probably should do so. However, he himself had looked over their resumes and hadn't seen anything unusual. REPRESENTATIVE GREEN asked whether there is a time constraint on getting these through the committee. CHAIRMAN KOTT said he isn't sure; it depends on when the legislature adjourns. Commission on Judicial Conduct Number 0308 REPRESENTATIVE ROKEBERG moved that the committee take up the appointment of Sharon Nahorney of Anchorage to the Commission on Judicial Conduct. He said it is a reappointment, and he believes that she is well known to everybody in the legislature. He stated that this [consideration of appointments] is no reflection on any individual, nor is it binding on a vote to any member. He recommended moving along with the process. CHAIRMAN KOTT announced that the committee would, then, take up consideration of Sharon Nahorney of Anchorage, a reappointment whose initial appointment was in 1991. REPRESENTATIVE ROKEBERG said, "So moved." CHAIRMAN KOTT said that is the motion to move Ms. Nahorney's name from the committee. He agreed that signing the document is not binding on anybody. He asked whether there was any objection. Hearing none, he announced that Ms. Nahorney's confirmation would be advanced to the floor for further consideration. Alaska Judicial Council Number 0411 CHAIRMAN KOTT announced that the committee would consider the confirmation of Gigi Pilcher of Ketchikan to the Alaska Judicial Council. He asked whether anything in Ms. Pilcher's resume would require bringing her before the committee either via teleconference or in person; there was no response. He commented on her extensive work experience and the awards that she had received. He also noted that she was the Ketchikan Public Servant of the Year in 1984. REPRESENTATIVE ROKEBERG commented that Ms. Pilcher appears to have a long history of public service in Alaska. REPRESENTATIVE KERTTULA pointed out that Ms. Pilcher has also served on the Alaska Sentencing Commission and the Alaska Juvenile Justice Advisory Committee. REPRESENTATIVE MURKOWSKI proposed that based upon Ms. Pilcher's impressive resume, the committee should advance her name to the full body. CHAIRMAN KOTT accepted that as a motion to move Ms. Pilcher's name forward to the full body for confirmation. He asked whether there was any objection. There being none, he announced that Ms. Pilcher's name would be advanced for confirmation. Board of Governors of the Alaska Bar Number 0596 CHAIRMAN KOTT announced that the committee would consider the confirmation of Anastasia Cooke Hoffman of Bethel to the Board of Governors of the Alaska Bar. REPRESENTATIVE ROKEBERG said he wonders what a "cultural navigator" is in the Alaska Court System. He asked whether it is a position of employment. REPRESENTATIVE KERTTULA conveyed her understanding that in the court system, especially in Bethel and Dillingham, one often runs up against trying to explain a civil or criminal law system, regarding the right to remain silent, for example, versus a culture that has existed for centuries that might go dramatically in other directions. It really is a difficult situation. To her understanding, these people [cultural navigators] help explain the system and guide people through it. REPRESENTATIVE ROKEBERG said he assumes that is when people are not represented by counsel. REPRESENTATIVE KERTTULA explained that she herself used to find, as a public defender, that there simply were too many people to be able to do justice. It really helps if people can come in and get oriented better. She said that is just a brief understanding of what the job does. Number 0667 REPRESENTATIVE JAMES asked whether this is a reappointment. CHAIRMAN KOTT specified that it is a new appointment. REPRESENTATIVE JAMES asked how much work there is to this position. She also asked whether Ms. Hoffman can do the job in Bethel or has to travel to Anchorage, for instance. She further inquired about the extent of the activity that Ms. Hoffman would be doing as a member of the Board of Governors of the Alaska Bar. REPRESENTATIVE KERTTULA noted that she herself had been president of the bar and was on the board for five years. She explained that there are meetings four times a year, quarterly. Ms. Hoffman would get a big packet of information, which she could read at home; she could teleconference in, "but mostly we fly people in for those meetings." Alluding to the fact that Ms. Hoffman's resume says she has a two-year-old son and is expecting another child in January, Representative Kerttula reported that she herself had a friend who had served quite successfully on the board while she had a very young baby. From Ms. Hoffman's resume and background, especially because she used to work for the court system, Representative Kerttula said Ms. Hoffman looks like a great candidate for the board. REPRESENTATIVE JAMES agreed that it certainly is a good opportunity, but said she still would have liked to have heard it from Ms. Hoffman herself. She restated that she is willing, however, to move appointees forward because that method has been chosen. CHAIRMAN KOTT pointed out that Ms. Hoffman had put a note on the bottom of her resume saying she is currently unemployed and has chosen to leave to her position with the Alaska Court System to stay home with her son. He suggested that Ms. Hoffman recognizes the requirements for this position; although committed to her family life as well, she seems to understand what the commitment would be to this particular position. Number 0798 REPRESENTATIVE MURKOWSKI asked Representative Kerttula whether there is geographic representation required on the Board of Governors of the Alaska Bar. She said it appears that there is a requirement that members be from all of the judicial districts. REPRESENTATIVE KERTTULA answered: There is for the elected members of the bar. For the public members, there isn't, but I think that ... it's often a voice that isn't represented because we don't have many attorneys from Bethel. So, normally, the people that'll be elected will be from Fairbanks or that district. So it would be nice to have a person from that area. Number 0836 REPRESENTATIVE GREEN also addressed a question to Representative Kerttula. Noting that Ms. Hoffman has only been out of high school for nine years, he asked whether that apparent lack of experience would be a deterrent or handicap. REPRESENTATIVE KERTTULA replied: The Board of Governors [of the Alaska Bar] even has an established chair for young lawyers, because what happens is we tend to get people who have been in the practice quite a long period of time, so that it's really nice to have younger people involved because there are a lot of beginning lawyers, and sometimes we forget how difficult it is for them. So when we have the younger lawyers or we have young people on the board, it gives more of a balance, and you tend to realize not everybody knows all the rules, the stresses that are on them. So, at least in my service on the board, it was really wonderful to have that young lawyer position that we created. REPRESENTATIVE GREEN pointed out that Ms. Hoffman is not an attorney. REPRESENTATIVE KERTTULA said she understands that, but Ms. Hoffman has quite a bit of experience with the court system and would be looking at that generation and providing that input in the decision making. Number 0975 REPRESENTATIVE KERTTULA made a motion to move Ms. Hoffman's name forward for consideration. There being no objection, the confirmation of Ms. Hoffman as an appointee was advanced for consideration of the full body. CHAIRMAN KOTT informed members that if anyone had questions between now and whenever the confirmation is taken up by the full body, he would encourage that member to call the appointee. Select Committee on Legislative Ethics Number 1015 CHAIRMAN KOTT announced that the committee would take up consideration of Shirley McCoy's reappointment to the Select Committee on Legislative Ethics. He noted that there is no formal process required by statute of the House Judiciary Committee regarding Ms. McCoy's appointment. However, initially members of the Ethics Committee had appeared before the House Judiciary Committee several years ago when that body was formed. Therefore, the House Judiciary Committee has been given the opportunity to address anything unusual or of interest regarding why Ms. McCoy should or shouldn't be reappointed. CHAIRMAN KOTT noted that he himself had served with Ms. McCoy for a couple of years now, and has been impressed with her ability. He noted that although Ms. McCoy would go before the legislature for confirmation, hers was not an appointment by the Governor. REPRESENTATIVE JAMES expressed amazement that Ms. McCoy is still willing to do this job. She said Ms. McCoy does a really good job at a job that she herself would never want. CHAIRMAN KOTT assured members that Ms. McCoy enjoys doing what she does, which he suggested is probably the reason that she wants to be reappointed. He announced that he would advance Ms. McCoy's name to the full body if there was no objection from the committee or questions; no objections or questions were offered. He also noted that Ms. McCoy lives in Juneau, indicating that she could be contacted if any questions arose. SB 193 - COLLECTION OF UNPAID WAGES CHAIRMAN KOTT announced the next order of business would be CS FOR SENATE BILL NO. 193(FIN), "An Act relating to the payment of wages and claims for the payment of wages." Number 1158 KRISTOPHER KNAUSS, Staff to Senator Drue Pearce, Alaska State Legislature, came before the committee to present the bill. He noted that SB 193 was introduced on behalf of a constituent, Margaret Bauman, who had obtained employment with the Alaska Business and Industry newspaper in the fall of 1998 on a contractual basis. Over the course of her employment, wages were illegally withheld from Ms. Bauman, and arrears reached over $10,000 before the employment relationship ceased. Senate Bill 193 would raise the maximum cap to $20,000 for which the Department of Labor & Workforce Development (DOLWD) may bring an action as a small claim; existing law reads $7,500, excluding attorney fees. MR. KNAUSS noted that Ms. Bauman had had a difficult time obtaining her lost wages because it is difficult for attorneys to take these types of cases on a contingency fee basis. In talking with the department, he said, the bill contains a zero fiscal note. The department would expect about 120 cases annually as the result of the change, which would not impact the department. He noted that department representatives were online via teleconference to answer any technical questions. Number 1251 CHAIRMAN KOTT asked Mr. Knauss why the figure is $20,000 and not $25,000, $30,000, or an unlimited amount, for example. MR. KNAUSS said he is not sure. He deferred the question to a representative of the DOLWD. Number 1301 J.R. "RANDY" CARR, Chief/Labor Standards & Safety, Wage & Hour, Division of Labor Standards & Safety, Department of Labor & Workforce Development (DOLWD), testified via teleconference from Anchorage. The department has been looking at addressing this problem for some years, he said, and they have been talking with both defense and plaintiffs' [counsel]. The $20,000 is a threshold value that existed before a private attorney would be interested in taking a case to court. For anything under that figure, most private attorneys would not be able to make any money. The figure, therefore, fills that gap between cases that the department is presently able to pursue and those cases that would attract the interest of private counsel. CHAIRMAN KOTT asked Mr. Carr whether a figure would have to be more than $20,000 in order to attract a private attorney. MR. CARR replied, "That's correct, sir." Number 1351 REPRESENTATIVE JAMES stated her understanding that an attorney is not needed for a small claims case because it is cut-and-dried in a lot of ways and there has been an admission that a debt is owed. Furthermore, a small claims case with a figure below $20,000 that isn't settled would still have to go someplace else for resolution. In that regard, a figure of $20,000 might preclude some valid cases from being settled without an attorney. Number 1411 MR. CARR pointed out that the cap for small claims cases would not change for the private sector. The bill only amends the limit for a case that may be brought by the DOLWD. Therefore, a person who is not coming to the department for resolution would not be able to pursue a small claims case on his or her own if the figure exceeded $7,500. That person would have to file a case in district court. Number 1446 REPRESENTATIVE MURKOWSKI noted that the sponsor statement reads, "... SB 193 increases the amount of past wages that employees are allowed to retain from $7,500 to $20,000 ...." However, according to her understanding, the bill increases the amount that the DOLWD can take on as a claim in small claims court. It doesn't have anything to do with past wages that employees can retain. MR. KNAUSS affirmed that. Number 1503 REPRESENTATIVE GREEN noted that the sponsor statement reads, "... SB 193 will update the law, making it possible for attorneys and the DOLWD to pursue small wage claims ...." Yet the bill only refers to the department, he said; it doesn't refer to an attorney or anyone else for that matter to bring action. He asked whether it is believed that only the DOLWD should have that prerogative or whether he is misreading the sponsor statement. Number 1554 MR. CARR replied that the intent of the DOLWD, in working with Senator Pearce on the bill, was only to increase the statutory jurisdiction for the department to pursue cases, not for private counsel. As he indicated earlier, private counsel can very rarely be obtained to pursue a case on behalf of a wage claimant if the value is less than $20,000. The private bar, he said, really doesn't seem to be interested in pursuing cases for less than $20,000, whether an action is brought to small claims court or district court. In relation to an individual taking a case on his or her own motion without counsel, the department's experience has been that the average wage claimant is not really equipped, even at the $7,500 limit, to represent himself or herself against an employer. The department doesn't think that would change if the small claims jurisdiction were opened to allow a private party to pursue a case of up to $20,000. It would provide a venue, but it would not be effectively utilized because of a lack of expertise in the system. The department, he said, feels that they are equipped to represent cases in relation to an increase in the small claims limit. Number 1645 REPRESENTATIVE GREEN wondered about the logic behind what Mr. Carr is saying. In other words, a person would have to go through the Department of Law for a claim of $19,500, which is still 1.5 times what one is able to do under the existing value of $7,500. It seems that if a person doesn't want to do it, that's one thing, but Mr. Carr is saying that a person can't do it, which is significantly different. MR. CARR replied that the department's motivation in working with the sponsor was to only expand the abilities of the department. The department was not looking at expanding all sorts of venues for other parties to use small claims court to pursue wage claims. In that regard, the department would not be able to project the impact on the court system. The department, however, knows what the impact would be and could project the impact on the court system on the cases that they turn away, but they could not project the impacts in relation to private parties or counsel. Number 1721 REPRESENTATIVE GREEN commented that it seems ridiculous that a skilled attorney working for someone else would be barred from small claims court. Number 1735 REPRESENTATIVE KERTTULA said she understands that the DOLWD is trying to carve out an exemption for small claims, and that they don't want to affect all kinds of small claims actions. She said: You could change this so that you would say any small claim dealing with wages under the statute, couldn't you? ... I'm with you. I think that people don't go to court, period, without an attorney anymore, and that they just are intimidated, even if it is small claims [court]. But say you've got someone who really is willing to do it rather than have to go through the department; if they really wanted to do it, maybe we would increase it just for that. But I'm not sure about the statutory cites. I mean, if that's just Department of Labor [& Workforce Development] going -- but, anyway, does that make any sense? MR. CARR replied that conceptually it makes sense, but the department is seeing a trend in employers hiring an attorney and bumping a case out of small claims court and into district court in the hope that the department will drop the case. And by letting anyone get involved for cases involving up to $20,000, he expects that to be the rule rather than the exception. As a result, an individual who is filing his or her own motion would have to obtain counsel or drop the case. And attorneys representing someone "on the cheap" in small claims court would end up investing time and effort in district court, which they were trying to avoid in the first place. REPRESENTATIVE KERTTULA said that is a good explanation. Number 1846 REPRESENTATIVE ROKEBERG said the bill is intended to give the department the authority to use the court and help them to resolve a claim prior to going to court. He asked Mr. Carr whether most claims are resolved prior to going to court. MR. CARR affirmed that. Perhaps 85 to 90 percent of cases are resolved administratively. The remainder are either determined to be invalid after an investigation or are filed in court. Of the cases filed in court, only about one-half actually go to trial. The increase in allowing the department to initially accept a wage claim for up to $20,000 would give them the ability to make contact with an employer and attempt to resolve matters administratively. The department believes that they would still resolve the "lion's share" of these cases short of having to file a court action. Number 1914 REPRESENTATIVE ROKEBERG said the bill keeps people out of the district court and keeps them in a simpler venue for proceedings; in that regard, he thinks that it would save the court system money. He suggested that unless the legislature is willing to revisit the issue of raising the cap on the small claims court, that may create a large fiscal note to the court system; he mentioned getting testimony from the Alaska Court System about that. He further suggested that it is a Pandora's box. He added: I'd be very concerned about doing that because that would give anybody that right to walk in there without counsel to try to take some of these cases on, and we've heard testimony that ... they can be moved into district court by the lawyer's counsel, ... if that's the case. ... That's the kind of issue we're getting into on balance. Number 1983 REPRESENTATIVE GREEN asked Mr. Carr what the department would do with a $25,000 claim. Would the department attempt to settle out of court as well? MR. CARR replied that if it is a straight wage claim under AS 23.05, then the department would not be able to take the wage claim or contact the employer or make any attempts to resolve it. However, the department may be able to take a case that involves a mix of minimum wage or overtime and wages - so that both AS 23.05 and AS 23.10 are in effect - because there is no cap on the amount of money that the department can pursue in relation to minimum wage claims and overtime. There are practical limitations in relation to filing a matter in small claims court, however, and whether or not the department has the wherewithal to take the case through the Office of the Attorney General in district or superior court. Number 2026 REPRESENTATIVE GREEN said: Well, my concern ... is that you [Mr. Carr] testified that the majority of these are settled out of court and then those do half of those are dropped later, so we're talking about a relatively small number that only ... this department has the right to go up. It seems to me you're crafting a speciality bill, because now you can actually see some merit to it, because it's high enough to excite you but you don't want anybody else in there. And if you leave it the way it is, you may still be trying to defend somebody, that small number that aren't settled out of court, and allow you to get some higher recompense. And I still am having difficulty why that's necessarily a good idea. I don't know that it would act as a deterrent, as Representative Rokeberg said, because you settle out of court now in most of them anyway. Number 2070 MR. CARR responded that the department does settle the majority of their cases under the $7,500 cap, and raising that cap would give them the ability to handle larger cases and represent those who can't find representation now due to the size of their case. He hopes that they would be able to continue their track record of settling cases administratively. It would do the department little good to simply be able to take those cases if they did not have the ability to pursue them in court as the ultimate "hammer," if they were unable to bring the employer to the table and settle the matter administratively. Number 2104 REPRESENTATIVE GREEN asked Mr. Carr whether the $20,000 figure was arrived at arbitrarily or is a "break" between those cases that the department would like to take and those that they figure need to got to court. MR. CARR replied no, it is not a break per se but a dollar value that has been provided to the department by members of both the defense and the plaintiffs' bar. Both agree that a case under $20,000 cannot be taken for any profit. As a result, they turn clients away routinely if a case is less than $20,000, and the department turns clients away if a case is over $7,500. The result is that individuals like Margaret Bauman can't get representation and can't get their cases to court. In response to a question by Representative Green regarding whether the $20,000 is an arbitrary number, Mr. Carr said no, the figure of $20,000 was agreed upon and suggested to the department by the plaintiffs' bar. The department originally was looking at a figure of $15,000, and several members of the plaintiffs' bar had said they wouldn't take a case for less than $20,000. When the department had discussed the matter with the sponsor of the bill, $20,000 was agreed upon. Number 2160 REPRESENTATIVE CROFT referred to Section 6 of the bill, which read: Sec. 6. AS 23.05.220(c) is amended to read: (c) The department may not accept an assignment of a claim in excess of the amount set out in AS 22.15.040 as the maximum amount, exclusive of costs, interest, and attorney fees, for the jurisdiction of the district court to hear an action for the payment of wages as a small claim. He noted that the department is limited to the jurisdiction of small claims court. In that regard, the department can't take an assignment that would go to district court. MR. CARR explained that the department can take an assignment that goes to district or superior court, but for those cases the department has to rely on resources of the Office of the Attorney General to represent them. He pointed out that the bill deals with two different sets of statutes. In AS 23.05, a straight wage claim cap that does not include overtime or minimum wage is set traditionally at a smaller level. It was originally set at $250, then was raised to $1,000, $2,000, and $5,000, and now it is set at $7,500 and tied to the small claims limitation because that is where the effective leverage is, in being able to pursue these matters at essentially no cost to the state. In that regard, the department represents themselves, and they do not have to have the Office of the Attorney General represent them. The department pays for every minute of time that they get out of the Office of the Attorney General. The department can take larger cases, he added, but they have to pick and choose. The department cannot take every case over the $7,500 level to court because they have a limited budget for their attorneys. Number 2227 REPRESENTATIVE CROFT conveyed his understanding that Section 6 limits the department to the jurisdiction of the small claims court cases unrelated to overtime and the minimum wage. In that regard, if a claim doesn't involve overtime or the minimum wage, the department can't go past the jurisdiction of the small claims court, which is $7,500. MR. CARR affirmed that. REPRESENTATIVE CROFT asked Mr. Carr whether the department's jurisdiction is unlimited in the areas of overtime and the minimum wage. MR. CARR replied, "That's correct." REPRESENTATIVE CROFT noted that he has been concerned about small claims for a while now. He had introduced legislation last year or the year before, together with Representative Fred Dyson, that would have increased the jurisdiction of small claims court. He noted that small claims court has relaxed rules of evidence, and, in general, the judge is more free to help the parties through the process. It is less confrontational and costs less, but it takes more of the court system's time, which is what he suggested Representative Rokeberg is worried about. Representative Croft further stated that the court system worries every time that the legislature extends the jurisdiction of the small claims court because their judges have to spend more time helping the parties along. He referred to an e-mail dated February 5, 2000, from Will Schendel, and read the following excerpt from it: There are two solution to this problem: One solution is to make a statutory change to award the winning employee a full recovery of attorney fees, as is currently the case for suits over unpaid minimum or overtime wages. My first preference, then, is for the legislature to put some real teeth into the unpaid wage assignment law in Anchorage [Alaska] by encouraging the private bar to take more of these cases (through an award of full attorney fees); at the same time, the cap on wage and hour assignments could be raised, so that wage and hour could, if it had the resources and time, take more of the claims, ... REPRESENTATIVE CROFT said: The difficulty we're in here is decisions about how and if to pursue your claim are not made on the merits of the claim; they're made on jurisdiction of the small claims court and your ability to find an attorney that can represent you at that. And for small amounts, you could have the most ironclad - factually and legally - claim; you were simply not paid what was due under the law .... And if it's a sizeable enough issue, if it's ten thousand dollars, you can't bring it yourself in small claims court and get the full amount, and you can't really afford to get an attorney, so you either go without representation in court -- but you're worried here not about the merits, which is what seems to me ... that litigants should be worried about. Do I have a good claim? Do I have one that is correct? No matter how good your claim, you can't get it heard in a cost-effective manner. And ... whoever Mr. Schendel is was saying ... that you can fix this by doing what we do in overtime minimum wage. If you win, then you will get paid your attorney fees and costs. That means you can now evaluate things not on necessarily the size of the claim but its merits. And ... it seems to me we're dancing around a problem, that there's ... no problem with what the bill tries to do, except that it may not try to do enough of the problem to really cure it. Raising the jurisdiction will allow them, just them, to take certain cases on their own to district court, but it doesn't solve a lot of the problems Representative Green was talking about, and it does seem to me that it's going to take more of your time, [Mr. Carr]. I mean, it won't be attorney general time; it won't be as costly, but isn't this going to lead to you more often in district court in those cases that go from seventy-five hundred to twenty thousand? And why is there a zero fiscal note? Number 2410 MR. CARR answered that Representative Croft is correct in that it would take more of the department's time, but that is their job. In regard to the zero fiscal note, the department would expect to see a 10 percent increase in wage claim load, statewide, which equates to about 100 to 120 new cases. As he had indicated earlier, the department settles about 85 percent to 90 percent of the cases; in that way, if that number holds true, the department is only looking at about 10 to 12 cases that make it to a filing level in small claims court. Mr. Carr said he is not going to be that naive, however. He thinks that when talking about a larger dollar value, the department is going to see a larger percentage of cases that don't get resolved and have to go to small claims court for action. The department is looking at approximately 50 cases statewide that would have to be filed in small claims court. Historically, he noted, only half of the cases filed end up in trial, which equates to an amount that the department believes can absorb with existing staff by making some internal adjustments. Number 2473 REPRESENTATIVE CROFT said there seem to be two ways to go in the event an employer does not pay what was due under the law. One is to empower the government to represent a person in more claims, which will cost more money and more government employees at some point. He commented that it is generous of the DOLWD to think that they can absorb the extra work now, but at some point they will ask for more people to represent employees in court. TAPE 00-48, SIDE B Number 0001 REPRESENTATIVE CROFT suggested it won't be a zero fiscal note forever. The other way is for the government to take a claim for a person. He thinks that the legislature should directly confront that difficulty by providing authorization for the department to get the attorney fees and costs if they win in certain categories of actions. Number 0024 REPRESENTATIVE JAMES agreed with Representative Croft in that small claims ought to be increased to a higher amount, but she believes that there would be a huge fiscal note. Her rationale is that if $20,000 is the bottom line for getting an attorney to represent a claimant, those with valid claims ought to be able to go to small claims court; otherwise, a person with a claim between $7,500 and $20,000 is left "out in the cold." Noting that the DOLWD has experts in this respect, she agreed with Mr. Carr that this is their job, and that they should represent the workers in Alaska. Representative James said she understands the $20,000. Although she would like to have it a little higher on these cases, she would go along with whatever people say they are willing to accept on that. Number 0142 REPRESENTATIVE GREEN remarked that he would certainly subscribe to the concept expressed by Representative Croft in which the winning side would get pay the attorney fees; in that way, it would act as another deterrent from going to court. He asked Mr. Carr how much of an attorney's time is charged against preparation, whether a case goes to court or goes to negotiation. It seems that these cases would require an attorney's time, he said, but maybe not a court's time, which has got to affect the department. REPRESENTATIVE CROFT commented that Mr. Carr is going to get himself into trouble for indicating that the department can absorb the extra cases. Number 0180 MR. CARR explained that the department "cheats" in that they don't have any attorneys on staff; they instead have trained wage and hour investigators on staff that handle the cases, including doing the footwork, investigating, auditing, negotiating and prosecuting of a case in small claims court if a matter cannot be resolved. In that regard, the department pays the investigators a salary and does not have to pay attorney fees as part of a contractual line item in their budget. REPRESENTATIVE GREEN pointed out that it sounds as if there is money involved nevertheless. MR. CARR noted that the department has seven wage and hour investigators statewide who are employed on a full-time basis. Number 0214 REPRESENTATIVE CROFT indicated there would be weeding out and settling for the cases handled by the department. MR. CARR replied, "That's correct." The weeding out process, he hopes, will involve for the most part a settlement and a collection on behalf of the employee. Number 0239 REPRESENTATIVE GREEN asked Mr. Carr whether it is correct that a judge or magistrate could hear a claim with the increased cap. MR. CARR affirmed that. Number 0253 REPRESENTATIVE GREEN noted that the qualifications to be a magistrate are that a person has to be 21 years of age and a resident of the state for six months. He asked whether the sponsor would be willing to go before an untrained magistrate for a $20,000 settlement. MR. CARR replied that he can't speak for the sponsor, but in most instances when the department ends up in small claims court, a major part of their job is to educate the bench in relation to the requirements of the statute, the applicability of state law, and case precedent. The department has found that the parties sitting on the bench are amenable to having that type of information presented and that they are generally capable of absorbing the information and rendering a proper decision. REPRESENTATIVE GREEN commented, "At no extra cost." CHAIRMAN KOTT responded, "And that's at no extra cost." It's almost like going before the youth court. Number 0304 REPRESENTATIVE MURKOWSKI noted that in her "former life" as an acting magistrate, she had heard wage and hour claims. The statutes are, as Mr. Carr has indicated, pretty cut-and-dried. It isn't as if there would be a full court hearing where both sides are going down all kinds of "rabbit trails." The claims and defenses are pretty straightforward. If the dollar amount is increased, she said, it wouldn't get that much more complex. Number 0346 REPRESENTATIVE JAMES remarked that her experience with small claims court is that the case has to be cut-and-dried; otherwise, it is pushed to district court. Number 0362 REPRESENTATIVE GREEN recalled that he had gone to small claims court six times when the cap was at $2,000. Although he had won all six cases, it did no good because he never got any money. Number 0377 CHAIRMAN KOTT stated that he is glad to hear Mr. Carr finally say that there would be an increase in the number of cases that the department would not be able to remedy administratively based on a higher threshold. Chairman Kott said he believes that if the amount increased, the department would find themselves before a magistrate or in court more often. He asked Mr. Carr whether there is a difference in whether the department represents an individual as an employee or as a contract laborer. Number 0414 MR. CARR answered that the department is able to represent only an employee. The term "contract labor" is a misnomer that is used frequently by employers and employees, but as a term of art it means very little. In that regard, there are problems in determining whether someone is an employee or a legitimate independent contractor, and much of the investigation may involve determining that status. If someone is found to be an independent contractor in accordance with the criteria established by the state supreme court, the department will not pursue the case. Number 0442 CHAIRMAN KOTT asked Mr. Carr whether the criteria the department uses have already been determined by the state supreme court. MR. CARR said yes, they were determined in 1981 with a case involving Jacko (ph) v. State. Number 0460 CHAIRMAN KOTT asked Mr. Carr what the available remedy is for a contractor. MR. CARR replied that any independent contractor in a business relationship has full use of the court system to resolve any civil complaint, but one would have to pursue a claim on one's own and through the private sector. CHAIRMAN KOTT commented that he hopes it is above $20,000. Number 0486 AL DWYER, Director, Central Office, Division of Labor Standards & Safety, Department of Labor & Workforce Development, came before the committee to testify. He told members that when the department was first presented with the bill, they really didn't have any idea the number of cases that they would be facing. Based on Mr. Carr's experience and some of the investigator's experience, they assumed that there would probably be 100 additional cases in which 90 would be handled administratively. It seems that has changed. He asked Mr. Carr to indicate what had changed his mind. MR. CARR said his faith in human nature. Number 0541 REPRESENTATIVE CROFT referred to AS 23.10.110(c), which reads as follows: (c) The court in an action brought under this section shall, in addition to a judgment awarded to the plaintiff, allow costs of the action and, except as provided in (e) - (h) of this section, reasonable attorney fees to be paid by the defendant. The attorney fees in the case of actions brought under this section by the commissioner shall be remitted by the commissioner to the Department of Revenue. The commissioner may not be required to pay the filing fee or other costs. The commissioner in case of suit has power to join various claimants against the same employer in one cause of action. REPRESENTATIVE CROFT said the subsection specifically references the minimum wage and overtime. He asked Mr. Carr what sections could be added to include other wage-type claims. MR. CARR replied that Representative Croft is referencing the Alaska Wage and Hour Act, which mandates the payment of minimum wage and overtime. The area of issue today is found under Chapter 5 of Title 23, which gives the department authority to pursue claims for wages and contract amounts such as unpaid benefits. Chapter 5 of Title 23 does not address any statutory obligation to pay minimum wage or overtime; it is primarily contractual in nature. The two statutes function in a "parallel universe," he said, but the enforcement is separate. The enforcement for minimum wage and overtime is found under AS 23.10.110, and the enforcement for anything else not related to minimum wage or overtime is found under AS 23.05. In effect, they are two different programs. He noted that the minimum wage and overtime statute does not have a cap, while all other wages and debts due to an employee are subject to a cap in regard to the amount that the department can pursue. Number 0650 REPRESENTATIVE CROFT asked Mr. Carr whether AS 23.05.180, "Wages in dispute," is the central section, while the others talk about who can hear a claim and when. MR. CARR replied, "No." He explained that AS 23.05.180, "Wages in dispute," deals with the waiting time for penalties found in AS 23.05.140. The actual authority to pursue a claim is found in AS 23.05.220, "Assignment of liens and claims to department." Up until 1998, the actual dollar cap was listed in that section. In 1998, the statute was amended to tie the dollar value of a wage claim to the small claims jurisdiction, which increased to $7,500 in 1997. Number 0739 MARGARET BAUMAN testified via teleconference from Anchorage in support of SB 193. At present, the DOLWD can only pursue amounts up to $7,500, but her former employer, Business News Alaska, owes her in excess of $10,000 and has refused to pay. They have acknowledged that they owe her money; they are essentially arguing that she was a contract laborer and have brought the case to the state DOLWD, who have found in the initial process and in the appeals process that she was an employee - as did the Internal Revenue Service. She said they have appealed the case to the commissioner level, and she is sure they will appeal it to the state superior court. It is a good thing that the department is on her side, she said, because she cannot afford an attorney. MS. BAUMAN noted that at the time she was working for Business News Alaska, she was taking care of an elderly parent who required 24- hour care, so she needed a job that would allow her to take care of her mother; that was the reason she stayed with the job. She commented that she would fax information to the committee which indicates the amount owed, as well as the results of a database search in relation to the individual who hired her, Kay Cashman. The information indicates that Ms. Cashman has a track record of debts all over the state. It seems that when an employer is allowed to operate outside of the law, it creates a severe disadvantage for those employers who are willing to abide by state law, Ms. Bauman concluded. Number 0970 CHAIRMAN KOTT indicated to Ms. Bauman that the committee had a copy of her testimony. Number 0896 CHAIRMAN KOTT asked whether there were further testifiers on teleconference, then closed the meeting to public testimony. Number 0910 REPRESENTATIVE CROFT noted that the overtime and minimum wage sections in statute that allow for awards of attorney fees and costs for prevailing parties seem to be pretty comprehensive. In that regard, they allow an award to the plaintiff unless the defendant shows, by clear and convincing evidence, that the act or omission giving rise to the action was made in good faith, and the defendant had reasonable grounds for believing it. It seems to be balanced in that there is a way out for the defendant-employer. That type of arrangement, he said, would allow for individuals like Ms. Bauman to prosecute a claim on their own and to have a claim judged on its merits instead of on a dollar amount. He said he has been trying to formulate a conceptual amendment in relation to the above, but isn't sure where to place it. Number 0986 REPRESENTATIVE CROFT made a motion to adopt a conceptual amendment [Amendment 1] to add provisions similar to those that apply to overtime and minimum wage claims, specifically AS 23.10.110, that describe the ability to get attorney fees in a prevailing situation relating to "Article 2." Number 1018 REPRESENTATIVE JAMES objected. She explained that she appreciates the efforts of Representative Croft, but this is a much larger issue than simply including a conceptual amendment in that particular section in statute. She is not familiar with Ms. Bauman's case, but individuals really need to go to the DOLWD to resolve issues of contract laborers versus employees. Representative Croft's conceptual amendment reduces the need for the cap to be changed from $7,500 to $20,000, which is an important opportunity for the department to go to small claims court, because it is the most expeditious and quick way in light of the fact that individuals need their money. She acknowledged that one does not always obtain the money owed because the judgment has to be taken and a method of collection has to be attached. From her experience, however, people who do not receive their paychecks are hurting. Therefore, the faster those folks can receive relief, the better. She feels that this can be achieved the fastest through small claims court, if the situation fits. REPRESENTATIVE JAMES remarked that she wouldn't want to do something that would eliminate the bill's purpose; she said the department is very, very good at these issues. She suggested this could be in a separate bill, but emphasized the need to hear from the public in regard to how it would affect both employers and employees. She doesn't believe it is appropriate to include in the present bill and would vote "no" on the amendment. Number 1152 REPRESENTATIVE KERTTULA surmised that one problem is that the DOLWD, in the other cases, cannot obtain the full attorney fees. She indicated this [amendment] would also resolve that issue. MR. CARR noted that he has been doing this for 25 years; in that time, he can count on one hand the number of cases in which attorney fees have been seen. He emphasized, "We're so glad if we can effect collection on behalf of the wage claimant. Even though we may have an award for attorney fees, we're willing to give that up just to get the wages paid to the worker." Mr. Carr said although he appreciates the intent, he doesn't believe the award of attorney fees would really trickle down to the department's budget. Number 1230 REPRESENTATIVE MURKOWSKI commented that she doesn't believe this amendment gets them where they need to go on this. She recognized that if an individual does not receive his/her paycheck, the last thing that individual wants to do is go from attorney's office to attorney's office in order to find someone who will take this case on a contingency fee basis. She echoed earlier comments that just because an individual can receive a judgment does not mean he/she will be able to collect on it. Therefore, to find an attorney to take on a $15,000 claim is not that realistic. She suggested that the easiest thing for these employees would be to assign their wage claims to the Division of Wage & Hour, which moves the individual through the process quickly. Therefore, whatever can be done to expedite the process for that division will benefit the employee far more than allowing attorneys to recover 100 percent of their fees. REPRESENTATIVE ROKEBERG spoke in opposition to Representative Croft's amendment because it opens a statutory chapter that requires review in total. For example, the effects of the liquidated damages and other statutory penalties that exist have not even been discussed today. Representative Croft's amendment adds legal fees on top of potential liquidated damages and statutory penalties. Therefore, he doesn't think it is appropriate to do this without taking the entire scope of enforcement procedures into account. He said SB 193 is a relatively straightforward bill that intends to make an immediate "fix" to an expanding jurisdiction. Representative Rokeberg suggested that perhaps this needs to be reviewed, but under separate legislation. Number 1408 REPRESENTATIVE CROFT responded that he thinks it [Amendment 1] does dovetail with this legislation. He said, "I think it would give [Mr. Carr] the power to say, ... 'We'd like you to settle, we have jurisdiction now for claims up to $20,000, and if you don't, you take their claim to an attorney for full fees.'" Representative Croft said he believes the two approaches allow him to settle more claims quicker by having this, but he does not suggest that DOLWD should have this power. In general, he doesn't believe the government should have this power; only the person affected by not having his/her wages paid [should have it]. REPRESENTATIVE CROFT told members, "I'm not doing any change to the liquidated damages that exist or don't exist in the various different wage and hour sections." He explained that he is worried that without some amendment which either increases some of the money to the department to pursue these or provides some other option for private individuals to pursue these, the bill doesn't cure the problem at which it was directed. He reviewed the two approaches, which are to either give [the division] more money to hire more staff for this or to allow the individual to be empowered to do this. Of those two approaches, he had chosen the latter. CHAIRMAN KOTT asked if there was further discussion on Amendment 1; none was offered. Upon a roll call vote, Representatives Green, Croft, Kerttula and Kott voted in favor of the adoption of Amendment 1. Representatives Rokeberg, James and Murkowski voted against it. Therefore, conceptual Amendment 1 was adopted by a vote of 4-3. REPRESENTATIVE ROKEBERG requested hearing from the bill sponsor's representative before proceeding further. Number 1637 MR. KNAUSS said he could not speak on behalf of the sponsor. However, the department doesn't have a problem with the amendment [Amendment 1] just adopted. REPRESENTATIVE ROKEBERG remarked that he is not sure how this all fits together. Number 1721 REPRESENTATIVE MURKOWSKI returned to Representative Rokeberg's question regarding how the attorney fees would fit with the penalty provisions, the liquidated damages provisions, and the mandatory and discretionary penalty provisions in Sections 4 and 5 of the bill. She asked whether Amendment 1 would affect [those provisions] in any way. MR. CARR answered that in regard to the cases brought forth by the department, the amendment would not affect them. He explained that the first amendment in Section 1 establishes the dollar value of $20,000 exclusive of costs, interest and attorney fees. Therefore, any award would not impact the amount that the department would be able to pursue. With regard to private sector cases, he was not prepared to address that at this time. Number 1789 REPRESENTATIVE CROFT pointed out that Amendment 1 was a conceptual amendment. He noted that he did not have any interest in delaying this bill because it is a good bill, with or without this amendment, although he believes it better with it. However, even if the legislature is on an accelerated schedule for sine die adjournment, it would not hurt to see the conceptual amendment, in its actual form, and to review it and pass it out at the next meeting. REPRESENTATIVE JAMES also expressed the desire to hear from the bill sponsor because she is not sure how this all fits together either. Therefore, she agreed with Representative Croft that the draft, with the conceptual amendment, should be reviewed and evaluated. REPRESENTATIVE ROKEBERG concurred. He said he would also like to see the legislative history in regard to why there was a differential and why this was done. He agreed that the committee would be remiss if it were to [pass this bill out] like this. He remarked that he may even vote against reporting it from committee. REPRESENTATIVE JAMES related her belief that if there is a minimum wage case and an overtime case, there is neglect and even fraud on the part of the employer. If it is a clear case of the [employer] not paying the wages, it should be easier to resolve, which is what is addressed in this bill. However, the example [that generated the legislation] was not such a situation. CHAIRMAN KOTT announced that SB 193 would be held over, and the bill, with the conceptual amendment [Amendment 1] in writing, would be back before the committee at the next meeting. He asked members to pose any questions they had to the department before the next meeting. [SB 193 was held.] HB 182 - CHARITABLE GAMING & GAMING ON FERRIES Number 2080 CHAIRMAN KOTT announced the formation of a subcommittee to address HOUSE BILL NO. 182, "An Act relating to charitable gaming and to gaming on state ferries; and providing for an effective date." He appointed Representatives Croft, Murkowski, Green, James, Kerttula, Rokeberg and himself to serve as subcommittee members. Noting that the subcommittee could not take action on the bill, he informed members of a meeting on Friday, April 7. He indicated HB 182 had been omitted inadvertently from the schedule, and a number of people were in town to testify. [End of discussion of HB 182.] SB 123 - ATTY FEES:APPORTIONMT/PUBLIC INT.LITIGANT Number 2146 CHAIRMAN KOTT announced that the final item of business would be CS FOR SENATE BILL NO. 123(FIN), "An Act relating to public interest litigants and to attorney fees; and amending Rule 82, Alaska Rules of Civil Procedure." He informed listeners that it was not his intent to move the bill that day, but several testifiers had been waiting on teleconference to testify. [Before the committee was CSSB 123(FIN).] Number 2166 DARWIN PETERSON, Staff to Senator Torgerson and the Senate Finance Committee, Alaska State Legislature, offered an abbreviated overview of the bill on behalf of the Senate Finance Committee, sponsor of the bill. He informed members that SB 123 would recognized public interest litigants by codifying them in Rule 82 [of the Alaska Rules of Civil Procedure]. It also would require the court to "apportion enhanced attorney's fees by prevailing issue." CHAIRMAN KOTT asked whether there were questions, then opened public testimony. Number 2275 JOSEPH CIZEK testified via teleconference from Anchorage. He informed members that he and his wife are being sued by two individuals, a husband and wife, who claim to be public interest litigants, having formed a nonprofit organization in which the husband is president and the wife is vice president. The Cizeks were threatened with this suit a year and a half ago, for more than $500,000 in damages plus attorney fees. The case now is being appealed. However, the attorney fees alone have bankrupted his small business as a general contractor. He and his wife are out at least $100,000 in attorney fees, and the plaintiffs are seeking approximately $150,000 in attorney fees. MR. CIZEK said he and his wife are forced to defend their position, based upon what the city has said on a grandfather rights issue relating to [a nonconforming] airstrip at the end of the Eagle River Valley. During this legal battle, they were informed from the start that there would be no hope of getting any attorney fees back, even if they prevailed, because of the [plaintiffs'] claim to be a public interest litigant group. "Something is not right here," he emphasized, noting that the college fund for his daughter is gone. TAPE 00-49, SIDE A REPRESENTATIVE MURKOWSKI asked whether the court has determined that the plaintiffs in that case are, in fact, public interest litigants. MR. CIZEK said no, that it is before the superior court at this time, and Judge Shortell has yet to make that ruling. REPRESENTATIVE MURKOWSKI noted that there are some pretty specific standards that must be met in order to be declared a public interest litigant, and, from Mr. Cizek's brief description, it sounds as if the plaintiffs aren't true public interest litigants, although she doesn't have the facts. MR. CIZEK said it appears that they will be granted that status. CHAIRMAN KOTT noted that Mr. Cizek is a constituent of his, and he has been directly involved in trying to settle that issue. Number 0226 WEV SHEA, Attorney at Law, testified via teleconference from Anchorage. He offered some personal background, noting that he has been involved in the legal profession since 1966 and has practiced law in Alaska since 1977, doing civil litigation almost solely. He also noted that he has done criminal prosecution in both Hawaii and Alaska, and was U.S. Attorney for the District of Alaska. He cautioned about not getting too tied up in emotion on this. There are very strict criteria for public interest litigant status, he told members, citing as an example an Alaska Supreme Court case involving Tim Cook (ph) that he himself had handled; in that case, Mr. Cook (ph) had been fired as a commissioner on the Alaska Public Utilities Commission (APUC) but eventually got his job back. Public interest litigant status was not granted. MR. SHEA noted that his position in that case was that because Mr. Cook (ph) was a public servant, he shouldn't have to pay all of his attorney fees, and should have been granted 100 percent of his attorney fees. That issue was ruled upon, on remand, by Judge Michalski, who accurately found, under the law - although Mr. Shea disagrees with it - that Tim Cook (ph) had a monetary interest in being on the commission because he was paid and therefore wasn't entitled to public interest litigant status. MR. SHEA said he is sure there is good reason to bring this legislation. However, he would address the problem with not having public interest litigation in voting contests and the right to vote; that was primarily what he himself was concerned with when he brought the first Dansereau case, which got an [Alaska] Supreme Court decision in 1995, and then the second Dansereau case, for attorney fees, on which he got an [Alaska] Supreme Court decision in 1998. Mr. Shea pointed out that in election contest cases, the litigants not only have to show that there is a violation of the law with regard to the election itself but also must show that there was a violation of the law which could have changed the results of the election. Suggesting Representative Green had spoken out on this, Mr. Shea mentioned breaking this out on various causes of action, then said he would point out the fallacy of that argument. MR. SHEA reported that in the 1994 election, Governor Knowles won by 536 votes; if 278 votes had gone the other way, or if it could have been shown that those voters could have been influenced to vote the other day, the election would have been a tie. With more votes than that, Jim Campbell would have won. Ten gallons of gasoline were given to everyone in the North Slope Borough who voted in that district, about 1,500 people. However, the farthest anybody went to vote in that borough was 12 miles, which he said was ridiculous, being paid to vote. However, the Alaska Supreme Court had ruled that there was not a valid state cause of action. Mr. Shea noted that he had alleged that [cause of action] because of having to choose between bringing the case in federal or state court, and he had believed it was a federal violation because [Congressman] Don Young was in the election. Mr. Shea said it is in the statute that if there is a state senator or representative running, then it is a federal election. However, the supreme court didn't look to that. So that is one cause of action that is "out" but which affected at least 1,500 votes. Number 0643 MR. SHEA continued. He noted that the supreme court did say that it was a violation of state law to mail a postcard to 7,000 to 8,000 voters that said "Vote for Tony Knowles - you have a chance to win $1,000"; that was done by Doyon Drilling (ph), Tanana Chiefs Conference and Fairbanks Native Association, and Mr. Shea said he had prevailed on that case. He indicated there was a third case, for irregularities in the North Slope voting process and not keeping the voting polls open. MR. SHEA expressed concern about the way this bill is written, and the way it affects voters' rights. He stated: I'll tell you, if I didn't bring that litigation, [Representative] Con Bunde never would have brought his bill, and you never would have passed the bill ... that Tony Knowles signed on June 22, 1996, changing the law. And the problem that I had was that Jim Campbell was scared to death to bring a litigation. He was really scared when I told him I'd already written a three-page letter to the FBI [Federal Bureau of Investigation] with regard to the federal violation. Well, the U.S. Attorney wouldn't touch it because he's [President] Bill Clinton's appointee. And in civil rights and voting rights violations, the FBI will not investigate the violations and pursue it unless the U.S. Attorney, prior to the investigation, said that he will prosecute the litigation. [Representative] Bunde refused to do that. Your attorney general, Bruce Botelho, wasn't going to take any action, and he didn't take any action; he fought all the way on two cases that I took to the supreme court. And what is the problem with the way the bill is written, as it affects voting rights, is that because Jim Campbell was scared to take the case because it ... was so controversial and somewhat confrontational, and the legislature sure wasn't jumping in and taking a stand at that time - none of you were, those of you that were there - was that I had to get ten citizens to step forward to be the plaintiffs. ... Under the statute, if the candidate won't do it - which Campbell wouldn't, naturally, because the wrongdoers had to do with the North Slope Borough, Tanana Chiefs, Fairbanks Native Association and Doyon, all of which he's done business or was continuing to do business with, in various corporations and other businesses he had - could I ever have asked, or would ten people ever have agreed, to take on litigation of that magnitude, if they knew they had a chance of being faced with attorney fees and costs against them? This was not some fly-by-night lawsuit that went up to the supreme court twice. This was a lawsuit that went up twice and we prevailed both times, and the public acted as the attorney general for the State of Alaska because the attorney general for the State of Alaska refused to act for the people. ... Everybody seems to jump on the fact that the second Dansereau case delineates the attorney fees and somehow indicates - and the Daily News indicated - that Wev Shea received $250,000, approximately, in attorney's fee. Let me break that down for you. ... I advanced out-of-pocket costs of approximately $25,000. I advanced fees in that case of approximately $225,000, which was 1,500 hours, approximately, at $150 an hour. The amount of time, that was me and one attorney that assisted me for about a hundred hours. The amount of time expended by the attorney general to fight that case: he had 14 attorneys that billed on the case, 4 or 5 paralegals, and they billed well in excess of what I bill, ... the number of hours. I find that very peculiar since in both cases I had the burden [and] ... had to carry both cases, since we lost both cases at the trial court level. I can't really tell you how to approach this, other than I think you're doing the state a real disservice if you change this law with regard to voting and public interest litigation, from that standpoint, when it comes to election contests. I really don't know who you're going to get to bring litigation that is this controversial, like these two Dansereau cases or the Tim Cook (ph) case, because I know when I called down, ... when Tim Cook (ph) was terminated, and talked and approached a number of legislators and a number of people in the leadership, they themselves were not going to challenge Governor Knowles' position. And that's why I did it. And if any of you think that Wev Shea took these cases to make money, I think you're sadly mistaken. I received, from the State of Alaska, after those two appeals, ... about $101,000, and I received it four years after I took the case. And I took the case, ladies and gentlemen, solely because I felt that the rights of the citizens of the State of Alaska were grossly being abuse. And I'll tell you, if I didn't do it, nobody was going to do it. ... I guess you can ... do what you want with the public interest litigation, and there's no question that there's problems. But I'd be very, very leery of it in the voting rights area, because what you're doing is, in this state, without an [elected] attorney general, you've got a clone for Tony Knowles sitting in the AG's [attorney general's] office. Number 1117 REPRESENTATIVE ROKEBERG stated his understanding that Mr. Shea had prevailed in one portion of the case. MR. SHEA affirmed that. REPRESENTATIVE ROKEBERG asked Mr. Shea what the end result of the case was. MR. SHEA responded that he had advanced so much money, and it was a year and a half after they had prevailed. Although there should have been a new election, he couldn't go in, right off the bat, and get an injunction because it was cost-prohibitive. These election contest suits take 100 percent of [an attorney's] time, all of the time. Basically, before the statute was changed, the supreme court came out with the first Dansereau decision, "and we prevailed." However, this decision came out in September of 1996, so Governor Knowles had been in office two years. Although the court basically said that approximately 7,000 to 8,000 votes were affected, at that stage Mr. Shea said he couldn't open it up and press forward for a new election. MR. SHEA commented, "Try advancing $225,000." Noting that new associates at law firms may be expected to bill 1,600 hours a year, he said he had essentially given away time for a year. He proposed the need to be sensitive and for somebody to be able to step in, in this state, the way the law is now, when the attorney general isn't willing to do so, especially regarding voting rights or when an issue is very controversial, because a whole section of legislators will have various conflicts. Mr. Shea added that when he had taken that litigation, he didn't know he would be awarded attorney fees because he had thought it was under Civil Rule 82; he was just thinking about the wrong that had been done, and he had seen clear violations, because of his familiarity with it, of state and federal election law. Because neither the federal nor state government was acting on it, he had stepped in. MR. SHEA said he wouldn't take a similar case now unless he knew he would be paid 100 percent of the attorney fees. Furthermore, in election contest litigation where somebody won't step forward, how could anyone ask ten voters to step forward and do it, when those people could be subject to actual costs and attorney fees? He said he couldn't address the situation in Eagle River [testified about earlier], but setting up a nonprofit organization has nothing to do with being a public interest litigant. Number 1393 ROBIN SMITH testified via teleconference from Anchorage as follows: A fundamental tenet ... of the American democratic system is that the executive and legislative branches of government must act lawfully and constitutionally, subject to review and restraint by an independent judiciary. This bill, I believe, would support government [tyranny] by stripping the common citizens' right to challenge the state. We need to be realists. It takes a lot of money to bring a suit against the state. And this bill would limit all but the rich ... in coming forward ... to sue the state. A citizen would not only have to incur 80 percent of the cost if he or she won but also the state cost if they lost. ... It would be as if the legislators were asked to defend bills that the citizenry challenged and said were unconstitutional. And I have to ask how many of you would be willing to put up your own money and say, "Yes, ... we have to countersue, we have to respond to this suit that's brought by the citizens." I fear that few of you would be willing to put your own money forward on this. So I ask you ... to please stop this bill now. It really undermines the right of the individual citizen to challenge the state, and I think that's one of the beauties of ... our American system. Number 1488 DALE BONDURANT testified via teleconference from Kenai in opposition to SB 123, suggesting he has a well-known history as a public interest litigant. He spoke in support of the public interest litigant process, which has a commendable history of promoting the ability of the smallest common public interest to be heard as well as those special personal interests of the more rich and powerful. This process has allowed the public to participate and actually make a valuable difference in the protection of the benefits of the law for the public, he told members. In a free constitutional democracy, one may not agree with another's position and yet agree with others' rights to hold and expound upon their positions; the opportunity to be heard on the merit of that position is what makes the freedom so valued. MR. BONDURANT said that those who support SB 123 would handcuff the operation of the public interest litigant process when more powerful interests take advantage of and knowingly abuse the process. However, the voices of the latter will not be muted because of having the financial resources to continue their special interests. Eliminated will be the small players who have a legitimate, common public concern. Because there no longer will be an organized, responsible and affordable avenue to pursue the public interest in these cases, they will fail. As is popularly stated, "Don't throw the baby out with the wash water." MR. BONDURANT said some believe this bill will stop abuse of the process. However, it will not. More powerful parties, even if they lose in adjudication of their purpose, have a large cadre of supporting advocates that can financially remit up to $100,000 in tax-exempt contributions. But SB 123 will destroy the general public's ability to participate in a process on the merits of the public interest issue. Mr. Bondurant urged members to please defend the right of the general public to be heard above the clamor of the politically powerful. He concluded: We have been very active in the public interest issues such as access to Alaska's public waters, fish, wildlife and equal public access to these common-property resources. And we're now involved financially and dedicated to try to win back the state's sovereignty over these navigable waters and ... the public resources. So ... don't cut out "us." Our donations are $10 or less, and we're fighting this battle for the entire public. So, I think this bill is very bad, and I ask you to vote "no" on it. Thank you very much. Number 1656 REPRESENTATIVE CROFT asked Mr. Bondurant whether he was one of the appellees on the McDowell lawsuit. MR. BONDURANT specified that he is one of the named appellees on that lawsuit. REPRESENTATIVE CROFT said he understands that Sam McDowell got about $100,000, perhaps a little more, to pay for his attorney fees in that. Furthermore, he also understands that Mr. McDowell doesn't think he could have done that suit without the public interest litigant status. He asked whether that is Mr. Bondurant's opinion too. MR. BONDURANT replied: Very much so. And we sure didn't get back all of our fees, and, like the one gentleman said, we didn't get ours back for quite a long time. But maybe a more pertinent case right now is one that I was a named plaintiff in that, and that was the Alaska Public Easement Defense Fund, back in 1977, when we fought so the public will have reasonable access to all public waters in the state of Alaska. And we're very proud of that thing, and it's, ... again, for the public's use. REPRESENTATIVE CROFT asked Mr. Bondurant whether he was a public interest litigant in that case. MR. BONDURANT answered: Yes, sir, there were three of us, and I was one of the named litigants in that one. And that was in 1977. And we also fought in the Gulkana (ph) case; we weren't a named litigant, but me and Sam McDowell were the only people there representing the state. Number 1729 CHAIRMAN KOTT asked whether anyone else wished to testify, then closed public testimony. He announced his intention of sending the bill to a subcommittee consisting of Representatives Murkowski, Croft and Kerttula, with Representative Murkowski chairing. [SB 123 was held over.] Number 1778 CHAIRMAN KOTT called an at-ease from 3:23 p.m. to 3:24 p.m. He called the meeting back to order and announced that the House Judiciary Standing Committee was recessed to the call of the chair. He told members that the meeting would reconvene at 2 p.m. the following day in order to take up the subcommittee report on HB 211 and any other pending legislation.