SENATE JUDICIARY COMMITTEE April 9, 1999 1:48 p.m. MEMBERS PRESENT Senator Robin Taylor, Chairman Senator Rick Halford, Vice-Chairman Senator Dave Donley MEMBERS ABSENT Senator John Torgerson Senator Johnny Ellis COMMITTEE CALENDAR HOUSE BILL NO. 9 "An Act relating to collection of settlement information in civil litigation; amending Rule 41(a)(3), Alaska Rules of Civil Procedure, and Rule 511(e), Alaska Rules of Appellate Procedure; and providing for an effective date." -MOVED HB 9 OUT OF COMMITTEE SENATE BILL NO. 123 "An Act relating to public interest litigants and to attorney fees; and amending Rule 82, Alaska Rules of Civil Procedure." -MOVED SB 123 OUT OF COMMITTEE PREVIOUS SENATE COMMITTEE ACTION HB 9 - No previous action to report. SB 123 - No previous action to report. WITNESS REGISTER Representative Brian Porter State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Presented HB 9 Ms. Lauree Hugonin, Executive Director Alaska Network on Domestic Violence and Sexual Assault 130 Seward St. room 209 Juneau, AK 99801 POSITION STATEMENT: Commented on SB 123 Ms. Pam LaBolle, President Alaska State Chamber of Commerce 217 2nd St. Juneau, AK 99801 POSITION STATEMENT: Supported SB 123 Mr. Steve Williams, Attorney 500 L St. Suite 400 Anchorage, AK 99501 POSITION STATEMENT: Opposed SB 123 Ms. Charlotte MacCay COMINCO 1133 W. 15th Ave. Anchorage, AK 99501 POSITION STATEMENT: Supported SB 123 Ms. Judy Erickson, Owner Capital Information Group PO Box 21804 Juneau, AK 99802 POSITION STATEMENT: Opposed SB 123 ACTION NARRATIVE TAPE 99-25, SIDE A Number 001 CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to order at 1:48 p.m. and announced HB 9 would be the fist order of business. HB 9-PERSONS REQUIRED TO FILE SETTLEMENT INFO REPRESENTATIVE BRIAN PORTER, sponsor of HB 9, explained the bill enacts some cleanups related to tort legislation that has become law. REPRESENTATIVE PORTER said the bill specifically addresses reporting of settlement results. HB 9 does the following things: it makes clear that reporting of settlement information is mandatory, it excludes areas not meant to be included, it clarifies that reporting requirements take effect after the appeal process is concluded, it amends the necessary court rules, and sets an effective date. Number 040 CHAIRMAN TAYLOR asked how the current reporting system is working. REPRESENTATIVE PORTER said the current system seems to be working for adjudicated cases, but reporting for settled cases appears to be a problem. CHAIRMAN TAYLOR commented this reporting requirement is one aspect of the tort reform legislation he strongly supported, as there is a serious need to compile information about these types of cases. Number 067 SENATOR DONLEY stated his support for the bill and asked how existing law deals with confidential settlements. REPRESENTATIVE PORTER answered the settlement information is still gathered, but the names of the litigants are excluded. SENATOR DONLEY confirmed that the Alaska Judicial Council (AJC) would receive the settlement information, even if the names were excluded. REPRESENTATIVE PORTER assured the information would be transmitted to the AJC, and in fact, the Council would get the names, the names would simply not be made public. CHAIRMAN TAYLOR said the release of confidential information was a concern of his. He stated that he thought the original bill dealt with the treatment of confidential information by the AJC. Number 113 SENATOR DONLEY stated one of his concerns is prohibiting secret settlements in cases of public safety issues. He knows some settlements of product liability cases involve plaintiffs agreeing not to inform others of the hazard on which their claim is based. SENATOR HALFORD asked what could be done for an individual facing "a Ford motor Company sized defendant" who could get a settlement only if they do not release the information. He said this puts the burden on "the victim who has very little resources" for the trial and the appeal(s), and "we pay for none of it." SENATOR DONLEY agreed that was true, but said "none of that affects this bill." Committee members agreed. Number 138 SENATOR DONLEY moved HB 9 from committee with individual recommendations. Without objection, HB 9 moved from committee with individual recommendations. SB 123-PUBLIC INTEREST LITIGANT: FEES SENATOR DONLEY declared SB 123 is actually a Senate Finance bill and stated he is the designated committee member presenting it. He pointed out the committee has received letters of support for the bill from the Ketchikan Gateway Borough (KGB) and the Alaska Miners Association (AMA). SENATOR DONLEY said the bill implements court rule 82 for public interest litigants. SENATOR DONLEY explained that up until a few years ago, courts used to apportion judgements, now they simply award all legal fees whether a litigant prevails on all claims or only some of them. SENATOR DONLEY said this promotes spurious lawsuits, since plaintiffs know they will receive compensation for all cost even if they win on only one of their points. He said the adoption of rule 82 provides reasonable fees for litigants and limits payment to costs associated with points on which the litigant prevails. SENATOR DONLEY said the letter of support from the KGB raises a good point: many of these organizations bringing litigation have staff attorneys. These attorneys are likely paid salaries equivalent to $30 - $40 per hour. Sometimes, litigants charge fees for the services of these attorneys as high as $150 an hour, and actually make a profit on the fees awarded. SENATOR DONLEY commented, "That's just wrong." He concluded SB 123 adopts the same rule used for other civil cases, it will prevent an inequity and also save the state some money. Number 194 MR. STEVE WILLIAMS, an Anchorage attorney, spoke against SB 123. MR. WILLIAMS explained the purpose of paying attorneys' fees for a public interest litigant is to encourage private citizens to raise awareness of issues of public interest such as unlawful or unconstitutional conduct by a government entity. MR. WILLIAMS said in this manner the public acts as "private attorneys general to vindicate the public interest and the rule of law." MR. WILLIAMS said SB 123 would affect only those cases where a public interest litigant prevails in a suit against an executive, administrative, or legislative action by a state or local government. He said SB 123 would drastically reduce the incentive to bring cases against officials who are acting illegally or unconstitutionally, and this is simply bad policy. MR. WILLIAMS suggested the committee review the history of public interest litigation in Alaska. He said public interest litigation has been used in a nonpartisan manner to benefit a broad range of Alaskans' political beliefs. MR. WILLIAMS said public interest litigation covers issues such as state elections, ballot initiatives, municipal taxes and more. These are the types of cases in which claims are, and should be, brought by public interest litigants, according to MR. WILLIAMS. MR. WILLIAMS argued that in these cases, public interest litigants should be awarded full attorneys' fees if they prevail and be protected from an award of fees if they do not prevail. Public interest litigants by their very nature do not have an economic interest at stake; they do not have sufficient financial incentive in to bring the case individually. MR. WILLIAMS mentioned that, aside from the fact the bill is bad public policy, regular rule 82 fees do not require apportionment by issue, as this bill would require. This is because the court has practical reasons for not deciding certain issues within a given case. MR. WILLIAMS said private attorneys are paid to litigate all aspects of a case, and public interest litigants should also be paid for arguing all aspects of a case. He maintained that the court has the power to eliminate or reduce frivolous or excessive fees, or to impose fees on a litigant bringing a frivolous case. MR. WILLIAMS reminded the attorneys on the committee that civil rule 11 prohibits frivolous claims and fines can be imposed on attorneys who assert them. Number 297 MR. WILLIAMS summed up his testimony as follows: SB 123 is unnecessary because of civil rule 11, it is bad public policy that is politically misguided, and it will lead to further litigation of this issue. CHAIRMAN TAYLOR asked MR. WILLIAMS if he is familiar with the origin of public interest litigation. MR. WILLIAMS replied the original case was GILBERT v. STATE OF ALASKA, in which a state senatorial candidate challenged residency requirements unsuccessfully. In this case, the court found that public interest litigants should not be held responsible for attorneys' fees. Number 350 CHAIRMAN TAYLOR said he was trying to remember if Alaska presaged the federal court in their ruling on public interest litigation. MR. WILLIAMS responded he did not believe the U.S. Supreme Court ever adopted a public interest litigant rule for attorneys' fees. In fact, Alaska is the only state that has a general rule which provides for awards of attorneys' fees to prevailing parties. CHAIRMAN TAYLOR said, "I believe there were decisions made at the federal level which initiated this entire process." He said his frustration is with the federal system that awards special interest groups for frivolous motions filed in order to delay resource development. Whatever the outcome of the suit, the federal government pays the attorneys' fees. Five years ago, the U.S. Forest Service spent more than forty million dollars on cases in which they prevailed. CHAIRMAN TAYLOR said this is an incentive to bring frivolous claims, and when litigants have to pay fees, the court will not see so much frivolous litigation. MR. WILLIAMS agreed that fines should be charged for frivolous cases filed; but, he said, the court can already do this. Under the Alaska Public Interest law, litigants are only paid when they prevail. CHAIRMAN TAYLOR maintained that he has not seen the court come down hard enough on spurious claims. Number 430 MR. WILLIAMS suggested SB 123 only affects litigants who win, reducing the fees they receive. Overall, MR. WILLIAMS believes this bill will decrease opportunities for public interest litigation. MR. WILLIAMS also observed that SB 123 will award prevailing public interest litigants less than that awarded to successful commercial litigants in civil cases. MS. CHARLOTTE MACCAY, representing COMINCO Alaska, stated her support for SB 123. She said that the permitting and developing process, especially as it relates to environmental concerns, is sometimes based more on fear of litigation than hard science. This bill will force public interest litigants to carefully consider the legitimacy of any case they seek to bring. She urged the committee to pass SB 123. Number 472 MS. LAUREE HOUGININ, Executive Director of the Alaska Network on Domestic Violence and Sexual Assault (ANDVSA) spoke in opposition to SB 123. MS. HOUGININ explained that ANDVSA was involved in a public interest litigation suit and they prevailed. Though they did their best to keep costs low and even did fund raising, in the end, they received fees amounting to only two-thirds of the amount they spent on the case. She said this bill will affect situations where small public interest litigants will be burdened by receiving only a thirty percent award for fees. MS. PAM LABOLLE, President of the Alaska State Chamber of Commerce, stated the Chamber supports SB 123, saying some special interest groups routinely use "public interest litigant" status to challenge state resource development. Number 535 CHAIRMAN TAYLOR remarked that a group has no interest in settling a case if they know they will be paid for all their costs and fees, even if they prevail in only one-third of their claims. MS. LABOLLE commented that sometimes the goal of these special interests is to tie things up in litigation and "burn up as much money . . . as you can possibly take from the opponent." MS. JUDITH ERICKSON, owner of Capital Information Group (CIG), opposed SB 123. MS. ERICKSON recounted her experience as a public interest litigant who sued Governor Hickel for access to public information. She prevailed on the majority of the case and was awarded a portion of attorneys fees. She noted that Capital Information Group had to petition for the status of public interest litigant, this could have been argued by the state. MS. ERICKSON said this bill will not only affect resource development issues. As a "mom and pop" business, CIG could never have brought this issue forward without public interest litigant status. Number 571 SENATOR HALFORD moved SB 123 from committee with individual recommendations. Without objection, SB 123 moved from committee with individual recommendations. With no further business to come before the committee, CHAIRMAN TAYLOR adjourned the meeting at 2:35.