MINUTES OF THE
SENATE COMMITTEE ON JUDICIARY
Sixty-seventh Session
March 26, 1993
The Senate Committee on Judiciary was called to order by Chairman Mark A. James, at 11:30 a.m., on Friday, March 26, 1993, in Room 224 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator Mark A. James, Chairman
Senator R. Hal Smith, Vice Chairman
Senator Lawrence E. Jacobsen
Senator Dina Titus*
Senator Raymond C. Shaffer
* Committee members are only present for a portion of the
meeting. This is noted in the body of the minutes.
COMMITTEE MEMBERS ABSENT:
Senator Ernest E. Adler
Senator Mike McGinness (Excused)
STAFF MEMBERS PRESENT:
Dennis Neilander, Senior Research Analyst
Sherry Nesbitt, Committee Secretary
OTHERS PRESENT:
Sergeant Steve Turner, Reno Police Department
Mark Clayton, Attorney, Vargas & Bartlett
John P. Fowler, Attorney, Vargas & Bartlett
Stephen Turner, Representing Reno Police Department
Bill Maupin, Past President, Defense Trial Lawyers of
Nevada
Richard Wyett, Chief Parole and Probation Officer, State
of Nevada
Frank Landes, Investigator, Washoe County District Attorney's
Office
Brian Hutchins, Chief Deputy Attorney General, State of Nevada, Office of the Attorney General, Transportation Division
Robert S. Hadfield, Lobbyist, Executive Director, Nevada Association of Counties
Pete English, Officer, State of Nevada, Department of Parole
and Probation
Bob Bayer, Officer, State of Nevada, Department of Parole and
Probation
Ben Graham, Lobbyist, Legislative Representative, Nevada District Attorney's Association
Nile Carson, Lobbyist, City of Reno
William A. Bible, Chairman, State of Nevada, Gaming Control
Board
Senator James opened the hearing on Senate Bill (S.B.) 268.
SENATE BILL 268: Authorizes limited-liability company to hold state gaming license. (BDR 4-1061)
Mark Clayton, Attorney, Vargas & Bartlett, presented oral testimony in support of S.B. 268. A summary of Mr. Clayton's testimony and a copy of S.B. 268 with his amendments are attached hereto as Exhibit C and Exhibit D, respectively. Mr. Clayton briefly discussed the background of S.B. 268. He indicated a need to amend Nevada Revised Statutes (NRS) 463 to include the ability of a limited-liability company to be licensed for gaming. Mr. Clayton advised Vargas & Bartlett worked with the corporate securities division of the Nevada Gaming Control Board to draft the proposed amendments to the statute, which are S.B. 268. He advised S.B. 268 was modeled after the current provisions authorizing limited partnerships to obtain gaming licenses.
Mr. Clayton reviewed the sections of S.B. 268, explaining each. He advised sections 1 through 13 are the crux of the bill, providing definitions unique to limited-liability companies, enunciating the state's policy regarding licensing of such entities, addressing fines and informational requirements, transfer of ownership and individual licensing and revocation of owners and managers. Mr. Clayton referred to the suggested amendments, provided in the summary of his testimony. He advised the suggested changes, which are technical in nature, were made at the request of the State of Nevada, Office of the Attorney General, Gaming Division. He further advised the amendments insure that manufacturers, sellers and distributors of gaming devices will be able to utilize the limited-liability company as a business entity.
Senator Shaffer asked Mr. Clayton to define a limited-liability company.
Mr. Clayton answered it is a merging of certain corporate characteristics such as the protections and limitations of liability afforded to an officer of a corporation. He advised the limited-liability company is treated under the federal tax code as a partnership, allowing income and expenses to flow through to the individual owners of the company, thereby avoiding double taxation otherwise occurring in a corporate structure.
Senator James confirmed the limited-liability company dispenses with sub-chapter S corporation requirements. He asked if any of the requirements set forth in sections 1 through 13 of S.B. 268, in which limited-liability companies must be operated to comply with gaming laws, affect those characteristics or cause them to be breached, doing away with the favorable tax treatment.
Mr. Clayton replied Chapter 86 of NRS provides that a properly organized limited-liability company will retain the characteristics needed to be treated as a partnership for federal income tax purposes.
Senator James requested that Mr. Clayton briefly describe the proposed amendments to S.B. 268. Mr. Clayton complied with this request.
William A. Bible, Chairman, State of Nevada, Gaming Control Board provided oral testimony. He confirmed that the board had worked with Vargas & Bartlett in drafting S.B. 268, and advised the board supports the bill. He advised the bill provides an additional vehicle which may attract capital into the state of Nevada, and he does not believe there would be any loss or compromise in the regulatory controls as a result of the legislation.
Senator asked whether limited partnerships are dealt with separately in the statutes.
Mr. Bible advised limited partnerships are dealt with separately as well.
Senator Jacobsen asked if limited-liability companies are subject to the same scrutiny as all officers in the company.
Mr. Bible stated the same regulatory controls exist; there is simply a different type of business structure.
Senator Jacobsen asked if violating the law in some manner outside the business would put a person in jeopardy with the corporation.
Mr. Bible stated personal suitability is determined in the application for licensure. If the person is not suitable, they would have to be removed from the limited-liability company. If the company was already licensed, disciplinary action would be taken against one of the members. If they are determined not to be suitable to continue holding a gaming license, provisions require their removal from the company. If the company itself was involved in wrong-doing, its gaming license could be revoked as well.
Senator James asked whether the words "significant influence" in section 13, line 14 of the bill should be changed to "any influence."
Mr. Bible replied this is the same language used in the portion of the statutes relating to partnerships. He assumed it was used in S.B. 268 for uniformity.
Senator James confirmed there was no further testimony and closed the hearing on S.B. 268.
Senator James opened the hearing on Senate Bill (S.B.) 292.
SENATE BILL 292: Eliminates requirement for unnecessary reports to department of prisons concerning offenders in residential confinement. (BDR 16-667)
Richard Wyett, Chief Parole and Probation Officer, State of Nevada presented oral testimony in support of S.B. 292. Mr. Wyett explained the current practice of the department of prisons regarding credit history and computation of sentence credits for all individuals sentenced to prison and subsequent parole. He advised a computer system had been developed for this purpose. He stated the purpose of S.B. 292 was to eliminate the keeping of two sets of records of offenders in residential confinement, one by the prison and one by his department. He added that the provisions of the bill reflect the current operations of the department. He referred to the many sections, removing similar wording. He advised that, although inmates are in the same program, sentence credits are based on when their sentencing occurred. Therefore, the wording needs to be removed for each eligible group.
Pete English, Officer, State of Nevada, Department of Parole and Probation, added the inmates referenced are in the Driving Under the Influence (DUI) Residential Confinement Programs. He advised that these people continue to be inmates even though they are supervised in the community by the Department of Parole and Probation. He reiterated Mr. Wyett's testimony regarding current record-keeping procedures.
Senator James confirmed there was no further testimony, and closed the hearing on S.B. 292.
Senator James opened the hearing on Senate Bill (S.B.) 293.
SENATE BILL 293: Prohibits denial of attorney's fees and costs in civil action solely because prevailing party is state, local government or public officer or employee. (BDR 2-505)
Brian Hutchins, Chief Deputy Attorney General, State of Nevada, Office of the Attorney General, Transportation Division, presented oral testimony. He stated S.B. 293 was sponsored by his office, and briefly explained the purpose of the bill. He advised that under certain circumstances in civil litigation, a party may be entitled to receive its attorney's fees and costs. He enumerated the criteria under which this is possible, which is found in Chapters 17 and 18 of NRS, and Rule 11 of Nevada Rules of Civil Procedure (NRCP). He advised the intent of S.B. 293 was not to eliminate the discretion of the court in awarding attorney fees, but to preclude a court from denying fees or costs to a government agency or an employee, simply because they are involved with a government entity. He further advised the intent was to apply the provisions of S.B. 293 to all courts in Nevada and in all litigation covered by NRS Chapter 18. He related several experiences in which there had been no award or a reduced award because the attorney was paid by the government. Mr. Hutchins reviewed S.B. 293, and the amendment which his office has suggested. A copy of the proposed amendment is attached hereto as Exhibit E. He advised S.B. 293 is supported by the Nevada District Attorney's Association, and referred to a letter provided from the Washoe County District Attorney, a copy of which is attached as Exhibit F. Mr. Hutchins advised that Judge Michael Fondi has also indicated his personal support for the legislation.
Senator Jacobsen asked for and received confirmation that a judge determines reasonability of fees and costs. He asked if there were any guidelines.
Mr. Hutchins stated case law sometimes gives judges some guidance, but many times the fees are determined by the prevailing rate in the community.
Senator Jacobsen asked if there was a way to challenge fees which are exceptionally high.
Mr. Hutchins replied parties can challenge the reasonableness of fees. He stated NRS Chapter 18 sets forth specific costs which may be recovered.
Senator James confirmed Mr. Hutchins' previous testimony regarding cases where S.B. 293 would apply, and that the government simply wanted to be treated like every other litigant.
Senator James stated he had not made a decision regarding the bill. He did, however, express concern regarding persons suing for a relatively small compensation being further discouraged from even bringing the limited claim they have because of the possibility of a large award of attorney's fees against them.
Mr. Hutchins disagreed this would be a problem. He advised the situation being discussed was not one in which a person had a valid case against the government. If the case is valid, there should be no concern. He advised the bill did not request changing the law regarding the circumstances under which attorney's fees can be awarded, but only limiting the discretion of the courts regarding the government.
Senator James asked, regarding determination of reasonable fees, if government attorneys keep time sheets.
Mr. Hutchins stated they do when they feel there will be an opportunity to recover costs, in civil rights litigation, in insurance defense cases, and in tort cases. He felt S.B. 293 would encourage time keeping in every instance.
Senator James asked if the award of attorney's fees would be limited to the actual charge, and if there is currently a statute which dictates the rate.
Mr. Hutchins advised he did not believe there was a statute dictating fees, however, there are for costs. Therefore, the determination would be made as to the prevailing rate in the community.
Senator James stated private attorneys build profit into their fees, while government should not be given a profit, but only be kept whole. He asked if this would not affect the prevailing community rate standard.
Mr. Hutchins stated the litigant should not have an incentive to go against the government because they would not have to pay the same amount of attorneys fees as if it was a private attorney. He further advised government attorneys in state court receive the prevailing rate, as dictated by federal law. The duty to prove-up the prevailing rate lies with the government.
Senator Jacobsen asked if a court allows fees for a government witness, must that person turn the fee over to the government agency.
Mr. Hutchins replied if the person is on salary and on government time, the money goes back to the government.
Bill Maupin, Past President, Defense Trial Lawyers of Nevada provided oral testimony in favor os S.B. 293. Mr. Maupin advised he is also chairman of this organization's legislative relations committee, and is in private practice in Las Vegas, Nevada. He stated he has had experience in representing political subdivisions in the state as a private practitioner. He explained different situations in which he has represented various entities. He stated the state and its political subdivisions are involved in more litigation than any other single type of litigant group in Nevada. Their involvement includes the same type of litigation as any other person or agency. He stated he had never seen an award of attorney's fees, under the discretionary clauses in the statutes, in favor of a political subdivision of the state of Nevada. He explained in detail his belief why government agencies were denied attorney's fees. He believed the problem could be solved by amending the last section of subsection 2 of S.B. 293 to read "may" rather than "shall." He felt this would preserve the court's discretion in various situations, and described those situations.
Senator James believed the amendment proposed by Mr. Hutchins would also address the problem of exorbitant fees and preserve the courts' discretion.
Mr. Hutchins felt it was important for the judicial system to be made aware that they must treat state and private litigants the same when entering discretionary awards.
Ben Graham, Lobbyist, Legislative Representative, Nevada District Attorney's Association, provided oral testimony in support of S.B. 293. He agreed with previous testimony, particularly regarding the proving-up of attorneys fees. He further stated that the opposing litigant may present testimony as to why attorneys fees should not be awarded, thereby providing an opportunity for the court to arrive at a medium.
Robert S. Hadfield, Lobbyist, Executive Director, Nevada Association of Counties, stated his organization's support of S.B. 293.
Brian Hutchins read a letter from the City of Henderson regarding prevailing rates for attorney's fees. The writer described a case in which a successful motion was defended successfully, but for which fees were not allowed because the attorney worked for a municipality, did not submit time sheets, and could not charge the city high hourly fees. Therefore, according to the court, he would only be entitled to $100. At the conclusion of the case, the same scenario occurred, except the judge stated he was inclined to award no attorney's fees. Mr. Hutchins also read a letter from the Douglas County District Attorney, supporting S.B. 293, although their office had not experienced difficulty in this regard.
Senator James asked if Mr. Hutchins had difficulty with changing the language from "shall" to "may."
Mr. Hutchins believed it should be "shall." He stated if it said "may" the judge could decide whatever rate he believed it should be, and there would be no uniformity.
Senator James asked for the federal statute to which Mr. Hutchins had referred. Mr. Hutchins believed it was 42 United States Code (USC) 1988. Senator James asked if "shall" was in that language. Mr. Hutchins replied he was not certain, but the case law supporting the statute said to look at the prevailing rate.
Senator James requested Dennis Neilander, Senior Research Analyst, to review the state and federal statutes and case law to determine the proper language.
Senator Jacobsen asked who would pay the attorney's fees for someone representing an inmate appealing a sentence.
Mr. Hutchins replied the government would pay that fee. He advised those situations, covered by criminal statutes, were not included in S.B. 293.
Senator James confirmed there was no further testimony on S.B. 293, and closed the hearing.
Senator James opened the hearing on Assembly Bill (A.B.) 82.
ASSEMBLY BILL 82: Expands authority of district courts to issue orders for use of pen register or trap and trace device to include investigators for attorney general or district attorneys. (BDR 14-591)
Mr. Graham provided oral testimony in support of A.B. 82. He advised the Washoe County District Attorney's Association requested this legislation. He explained the pen register as being a sort of caller identification for the government. He stated this allows determination of numbers being called from, or received by, a telephone. He advised many people are authorized to use this device, but the need exists to give the authority to investigators for the attorney general or district attorney's offices.
Senator James asked for and received confirmation that a new category of peace officers was not being added.
Mr. Hutchins provided oral testimony in support of A.B. 82. He believed it was an omission in the statute which left the investigators of the attorney general and district attorney without the authority requested.
Frank Landes, Investigator, Washoe County District Attorney's Office, provided oral testimony in support of A.B. 82. He explained why his organization felt the legislation was necessary. His testimony was provided in writing, and is attached hereto as Exhibit G. He advised that currently, in each instance his office needs this tracing equipment, they must make application to the court for another agency to obtain the equipment for them. He felt this was a waste of time and money for all concerned. He indicated he is a board member of the Peace Officers Research Association of Nevada, which also supports the bill.
Senator Jacobsen asked for and received clarification of the steps required for Mr. Landes' agency to apply for an investigation using tracing equipment, and that the application is a matter of court record.
Sergeant Stephen Turner, Reno Police Department, provided oral testimony in support of A.B. 82. He described situations in which the district attorney's office has had to come to Mr. Turner's department to obtain a trap and tracer or register.
Senator Titus entered the meeting at 1:30 p.m.
Senator James advised he had received a letter from Dorothy Nash Holmes, District Attorney, Washoe County District Attorney's Office, in support of A.B. 82. A copy of this letter is attached hereto as Exhibit H.
Senator James confirmed there was no further testimony, and closed the hearing on A.B. 82.
SENATOR SMITH MOVED TO AMEND AND DO PASS S.B. 268.
SENATOR SHAFFER SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR TITUS ABSTAINED FROM THE VOTE.)
* * * * *
SENATOR SMITH MOVED TO DO PASS S.B. 292.
SENATOR SHAFFER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
SENATOR SMITH MOVED TO DO PASS A.B. 82.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
There being no further business to come before the committee, Senator James adjourned the meeting at 1:40 p.m.
RESPECTFULLY SUBMITTED:
Sherry Nesbitt,
Committee Secretary
APPROVED BY:
Senator Mark A. James, Chairman
DATE:
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Senate Committee on Judiciary
March 26, 1993
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