The Senate Committee on Judiciary was called to order by Chairman Mark A. James, at 9:00 a.m., on Thursday, May 13, 1999, in Room 2149 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator Mark A. James, Chairman

Senator Jon C. Porter, Vice Chairman

Senator Mike McGinness

Senator Maurice Washington

Senator Dina Titus

Senator Valerie Wiener

Senator Terry Care

GUEST LEGISLATORS PRESENT:

Assemblyman Dennis Nolan, Clark County Assembly District No. 13

Assemblyman Douglas (Doug) A. Bache, Clark County Assembly District No. 11

STAFF MEMBERS PRESENT:

Silvia Motta, Committee Secretary

OTHERS PRESENT:

Assemblyman Dennis Nolan, Clark County Assembly District No. 13, thanked the committee for their indulgence in allowing him to testify over a teleconference line from Las Vegas. Assemblyman Nolan stated A.B. 239 was a modification to create the revolving account which would be administered through the criminal repository whereby bequests, donations, contributions and appropriations could be made to the revolving account either through nonprofit organizations, government, or business entities. He said the money would be administered by the criminal repository and made available to nonprofit organizations to conduct background checks of persons who work or have applied to work directly with children. Assemblyman Nolan declared A.B. 239 does not, in any way, require or mandate background checks, but simply creates this account whereby money can be received and then directed towards nonprofit organizations who wish to conduct background checks. He pointed out section 3 of the bill provides for a governmental agency to establish forms and procedures for a person to donate money to the account for the purpose of background checks on volunteers who work directly with children. He said he had been conversing with several businesses who would be willing to seed this account and has a commitment for about $8,000. He stated with the ratification, made by both the Senate and the Assembly, of the National Child Protection Act, the criminal repository in the very near future will be able to access the Federal Bureau of Investigation’s data base which will cut the cost to do the background checks from about $39 to a $25 charge.

Senator Wiener asked Assemblyman Nolan to give a brief history of the bill he had last session which was converted into a resolution. Assemblyman Nolan replied the resolution encouraged nonprofit organizations which volunteered to work directly with youths to establish youth protection programs where children are trained to recognize when somebody is attempting to molest them and how to resist and report such an attempt. He continued the resolution also encouraged those organizations to conduct background checks. He added the resolution was transmitted, along with a letter from the attorney general, to all known charitable and nonprofit organizations working directly with youths in the state. Assemblyman Nolan stated the attorney general’s letter put these organizations on notice of the systems in place to protect the children they work with directly, whereby if an organization had an incident occur it could be held to a higher civil and potentially criminal standard for negligence.

There being no further testimony, Chairman James closed the hearing on A.B. 239 and opened the hearing on A.B. 21.

Assemblyman Douglas (Doug) A. Bache, Clark County Assembly District No. 11, testified in examining various bills he noticed the essence of A.B. 21, section 1, is part of S.B. 451 which he believed was in the Assembly Committee on Judiciary or Assembly Committee on Commerce and Labor at this time. He indicated if S.B. 451 passes, A.B. 21 would not be necessary.

Chairman James inquired if section 4 of A.B. 21 is also included in S.B. 451. Assemblyman Bache responded he had not double-checked on section 4. Assemblyman Bache indicated section 4 was amended by the Assembly Committee on Judiciary. Chairman James asked Brad Wilkinson, Committee Counsel, Legal Division, Legislative Counsel Bureau, if section 4 was a conflict amendment. Mr. Wilkinson responded he would have to look into the matter.

Senator Porter asked whom the appointed tellers would be which are referred to in section 1, subsection 2, of A.B. 21. Assemblyman Bache replied it would be people appointed who are part of the homeowner’s association and not running for office.

Pamela Scott, Property Manager, Howard Hughes Corporation, stated section 1, of A.B. 21, has been dealt with quite adequately in S.B. 451. She said S.B. 451 contains a provision for secret balloting and S.B. 451 provides the votes must be counted in public. Ms. Scott indicated section 4 of A.B. 21 is already law and she believed S.B. 451 was amended and passed through the Assembly Committee on Commerce and Labor at about 7:00 p.m. of the previous evening.

There being no further testimony, Chairman James closed the hearing on A.B. 21 and opened the hearing on A.B. 650.

Brian Doran, Deputy Court Administrator and Deputy Director of the Administrative Office of the Courts, Office of Court Administrator, presented A.B. 650 on behalf of the Las Vegas Municipal Court. He stated one purpose of the bill is to request the Nevada Supreme Court develop rules and regulations pertaining to the filing of documents with the courts of Nevada through the use of electronic media. Once received through electronic media, the rules would also govern the processing, storage and retrieval of the documents. He stated another purpose of the bill is to provide law enforcement agency employees, who elect to use hand-held computers, to issue citations and similar documentation whereby the information produced can be processed by the courts in the same manner as if manually written or filed.

Senator Care asked how extensively now is the practice of electronic ticketing. Mr. Doran replied it is presently only being used in the parking citation arena as a civil citation. Mr. Doran said law enforcement has been reluctant to use the electronic process of issuing citations only because there have been no rules or procedures.

Chairman James asked what some of the other provisions are of A.B. 650, particularly section 3. Mr. Doran responded section 3 of the bill attempts to mirror the manual process. Chairman James asked the need for a section of law to provide it is unlawful for a person to violate a written promise to appear when it is already a statute. Mr. Doran said it is already a law for the manual process, but the purpose of A.B. 650 is to make clear violating a written promise to appear is also a violation for the electronic process. Mr. Wilkinson interjected the language has been removed from section 5 of the bill and moved to section 3 whereby it becomes a new section of the Nevada Revised Statutes (NRS) chapter 171.

Mr. Doran pointed out A.B. 650 does not force any law enforcement officer or court to take up electronic filing, but just starts the process for the Nevada Supreme Court to begin putting together rules and procedures.

There being no further testimony, Chairman James closed the hearing on A.B. 650 and opened the hearing on A.B. 18.

Robert Crowell, Lobbyist, State Bar of Nevada Commission, stated the Assembly amendment dealt with section 1, subsection 4, which provides for the opportunity of the State Bar of Nevada to issue a cease and desist order prior to asking the district attorney to prosecute. Mr. Crowell said that language was suggested and agreed to by the State Bar of Nevada. He indicated there are a lot of misconceptions about the provisions of A.B. 18.

Andrew J. Puccinelli, President, State Bar of Nevada, stated A.B. 18 has the unanimous support of the board of governors of the State Bar of Nevada and he urged passage of the bill.

Senator Care asked if anyone was aware of how many citations had actually been issued in Nevada in the past year for violating the current statute.

Rob Bare, Bar Counsel, State Bar of Nevada, responded citations could mean a lot of different things. It could mean citations as evidence by a complaint filed by a district attorney. It could mean issuing cease and desist orders, or going forward in civil court and taking the sorts of actions to address the concerns brought to the State Bar of Nevada’s attention by people who have been victimized. Mr. Bare stated the reason A.B. 18 is before the Legislature is because people are being victimized by people who are not authorized to practice law. He said over the past 2 years hundreds of Nevada residents have written to or called the State Bar of Nevada because they have been harmed by people who were unauthorized to practice law. Mr. Bare pointed out the statute has been in existence since 1963 and has always been a misdemeanor. The State Bar of Nevada is now asking the Legislature to make this statute a gross misdemeanor, first offense, which takes the penalty from 6 months in the county jail with a $1,000 fine to 1 year in the county jail with a $2,000 fine. Mr. Bare added the State Bar of Nevada is asking the Legislature to make this offense a Class E felony if the offense is repeated within a 7-year period, which provides the court discretion of a minimum of 1 year in the state prison, maximum 4 years, and a $5,000 fine. Mr. Bare stressed the public has asked the State Bar of Nevada to do something about this issue.

Chairman James asked what other less clear situations could arise in which someone could be assisting in the legal process with something that could be deemed the practice of law under the Nevada definition and find themselves having committed a crime.

Mr. Bare responded he was confident when the district attorneys in this state turn their attention to prosecuting someone for the unauthorized practice of law, it is going to be an egregious situation where legal advice has clearly been given and perhaps representation has been provided. Mr. Bare stated the court should be in a position to define the practice of law.

Chairman James voiced concern that a criminal statute must give adequate notice to those who might run afoul to it as to what sort of conduct is being prohibited. He said if it is difficult for the Legislature to define the practice of law, he has some compunction about increasing the statute from a misdemeanor to a gross misdemeanor.

Mr. Bare concurred with Chairman James’ concern and said the State Bar of Nevada is not trying to create a new law, but trying to give some teeth to the existing law because people are being harmed.

Senator Wiener asked for an explanation of the language "otherwise authorized to practice law in this state" versus "an active member of the State Bar of Nevada." She also inquired if the State Bar of Nevada issuing cease and desist orders sets precedence that a professional organization has the ability to get involved in criminal activity when it might have a conflict of interest.

Mr. Bare explained the language "otherwise authorized to practice law in this state," was an effort to clarify that judges in Nevada, pursuant to Nevada Supreme Court Rule 42, have some discretion to allow individuals not licensed in Nevada, but who are licensed lawyers in other states, to practice law in Nevada courts. Senator Wiener said the language is vague because it does not state "or is licensed by another state to practice law."

Senator McGinness said he did not believe Senator Care’s question about how many cases of unauthorized practice of law have been prosecuted in Nevada in the last couple of years was adequately addressed. Mr. Bare narrated two specific cases which the State Bar of Nevada brought before the court last year.

Senator McGinness asked what the result was of one specific case, Amigo Services, Mr. Bare had mentioned. Mr. Bare replied the court enjoined Amigo Services from practicing law in the immigration area, specifically spelling out various concerns of the court with what Amigo Services was doing. Mr. Bare added the bankruptcy courts have also taken some initiative in Nevada over the last year to tell certain people to quit practicing in bankruptcy court.

Mary Audiss, Concerned Citizen, stated she hired someone in January 1998 who held himself out to be an attorney for representation of termination of parental rights. She said there were numerous problems with the paperwork such as misspelled names and incorrect facts in the affidavit. Ms. Audiss said in an effort to provide her attorney with some paperwork from the family support division, she was notified by an employee of the family support division that her attorney was disbarred. After being told the district attorney’s office could not help her in this matter, she contacted the State Bar of Nevada. Ms. Audiss said this disbarred attorney gave her legal advice and charged her $700.

Senator Care said he has heard there are legions of California attorneys who have come to Nevada, are not members of the State Bar of Nevada, and in essence practice law in Nevada in drafting complaints regarding construction defects. He asked if there was any truth to what he has heard.

Mr. Bare replied unfortunately there is a tremendous amount of truth to what Senator Care has heard in this regard. He said he has conducted bar disciplinary hearings concerning those lawyers who are not licensed in Nevada and have taken it upon themselves to practice law in Nevada in the area of construction defects. Mr. Bare continued some of these lawyers went as far as opening law offices without bothering to obtain a license to practice law in Nevada.

Juan Carlos Garcia, Concerned Citizen, testified via a translator, Juan Saenz, that he came from El Salvador with three brothers asking for political asylum after his parents and three other brothers were killed. Mr. Garcia said he filed an application with a notary who told Mr. Garcia she would help him. He said he received a letter from immigration informing him that he had an appointment in Houston, Texas, and when he showed the letter to the person he had hired to help him she said nothing to him about the contents of the letter. Mr. Garcia continued later he received another letter informing him he was deported because he did not appear at his appointment in Houston. Chairman James asked how much Mr. Garcia was charged. Mr. Garcia said he was charged $150 for each family member.

Ben Graham, Lobbyist, Nevada District Attorneys’ Association, stated any case relating to the unauthorized practice of law submitted by the State Bar of Nevada to a Nevada district attorney will have to be completely and thoroughly documented, leaving no doubt beyond a reasonable doubt to each and every element before a case will be approved. Mr. Graham stressed these cases have to be clear and convincing.

Chairman James thanked Mr. Graham for his input, but stated his concern remained this is a misdemeanor statute brought before the Legislature to be changed to a felony statute with the same definition. He said dealing with the deprivation of a person’s liberty is a serious matter and he wants to be sure this issue is handled judiciously.

John Olive, Acorn Corporate Services, Inc., submitted his written testimony in opposition to A.B. 18 (Exhibit C). Mr. Olive stressed his concern about the degree of the penalty entailed in the bill. He indicated section 4 of A.B. 18 would empower the State Bar of Nevada with some quasi-judicial powers which he believes exceed the constitutional validity of what the State Bar of Nevada’s role is in the legal community. Mr. Olive stated that during the two previous Assembly Committee on Judiciary hearings on A.B. 18 no opportunity was given for testimony to be heard in opposition to the bill. He added, however, voluminous written testimony in opposition to A.B. 18 was submitted at these Assembly hearings.

Chairman James asked why nobody testified in opposition to A.B. 18 at the Assembly Committee on Judiciary hearings. Mr. Olive said it was his opinion the proponents of the bill consumed all the time available for the hearing.

Mr. Olive stated it was his position the negotiations conducted between Keith Grimes, a paralegal, and members of the State Bar of Nevada were not reflected in the A.B. 18 language submitted to the Assembly Committee on Judiciary. Therefore, Mr. Olive said he believed the amended language is not reflective of the concerns of the private sector and certainly is not reflective of the concerns of the resident agent industry about this bill. He stressed the passage of A.B. 18 would significantly impact his company’s ability to do business within the State of Nevada.

Chairman James said he was less interested with the issue of the negotiations as the Senate Committee on Judiciary is charged with handling the policy issue presented to it. Chairman James said he wants to know from the opponents how it is that A.B. 18 is going to prevent them from practicing their profession.

Mr. Olive said he believed the State Bar of Nevada’s intention is to expand the definition of what constitutes the practice of law. He stated his belief was based on S.B. 203 of the Sixty-ninth Session, wherein the State Bar of Nevada proposed a very overly broad definition of what constitutes the practice of law.

Chairman James said S.B. 203 of the Sixty-ninth Session was before the Senate Committee on Judiciary and the bill was not processed because of the concerns raised about trying to come up with a definition of the practice of law. Chairman James asked Mr. Olive what his profession entailed which he believed would come within the scope of this bill.

Mr. Olive stated the statutory scope of the duties of resident agents is rather narrow. He continued resident agents provide, as a service to the public, the filing of corporate documents with the secretary of state. Mr. Olive emphatically stressed by allowing the State Bar of Nevada the power to issue a cease and desist order on a mere suspicion, the State Bar of Nevada can revert to S.B. 203 of the Sixty-ninth Session with regard to its interpretation of what constitutes the unauthorized practice of law without recourse to a statute.

Chairman James said he could not imagine the legal profession would be able to function without the essential services resident agents provide. Mr. Olive said the secretary of state’s office had proposed an amendment to A.B. 18. Mr. Olive referred the committee to page 2 of the secretary of state’s May 12, 1999 letter to the Senate Committee on Judiciary (Exhibit D). Mr. Olive stated his concurrence with the secretary of state’s suggested amendment to A.B. 18 and said he believed the amendment had wide support within the resident-agent industry.

Chairman James asked Mr. Olive if resident agents draft articles of incorporation and by-laws. Mr. Olive responded there are standard articles of incorporation which are in published-form books and those are filed with the secretary of state’s office. Chairman James said he would be concerned putting the secretary of state’s proposed amendment in the statute because corporate formation can be an area where the goal must be accomplished by whatever appropriate legal means is necessary. Chairman James added there are a lot of occasions where legal advice is necessary in forming corporations. Mr. Olive stated within his organization attorney services are retained for that particular function, but it is the resident agent who actually files those documents with the secretary of state. Mr. Olive said he feels the resident-agent industry qualifies for an exemption on the bases outlined in the last two paragraphs on page 2 of Exhibit C.

Senator Care interjected he agreed with Chairman James as he also did not see how the resident-agent industry even came under the purview of A.B. 18, or the current statute. He pointed out there is a distinction between a client consulting with an attorney on whether to have a limited liability company or a limited partnership versus a person obtaining standard form articles of incorporation from a resident agent.

Chairman James stated this is the fourth legislative session in which he has been chairman of the Senate Committee on Judiciary and pointed out that he has always been reluctant to process the bills that attempt to legislatively set out what the practice of law is, or is not.

Mr. Olive emphasized his concern of what he sees as the demonstrated intent of the State Bar of Nevada to broaden what actually constitutes the practice of law.

Judy M. Cresanta, President, Nevada Policy Research Institute, said her company represents the work of 18 Ph.D senior researchers and 35 associate researchers who do original research on public policy issues from a free market and constitutional perspective. She said she was testifying at the request of Senator Washington to report on the constitutional relevancy of A.B. 18. She testified activities that constitute the practice of law are not well-defined in A.B. 18. She asked if it were just, fair and equitable to prosecute any individual for a gross misdemeanor or a felony without defining the crime for which one may be found guilty. She said the bill makes the State Bar of Nevada equivalent to a fourth branch of government in the State of Nevada. She continued under A.B. 18 Nevada would not only have the executive, legislative and judicial branches of government, but as currently written the state would also have an additional executive law enforcement branch in the form of the State Bar of Nevada, a private association, whose benefits certainly conflict with those being prosecuted. Ms. Cresanta asked if citizens or the State Bar of Nevada decide how individuals should pursue certain activities. For example, should lawyers be the only ones allowed to define what is a binding contract? Should law enforcement officers be required to have an attorney present before they define the law before a suspected criminal or issue a traffic citation? Should a banker need an attorney present for every bank loan? She further inquired as to the activities of title companies, real estate brokers and insurance companies. She stated all of these entities, in some fashion, execute the law.

Ms. Cresanta said if any meaningful reform occurs to prevent abuses, a clear definition of the practice of law and a clear delineation of what practicing law does not constitute needs to be well-defined before any statute is enacted by the Legislature. She suggested a rational and practical course of action is to direct the State Bar of Nevada, resident agents, realtors, bankers, title companies and all other private companies with an interest in A.B. 18 to engage in earnest and meaningful discussions to arrive at a proposed law that will define the practice of law, define what is not included in the practice of law, and direct the district attorneys or the state attorney general to prosecute those cases under the defined "unauthorized practices of law." Ms. Cresanta said the statutes should be revised, but the Legislature should not pass a law which abdicates its lawmaking responsibility to the courts or to a private professional association. She stated the passage of A.B. 18 would be a great detriment to many of Nevada’s citizens and would certainly be challengeable in court. She continued the passage of A.B. 18 would disrupt the function of many businesses. Ms. Cresanta pointed out because of the obvious constitutional flaws in A.B. 18, she respectfully suggested the bill’s consideration of passage be postponed until the most basic questions contained within its language can be carefully and completely defined.

Gabrielle Lapointe, Co-owner, Divorce Made Easy, read her written testimony (Exhibit E).

Scott W. Anderson, Deputy, Commercial Recordings Division, Office of the Secretary of State, said the proposed amendment in Exhibit D was drafted in response to the specific provisions of S.B. 203 of the Sixty-ninth Session which singled out those persons who most readily use or do business with the secretary of state’s office. He stated the purpose of the secretary of state’s proposed amendment is to protect the revenue-generating ability of the Office of the Secretary of State.

Elizabeth R. Brogan, President, State Agent and Transfer Syndicate, Inc., and Lobbyist, The Nevada Association of Listed Resident Agents, stated her opposition to A.B. 18 and submitted a letter dated May 13, 1999, addressed to Senator Mark James (Exhibit F), setting forth her reasons for opposition to the bill.

Charles W. Joerg, Lobbyist, Nevada Association of Independent Businessmen Political Action Committee, submitted suggested A.B. 18 language changes (Exhibit G).

Chairman James said he found Ms. Cresanta’s testimony to be very compelling because there was some room for doubt. He continued with as much confidence as he has in Mr. Graham, he has concern about increasing a penalty based upon a definition nobody at this hearing was able to articulate in an easy manner. Chairman James concurred with Ms. Cresanta’s suggestion of having the various interest groups together in the context of an interim study or some other form of study group to define the "unauthorized practice of law" upon which everyone can agree. He continued once an agreeable definition has been derived, the process could be furthered in deciding the criminal penalty.

With no more time available for further testimony, Chairman James closed the hearing on A.B. 18. Witnesses unable to testify in opposition to A.B. 18 submitted their testimony for the record (Exhibit H). Chairman James opened the work session.

Senator McGinness said churches come to mind when thinking about volunteers who work with children. He asked if the passage of A.B. 239 would require the investigation of youth group volunteers or Sunday school teachers.

Chairman James noted the fiscal note language of A.B. 239 "contains an appropriation not included in the executive budget" was to be amended out of the bill. Mr. Wilkinson said that language was in the original version of A.B. 239 and fiscal notes are not amended. In answer to Senator McGinness’ question, Chairman James replied it was his understanding from Assemblyman Nolan’s testimony the fund is created solely by gifts or grants and that money is then available for anyone who wants to conduct a background check. Chairman James pointed out there is no mandate in A.B. 239 requiring background checks. Mr. Wilkinson concurred with Chairman James’ response to Senator McGinness.

Senator Washington asked if "the director of the department" in section 2, subsection 2, A.B. 239, refers to the Department of Motor Vehicles and Public Safety. Chairman James replied yes. Senator Washington asked if there were any other agency on the state or county level, such as the district attorney’s office or the sheriff’s office whereby the account to investigate the background of volunteers who work with children could be administered.

Chairman James asked Dennis Debacco, Supervisor, Central Repository for Nevada Records of Criminal History, Department of Motor Vehicles and Public Safety, to respond to Senator Washington’s question. Mr. Debacco said there are numerous types of accounts within the criminal history records repository and the passage of A.B. 239 will just establish an account for the purpose of background checks of volunteers who work with children.

Chairman James asked for a motion to do pass A.B. 239.

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Chairman James asked for a motion to do pass A.B. 650.

Senator Care said he thought the language "rules not inconsistent with" on page 1, line 3 of A.B. 650, would read better if it were changed to "rules consistent with."

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Chairman James referred the committee to the work session document on A.B. 363 (Exhibit I). He said the Senate Committee on Judiciary had thought it would be better to increase the minimum penalty, rather than the maximum penalty.

Gemma Greene, Lobbyist, Nevada District Attorneys’ Association, said she talked with Assemblywoman Sheila Leslie, Washoe County Assembly District No. 7, who is supportive of a penalty of 2 years to 15 years, which increases the minimum penalty.

Chairman James asked for a motion to amend and do pass A.B. 363, amending the bill to change the penalty for stalking from a term of not less than 1 year and a maximum term of not more than 6 years, to a term of not less than 2 years and a maximum term of not more than 15 years.

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Allison Combs, Committee Policy Analyst, Research Division, Legislative Counsel Bureau, explained the amendments to A.B. 392, as outlined in the work session document (Exhibit J). She said there was committee concern the language "in lieu of submitting an action to nonbinding arbitration" could be interpreted to completely take out or sidestep the arbitration program. Ms. Combs pointed out "in lieu of" was replaced with "in addition to," however, she indicated Mr. Wilkinson might have a better suggestion.

Mr. Wilkinson said he understood the concern is to not do away with the arbitration, but to allow the alternative method first, and if that is not successful, then to go to arbitration. He said he did not have a specific language change in mind although he clearly understood the intention of A.B. 392. Chairman James said the change would be language making it clear the Legislature is not authorizing the court to obliterate the arbitration statute.

Senator Care suggested adding clarifying language to A.B. 392 that the judges of the short trials would not, in fact, be district court judges, but a role of attorneys who would act as judges. Chairman James said he thought the short trials should just continue to be handled as they are now.

Chairman James said Senator Wiener submitted a proposal to exempt small claims court from the new provisions. Mr. Wilkinson said that amendment would not be necessary because small claims court issues do not apply to arbitration, but only civil actions with a value of $40,000 for the cause of action. Mr. Wilkinson continued actions in justice court could be submitted to arbitration or another proceeding with the consent of the parties.

Chairman James said the only amendment then to A.B. 392 would be the language Mr. Wilkinson is going to devise making it clear the Legislature is not authorizing the court to obliterate the arbitration statute. Chairman James asked for a motion to amend and do pass A.B. 392.

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There being no further business, Chairman James closed the work session and adjourned the meeting at 10:35 a.m.

RESPECTFULLY SUBMITTED:

Janice McClure,

Committee Secretary

APPROVED BY:

Senator Mark A. James, Chairman

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