MINUTES OF THE

SENATE Committee on Judiciary

 

Seventy-First Session

April 16, 2001

 

 

The Senate Committee on Judiciarywas called to order by Chairman Mark A. James, at 9:30 a.m., on Monday, April 16, 2001, 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

 

STAFF MEMBERS PRESENT:

 

Bradley A. Wilkinson, Committee Counsel

Allison Combs, Committee Policy Analyst

Carolyn Allfree, Committee Secretary

 

OTHERS PRESENT:

 

Senator Michael (Mike) A. Schneider, Clark County Senatorial District No. 8

Greg W. Ferraro, Lobbyist, Nevada Resort Association

Kevin Higgins, Chief Deputy Attorney General, Fraud Control Unit for Industrial Insurance, Office of the Attorney General

Stan Olsen, Lobbyist, Las Vegas Metropolitan Police, Nevada Sheriffs and Chiefs Association

Ben Graham, Lobbyist, Clark County District Attorney, Nevada District Attorney’s Association

 

 

Chairman James opened the hearing on Senate Bill (S.B.) 419.

 

SENATE BILL 419:  Requires Gaming Policy Committee to study certain issues. (BDR S-1184)

 

Senator Michael (Mike) A. Schneider, Clark County Senatorial District No. 8, explained that he has an affiliation with a time-share operation in Las Vegas and is introducing S.B. 419 because “we are approaching a new form of business in Nevada.”  Las Vegas is the hottest time-share market in the United States, he said, and “every major time-share developer in the world wants to come into Las Vegas.”  He said they are building very nice resorts in other places, such as Orlando, Florida.  In Las Vegas, they will come in and build time-share resorts in the resort corridor, he claimed, where land costs up to $10 million an acre and the draw is Nevada-style entertainment.  Because the time-shares consist of suites with full kitchens, there is not a lot of emphasis on restaurants and bars, he said, but he sees a need for smaller casinos to accommodate their clientele.  He explained that time-share operators would probably not operate the casinos, but would contract them out as leased space.

 

Senator Schneider alleged there is a huge demand for time-share units in Las Vegas.  He described a new resort built behind the MGM Grand Hotel/Casino “to the tune of about $150 million,” for the first phase, with the second phase planned for this summer.  These resorts are very elaborate, with full suites and swimming pools, but under current law they are not able to have any gaming devices, except for just the 15 machines in a bar, he said, and this particular resort has reserved a space of 10,000 square feet to lease out for a casino.  He explained these casinos would be for the benefit of the time-share clientele, and owners do not anticipate outside people coming in.  The point he is trying to make, he said, is the time-share concept attracts and supports a whole new customer for Nevada.  The time-share resorts will not have convention space or amenities, such as show rooms and major restaurants; the people will actually leave the time-share resorts to go to the large clubs and restaurants, he said.  Then, when they come back to their home base at the end of the evening, he said, “and have an after-dinner drink and break a $20 bill . . . take the change and play in the machines.”  For that reason, he said, he brought this bill forward, to broaden the gaming industry.

 

Chairman James asked whether the time-share owners would have to be licensed, and Senator Schneider said the resorts are run by homeowners associations and, if anything, the homeowners associations might have to be licensed.  Chairman James said it is an interesting thought that a homeowners association board of directors would be running a casino.  Senator Schneider said these homeowners associations do not have a board of directors such as a typical homeowners association has; the board is made up of the property management company.  He explained 20,000 to 30,000 owners in a time-share resort each hold a deed, but they do not feel they need to participate “like a normal homeowners association.”

 

“This is a totally different type of gaming issue than we have had in the past,” Senator Schneider said, “and I thought we should stay on the cutting edge in this industry.”  He said Hilton Hotels has built two very large time-share resorts in Las Vegas, one at the Flamingo Hilton and tied into the Flamingo Casino, the other a time‑share tower on Paradise Road, beside the Las Vegas Hilton.  Additionally, Hilton has plans to build three or four towers west of the Sahara Hotel and Casino.  Under our current law, he said, Hilton could have only 15 machines in a bar in each of these time-share resorts.  “I think this [proposal] is just an evolutionary step in broadening our market . . . and bringing in new clientele,” he said.

 

“For the record,” Senator Schneider said, “the property I am affiliated with and have an ownership in is the Royal Hotel [and Casino] in Las Vegas, on Convention Center Drive . . . We do have a gaming license there . . . we are grandfathered in; no matter what happens, we can have that license forever; so this does not affect me whatsoever.”  Chairman James commented the only “revolutionary” thing the committee has done this session is with international gaming salons.  This is a new idea, he said, and he suggested it might be a good topic to be considered by the gaming policy committee.  He said the gaming policy committee would have a stronger role this interim than it has ever had before, and the governor had expressed his desire to have the gaming policy committee meet and consider various issues.  Senator Schneider said he would be pleased to see that happen.  He said he recognizes the members of the resort and gaming community are opposed to his proposal, but he feels it is because they do not understand it, and he would like the opportunity to persuade them of its value.  Chairman James said S.B. 419 can be changed to a resolution to be directed to the gaming policy committee.

 

Senator Care said he would like to hear the opposition to this bill.  “We just gave the gaming industry this international gaming salon; we are told there are players who are going to drop $10 [million], $20 [million], $30 million a visit.  Certainly they do not feel threatened by the time-share industry,” he said, “or maybe they do, and I would like to hear the reasons why.”  Senator Schneider said time-share people probably do not gamble huge amounts.  He said the typical time-share owner is about 55 years old and has an income above $70,000, is a good customer to Nevada and, currently, is not coming in a lot.  He reiterated his earlier remark that Las Vegas is the “number one requested place for time-share owners to go, and they cannot get units in there.  This is just part of a growing business for us,” he said.  Chairman James pointed out that, currently, time‑share projects are being incorporated into existing casinos.

 

Greg W. Ferraro, Lobbyist, Nevada Resort Association (NRA), responding to Senator Care’s question, stated the resort association’s opposition to S.B. 419 is based on the fact that they believe the bill asks more questions than it answers.  He said they need to work together to understand what the opportunities and competitive gains might be, versus what any downsides might be.  He said they are concerned about unintended consequences; they are committed to studying the issue; but they think, “candidly, the cart might be before the horse.”

 

Senator Care asked Mr. Ferraro if the NRA agrees with Senator Schneider that, under current law, a time-share could not be constructed that would have its own self-contained “mini-casino.”  Mr. Ferraro answered that he is not an expert in the area of time-share arrangements, but he believes that to be the case.  He believes the issue requires intensive study.  “We do not do things that might unintentionally or inadvertently undermine our efforts,” he said.

 

Chairman James noted:

 

For 45 or 50 years, we did not allow corporate ownership of gaming.  The whole idea of a corporation with different share‑holdings . . . was a very slow process . . . When you say time-share, it means chapter 119 [of NRS], which has its own set of governance, because you have multiple owners of units . . . I do not know how that all overlays with the gaming statutes; it seriously is an area for some inquiry.

 

Senator Schneider explained the Royal Hotel and Casino, in which he owns an interest, had to be separated from the time-share because the owners bought an existing place they are converting, floor by floor, to time-share.  He stated:

 

At a certain floor, all of a sudden we will not have the required room count for the old gaming license . . . But, we were going to cover that, because we have the motel next door . . . This does not affect us, but somebody else just coming in and doing the same thing, building from the ground up . . . [is] denied having anything but a little bar and 15 machines.

 

Senator Titus said it might be helpful to the committee to go back and look at the minutes in the 1991 session, when this (Nevada Revised Statutes [NRS] 463.01865, establishing the definition of “resort hotel”) was enacted.  A lot of debate went into it, she said, because they wanted to protect the quality of gaming.  Senator Schneider said he was talking about something very limited, compared with what the large resort casinos can support, because the time-share resorts do not have the amenities to support large casinos.

 

Chairman James said a resolution should be prepared to request this issue, the issue of Internet gaming and the taxation of Internet gaming, the impact on Nevada of tribal gaming, and the issue of problem gambling be studied by the gaming policy committee.

 

SENATOR PORTER MOVED TO AMEND AND DO PASS S.B. 419 TO CREATE A RESOLUTION.

 

SENATOR MCGINNESS SECONDED THE MOTION.

 

Senator Titus said she has been consistently voting against the creation of all of these committees to carry on the work of the Legislature outside of “this domain.”  She said:

 

This is kind of my protest against the fact that I said we could not do it in 120 days, and we keep giving away all this power and jurisdiction to other people who are not as accountable.  So, that is why I am going to vote against this.  There are only a couple of
legislators on there, and the other people are appointed, and the Governor is on there, and they will be making policy, and there is little press coverage . . . It is just not the same as us doing it here.

 

THE MOTION CARRIED.  (SENATOR TITUS AND SENATOR CARE VOTED NO.)

 

*****

 

Chairman James closed the hearing on S.B. 419 and opened the work session hearing.  (Exhibit C is the Work Session document.)  He opened the hearing on Senate Bill (S.B.) 48.

 

SENATE BILL 48:  Prohibits various acts related to Internet, networks, computers and electronic mail. (BDR 15-259)

 

Chairman James said there was concern expressed by Internet service providers regarding the privacy statement section of the bill.  He said the subcommittee went over S.B. 48 in great detail.

 

Chairman James said there was no formal amendment proposed to S.B. 48, but the part requiring a privacy statement was problematic because it was felt there should be a national standard and to make Nevada a separate standard would be difficult for ISPs (Internet service providers).  He suggested amending the bill to remove the language regarding the privacy statements and allow for further study since it is an emerging area of the law.  There were no major objections to the bill, otherwise, he said.

 

SENATOR MCGINNESS MOVED TO AMEND AND DO PASS S.B. 48.

 

SENATOR WIENER SECONDED THE MOTION.

 

Senator Care asked about the reference to “spamming” in section 8, subsection 4, paragraph (b), and whether somebody sending out unsolicited advertisements again and again would constitute a crime, under the language.

 

Chairman James answered the crime is in response costs, loss, injury, or other damage in excess of $500, committed in a scheme to defraud or illegally obtain property or cause an interruption or impairment to public service.  Reading from the bill, he said:

 

It is clear that it says, “to prevent, impede, delay or disrupt the normal operation or use of the Internet or network site . . . or under circumstances in which such conduct is reasonably likely to prevent, impede, delay or disrupt the normal operation.”  It is trying to get at these cases where they try to shut down Internet sites or shut down someone’s computer system . . . I do not think just a lot of messages is going to do that; it is talking about a technological breakdown.

 

THE MOTION CARRIED UNANIMOUSLY.

 

*****

 

Chairman James opened the hearing on Senate Bill (S.B.) 551.

 

SENATE BILL 551:  Makes various changes concerning computers, technology, Internet and crimes against children. (BDR 15-442)

 

Chairman James said the subcommittee had a lengthy meeting on S.B. 551 and the proposed amendments are outlined on page 2, 3, and 4 of the work session document (Exhibit C).

 

Kevin Higgins, Chief Deputy Attorney General, Fraud Control Unit for Industrial Insurance, Office of the Attorney General, explained the proposed amendments, as discussed in the subcommittee hearing (Exhibit D), as follows:

 

Typically, law enforcement, if they are researching a piece of e‑mail and they want to find out who sent it . . . it is necessary to have certain records maintained . . . [See proposed amendment 1 on page 1, Exhibit D.]  This would parallel the authority law enforcement has now to issue an administrative subpoena to the
telephone company or power company to find out who a customer is at a particular address . . . Because the language has changed in subsection 1, subsection 2 would be changed . . . [See proposed amendment 2, page 1, Exhibit D.]

 

Senator McGinness noted this proposed amendment provides for a penalty “for each violation,” and he asked if the provider would be fined for each of 100 names that were missing, for example, or for just the name for which law enforcement was looking.  Mr. Higgins said, generally, violations would probably be consolidated, and intent would be required for the criminal provision.  “I would imagine we would charge them with only one violation; and, if we went back the next week and it was a separate incident, that would be a separate violation,” he said.

 

Mr. Higgins continued, “Subsection 3 defines the kind of things our subpoena will include . . . All of this information is federally regulated, and local law enforcement has to comply with the Electronic Communications Privacy Act [of 1986] [ECPA] . . . ”  Chairman James said it would give him greater comfort to require a court order, based on reasonable cause, for the information to be provided to law enforcement.  Senator Care said he agrees law enforcement should not be able to so easily issue a subpoena just because they think a crime is being committed.

 

Responding, Mr. Higgins said the administrative authority would bring Nevada law enforcement agencies into compliance with the federal law.  He explained:

 

Some things you can only get with court order, some things subpoena with notice to the parties . . . This is only basic subscriber information we can get with a subpoena . . . If the Internet service provider chooses not to abide by the subpoena . . . then we go through the standard civil subpoena challenge, we go to district court, we would file a motion for order to show cause, and they would have the opportunity in front of a district court judge to explain why they should not provide that information.

 

Mr. Higgins said the Internet providers keep this information now, and what they want is a way to provide it to law enforcement so they will not be in violation of the Electronic Communications Privacy Act of 1986.

 

Chairman James said it is the sentiment of the committee to put the whole matter in court and have law enforcement provide reasonable grounds to the court for obtaining the information.  Mr. Higgins replied it would be far more stringent than the federal law.  He stated:

 

The problem is, sometimes you are investigating a case [in which] you do not have probable cause that would allow you to get a search warrant; you are simply asking, “Who is Joe Smith at aol.com?”  AOL [America Online] will not provide that information unless, in the state of Nevada, we are authorized pursuant to statute under ECPA.  They [Internet service providers] tell us, “You do not have the authority in Nevada to issue those subpoenas and we are not going to provide you that information.”  They are afraid of getting sued by their customers, so they want to make sure they are accurately giving away the information, on a state-by-state basis, under the laws of each state.

 

Chairman James said, ”It is more than that.  It is ‘customer lists, including name, address, telephone number, method of payment, date and times of customer log-in, and minutes on line.’”  Mr. Higgins replied it is how you can tell who is on line at a given time.  If the Internet provider does not want to provide the information, we have a court procedure to do it, he said.  Chairman James said the court procedure protects, not the ISP, but the customer.  Mr. Higgins replied, “The holder of the information has the authority to reject the subpoena.”  Chairman James likened it to a bank record, where the bank can say there are records, but they are the records of somebody else.  Mr. Higgins agreed it is a very similar situation.  He stated the fraud unit has the ability to subpoena financial information, and if people do not want to provide it, “we go to court.”

 

Chairman James explained:

 

The bank is concerned about giving out their information.  The bank gives notice to the customer, and the customer hires a lawyer; the customer files an objection under Rule 45, and you go to court and litigate it.  The reason the bank does that is because there is not this kind of protection in the law that says the bank
can just give it away and it is protected.  So, what this will do is . . . the Internet service provider will not object to the subpoena; they will just produce it; they may not even notify the customer.  What I am saying is, add the requirement.  It is not burdensome.

 

Mr. Higgins said he did not know what standard of proof would be used.  He added:

 

If we need a probable cause standard, there is no point in even doing this; we will just get a search warrant.  And, that is the problem; we cannot satisfy that probable cause standard.  If somebody gets a piece of hate e-mail [containing a death threat], do we have probable cause to believe who committed that crime?  We have absolutely no idea, unless we ask the ISP.

 

Law enforcement must have a search warrant, if it wants to get the contents of e-mail, he said.  He added, most states have authorized law enforcement to ask for subscriber information; Nevada is one of the few that has not.  He said he has hundreds of complaints from people who have bought things on eBay, and law enforcement cannot do a simple subpoena to say, “Tell me who Joe Blow at reno.net is who is doing all this stuff on eBay.”

 

Mr. Higgins said, “The status of the law now . . . is, if Caller ID comes through [indicating] somebody at 687-1234 has been giving me obscene phone calls, I can prepare an administrative subpoena right now and find out who the phone number belongs to.”  Chairman James asked what law enforcement’s basis is for doing anything when somebody says he has had a problem on eBay or somebody is sending him threatening e-mail.  Mr. Higgins replied, “A crime has been committed, but we do not have probable cause to believe a particular person has committed it.”  Chairman James responded, “You do not need that; you need probable cause to believe a crime has been committed.  You do not know who committed it; that is what you are after.  All you have to do is take that to the court,” he said.  Mr. Higgins countered, asserting this is a daily need for law enforcement, and to require them to go to the district attorney and get a court hearing would make the process much more difficult.  He said if they could set a legal standard for law enforcement to take to a judge to get the records he would be more comfortable.  Chairman James replied the standard would be reasonable cause to believe a crime has been committed by use of the ISP.

 

Mr. Higgins explained proposed amendment 4, page 1, Exhibit D, concerning stalking on the Internet.  He said the subcommittee was concerned that a single incident might constitute a crime, so this would amend section 3, subsection 3 of S.B. 551 to apply to mass mailings, rather than just one contact.  Chairman James said the language he had suggested is, “in a manner that increases the potential for harm or violence to the victim.”  He said for the crime of stalking a first offense is a misdemeanor; for aggravated stalking it is a gross misdemeanor.  Here we are going to a category C felony, and the reason is the Internet is being used in a manner that causes an enhanced potentiality for violence or harm; it is more than harassing somebody, he said.  The proposed amendment states, “to cause a person to feel.”  Chairman James stated, “First of all, it would have to be a ‘reasonable’ person, and it has to include this element of broad publication . . . That is the reason for the category C [felony].”

 

Mr. Higgins explained proposed amendment 6, page 2, Exhibit D.  He gave an example of a suspect contacting a 40-year-old undercover agent, believing the agent to be a child under 16 years of age.  He said the attempt to contact an under-age child would be a crime under this section.  Chairman James said “impossibility” can be used as a defense in this instance.

 

Stan Olsen, Lobbyist, Las Vegas Metropolitan Police, Nevada Sheriffs and Chiefs Association, clarified how this kind of law works.  He said, if somebody sells you aspirin and tells you it is cocaine, you can be charged and convicted for purchasing cocaine.  Chairman James reiterated his concern for “impossibility” as a defense and asked Bradley A. Wilkinson, Committee Counsel, if there might be better language.  Mr. Wilkinson replied he thinks the language suggested would work.  He explained, under those circumstances, the person would be guilty of attempted luring, and making the punishment the same for an attempt as for a violation would work.

 

Regarding proposed amendment 8, page 2, Exhibit D, Chairman James said he thinks making failure to adopt the policy unlawful as a misdemeanor and subject to a fine of $500 is enough.  He said he did not think a violation should be a gross misdemeanor.  Mr. Higgins said he would like to keep the $1000 fine because this is not for a single sale; they could potentially be selling to hundreds of people simultaneously, he said.  Chairman James insisted on lowering the fine to $500, as well as the fine outlined in proposed amendment 10, page 2, Exhibit D, relating to Internet sale of alcohol.

 

Mr. Higgins said proposed amendments 11, page 2, and 13, page 3 (Exhibit D) remove mandatory language, replacing “must” with “may.”  Proposed amendment 17, page 3 (Exhibit D) provides that a person assisting in a crime by using encryption is guilty of the underlying crime.

 

Senator Wiener asked for clarification concerning the stalking provision.  Chairman James said it will be the same language as in the stalking statute, “that would cause a reasonable person to feel terrorized, frightened, intimidated, or harassed, and that actually causes the victim to feel terrorized, frightened, intimidated, or harassed,” and, “published in a manner that substantially increases the potentiality for harm or violence to the victim.”

 

SENATOR MCGINNESS MOVED TO AMEND AND DO PASS S.B. 551.

 

SENATOR WIENER SECONDED THE MOTION.

 

THE MOTION CARRIED UNANIMOUSLY.

 

*****

 

Chairman James closed the hearing on S.B. 551 and opened the hearing on S.B. 242.

 

SENATE BILL 242:  Prohibits growing, cultivating or propagating of marijuana. (BDR 40-469)

 

Chairman James referred to the provisions in S.B. 242 for graduated penalties for growing marijuana.  He said it had been determined 1 to 50 pounds would constitute a Category E felony, 50 to 100 pounds a Category D felony.  Above 100 pounds is covered under the trafficking statutes, he said.  Then, he added, the bill mirrors the trafficking statute, which provides that 100 pounds or more, but less than 2000 pounds, would constitute a Category C felony; 2000 pounds or more, but less than 10,000 pounds, would constitute a Category B felony; 10,000 pounds or more would constitute a Category A felony and life imprisonment with the possibility of parole, minimum 5 years, or definite term of 15 years, with eligibility for parole after 5.

 

Senator Wiener asked what possession of less than 1 pound would constitute.  Chairman James answered it would be felony possession.  Mr. Olsen noted the Assembly misdemeanor marijuana bill would allow individuals to grow their own marijuana for medicinal purposes and would allow for no controls for small amounts of growing for personal use.  Chairman James said the committee is not attempting to deal with that bill today.  He added, “I do not think we should have the state of Nevada growing marijuana, nor do I think we should have individuals growing it.  What we should have, if we are going to implement medical marijuana, is to do it through the drug companies.”

 

Senator Porter said, “As I understand it, the intent of S.B. 242 was to correct something that was inadvertently left out last session.”  Mr. Olsen said that is correct.  He said the one concern he has is it takes a lot of plants to get to 50 pounds of marijuana, but as long as the penalties are in the felony range, law enforcement will support the bill.

 

Ben Graham, Lobbyist, Nevada District Attorney’s Association, said S.B. 242 “is a step in the right direction” and the district attorney’s association supports the amendments.

 

Chairman James said proposed amendment number 1 outlined in the work session document (Exhibit C) would be ignored for now and dealt with when Assembly Bill (A.B.) 453 comes to the committee, as time allows.

 

ASSEMBLY BILL 453:  Authorizes medical use of marijuana in certain circumstances and revises penalties for possessing marijuana.  (BDR 40‑121)

 

Chairman James said if there is an amendment to S.B. 242 required to make an exception after A.B. 453 is processed, it can be done in a conflict amendment.

 

SENATOR TITUS MOVED TO AMEND AND DO PASS S.B. 242.

 

SENATOR CARE SECONDED THE MOTION.

 

THE MOTION CARRIED UNANIMOUSLY.

 

*****

 

Chairman James closed the hearing on S.B. 242 and opened the hearing on S.B. 301.

 

SENATE BILL 301:  Makes various changes concerning certain professions. (BDR 7-634)

 

Chairman James said he has not heard from Senator Townsend (Randolph J.  Townsend, Washoe Senatorial District No. 4), Chairman, Senate Committee on Commerce and Labor, regarding amending A.B. 539 into S.B. 301 (amendment number 3, outlined in the Work Session document, Exhibit C), so that cannot be dealt with today.

 

ASSEMBLY BILL 539:  Makes various changes to provisions governing architects, registered interior designers and residential designers.  (BDR 54-615)

 

Allison Combs, Committee Policy Analyst, explained the proposed amendments to S.B. 301.  Senator Titus asked why architects and designers were being deleted from subsection 4 of NRS 625.407.  Ms. Combs said she believes it is because they are already included under NRS 623.349.  Chairman James confirmed Ms. Combs’ statement.

 

SENATOR MCGINNESS MOVED TO AMEND AND DO PASS S.B. 301.

 

SENATOR PORTER SECONDED THE MOTION.

 

THE MOTION CARRIED UNANIMOUSLY.

 

*****

 

Chairman James closed the hearing on S.B. 301 and opened the hearing on S.B. 411.

 

SENATE BILL 411:  Enacts provisions governing confidentiality of certain information. (BDR 3-36)

 

Chairman James offered an amendment to section 6 of S.B. 411 that would limit the scope of the bill to broad public hazards.  He suggested public hazard be defined as a substantial public hazard, “meaning an instrumentality, device, person, procedure, product, or condition of any instrumentality, device, person, procedure, product that has caused or is likely to cause substantial bodily injury or death.”  Throughout the bill, the words “substantial public hazard” would replace “public hazard,” he added.  Additionally, he suggested adding the language, “The word person, as used in this section, does not include a natural person.”  He said it would clarify the bill does not deal with isolated cases.

 

Senator Titus and Senator McGinness asked if the part of the bill dealing with the labor commissioner would be left in, and Chairman James said it would be.  Senator Porter asked if the term ”alleged violations” in section 10 of the bill meant an accusation without substance.  Chairman James responded that the labor commissioner would not be entering into an agreement unless there were substantial reason to believe there is a violation.  “’Alleged’ just means that it has not been adjudicated,” he said.  “In most of the cases, when there is a settlement, it is not going to be an adjudicated violation.  You cannot change it to say it has been adjudicated, because then it would not be a settlement; it would just be an administrative determination that was appealable,” he said.  He added a disclosed settlement can contain a denial of any liability.

 

Senator Care said, as an attorney, he is concerned with section 7 of S.B. 411, and how he would write a settlement agreement for a defendant client over something involving a potential public hazard.  He said he would have to advise his client that, if he did not include it, they both might be in violation of the law.  Chairman James said, what they have tried to do is narrow the definition of public hazard to “substantial” public hazard, and it is going to be up to the court.  He said, “The court will decide these cases.  That is how the bill is drafted, that the court will not enter an order that will seal or conceal them and will also not enter an order that prevents the disclosure of an otherwise sealed settlement, if it involves a substantial public hazard.”  He noted the consequence is not a liability determination; it is just that the information will be there, he said.  Senator Care asked whether, in terms of the language “effect of concealing a public hazard,” an attorney has a duty to include a disclosure in a settlement agreement involving a public hazard; whether not including it can be construed as an act of omission; and, whether there is an affirmative duty to put it into the settlement agreement.  Chairman James said he did not think there was such a duty, and gave the following example:

 

You settle the first case where a Firestone tire separates.  The attorneys . . . decide they do not want this to be public, so they seal the record.  Somebody wants to get at those court records and see what allegations were made and get at any discovery that might have been filed with the court.  They go to court and find the records have been sealed.  So, they file a motion.  The court holds a hearing on the motion.  The parties come in and say, “This is not a substantial public hazard; we have had only one claim of this . . . ”  The court makes a determination and says, “No, this is obviously a public hazard,” and unseals the case.  Or, you go in and you ask the court to seal it and, at that proceeding, the court makes that same determination . . .

 

On the other hand, Chairman James said, in the case of an individual who fell off a bar stool, a judge would say it is about someone who fell off a bar stool; it is not a substantial public hazard.  And, the case would remain sealed.  He stated:

 

The run of the mill tort cases that do not involve a product placed in the stream of commerce, an instrumentality in the stream of commerce, a pollutant which has been let out or put into building materials that would otherwise harm workers . . . If it does not involve those kinds of things, it will not be covered by this.

 

Senator Care said he is sympathetic and will support the bill today, as a matter of public interest, but he does not envision its working smoothly.

 

Senator Porter asked Chairman James to explain his amendment again.  Chairman James reiterated his previous statement regarding substantial bodily harm or death, and the term “natural person.”  He noted the amendment removed the cases involving economic harm and securities fraud.

 

SENATOR TITUS MOVED TO AMEND AND DO PASS S.B. 411.

 

SENATOR PORTER SECONDED THE MOTION.

 

THE MOTION CARRIED.  (SENATOR WASHINGTON VOTED NO.)

 

*****

 

There being no further business, the meeting was adjourned at 11:45 a.m.

 

 

RESPECTFULLY SUBMITTED:

 

 

 

Carolyn Allfree,

Committee Secretary

 

 

APPROVED BY:

 

 

 

                       

Senator Mark A. James, Chairman

 

 

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