MINUTES OF THE

SENATE Committee on Judiciary

 

Seventy-First Session

April 11, 2001

 

 

The Senate Committee on Judiciarywas called to order by Chairman Mark A. James, at 8:43 a.m., on Wednesday, April 11, 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

Barbara Moss, Committee Secretary

 

OTHERS PRESENT:

 

Richard Kirkland, Director, Department of Motor Vehicles and Public Safety

R. Warren Lutzow, Chief, Division of Parole and Probation, Department of Motor Vehicles and Public Safety

Troy Dillard, Unit Manager, Parole and Probation, Division of Parole and Probation, Department of Motor Vehicles and Public Safety

James F. Nadeau, Lobbyist, Captain, Washoe County Sheriff’s Office, and Nevada Sheriffs and Chiefs Association

Steve Asher, Sergeant, Sparks Police Department

Robert J. Fuller, Community Affairs Officer, Sparks Police Department

Teresa Wiley, Sparks Police Department

Adam Wygnanski, Detective, Reno Police Department

Patricia A. Hines, Lobbyist, Nevada Cure

Judge Cynthia Dianne Steel, Family Division, Eighth Judicial District

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

David S. Gibson, Lobbyist, Clark County

Mike Ebright, District Administrator, Division of Parole and Probation, Department of Motor Vehicles and Public Safety

John C. Morrow, Lobbyist, Washoe County Public Defender

Steven Ing, Marriage and Family Therapist (MFT), American Forensic Counseling

John Hines, Concerned Citizen

Kent F. Lauer, Lobbyist, Nevada Press Association

D. Taylor, Culinary Workers Union, Local 226

Samuel P. McMullen, Lobbyist, Retail Association of Nevada, and Las Vegas Chamber of Commerce

Mary F. Lau, Lobbyist, Retail Association of Nevada

Kami L. Dempsey, Lobbyist, Las Vegas Chamber of Commerce

John P. Sande III, Lobbyist, Nevada Bankers Association, and International Game Technology

Alfredo Alonso, Lobbyist, Citibank (Nevada) NA

Raymond Bacon, Lobbyist, Nevada Manufacturers Association

Peter D. Krueger, Lobbyist, Nevada Petroleum Marketers and Convenience Store Association, Cigar Association of America

Robert Barengo, Lobbyist, Nevada Consumer Finance Association

Elizabeth M. Pederson, Lobbyist, League of Women Voters of Nevada

 

Senator James opened the hearing on Senate Bill (S.B.) 412.

 

SENATE BILL 412:  Revises various provisions pertaining to certain offenders. (BDR 14-798)

 

Richard Kirkland, Director, Department of Motor Vehicles and Public Safety, pointed out the current law requires convicted sexual offenders, upon either release from prison or parole and probation, to report to the area in which they live in order to register at the local police department or sheriff’s office.  Thereafter, sexual offenders are required to reregister at the Division of Parole and Probation (DPP) for tier assessment to notify the people in the community.  Director Kirkland said, since the law became effective in 1998, approximately 2500 registrations have been accomplished statewide.  Unfortunately, for a variety of reasons, approximately 500 of the sexual offenders do not make the trip from the local police department or sheriff’s office to the P&P.  The director noted, it takes many resources to locate offenders, some of whom cannot be found, and the procedure is very inefficient and ineffective.  He expressed a desire to have sexual offenders register at the local police department or sheriff’s office, as they are doing currently, and have the data transmitted electronically, as is done by other major agencies in the state.  Director Kirkland stated this procedure would be quicker and less expensive. 

 

Continuing, Director Kirkland indicated some agencies expressed concern about S.B. 412 placing more burden upon them.  He pointed out, shifting the burden is not the intention of the legislation, and that concern had been alleviated in meetings with agency representatives.  The director declared the Department of Motor Vehicles and Public Safety would continue to assume its responsibilities, and asserted the new procedure would ease the burden on all entities. 

 

R. Warren Lutzow, Chief, Parole and Probation (P&P), Division of Parole and Probation (DPP), Department of Motor Vehicles and Public Safety, indicated all sexual offenders should be going to the law-enforcement agencies to register as a convicted sexual offender, and then they are referred to DPP for additional work.  He pointed out this procedure delays the tier assessment a minimum of 3 to 5 days.  Chief Lutzow explained, sexual offenders are given 48 hours to move from “Point A” to “Point B,” and by the time they get there (if they show up) several more days have passed, and then the data is collected and mailed to the Central Repository for Nevada Records of Criminal History (central repository).

 

Further, Chief Lutzow indicated the larger agencies use an electronic system to gather most of the pertinent information, which includes residence, employment, vehicles, physical characteristics of the individual, and the crimes of which they have been convicted, and it is then sent to the central repository.  The chief stated S.B. 412 basically requests DPP to be removed from the second step, which is not effective in any event. 

 

Troy Dillard, Unit Manager, Parole and Probation, Division of Parole and Probation, Department of Motor Vehicles and Public Safety, pointed out section 3 and section 7 of S.B. 412, deal with conditions for supervision of sexual offenders on probation and parole.  He pointed out the modification requests would clarify the wording and make it more consistent with other existing conditions, as well as add some new conditions necessary to supervise sexual offenders in a manner to best protect the community.  Mr. Dillard noted the conditions provide the supervising officer discretion as to the imposition, or nonimposition, based upon each individual case. 

 

Referencing page 3, line 16, section 3, subsection 1, paragraph (h), “Not have contact or communicate with a victim of the sexual offense or a witness who testified against the defendant or solicit another person to engage in such contact or communication on behalf of the defendant, unless approved by the parole and probation officer assigned to the defendant,“ Senator Wiener inquired why communication between the parties would be allowed.  In response, Mr. Dillard said victims in the cases vary greatly, some could be spouses and some could be children.  He explained, section 3 specifically deals with incest cases where a child may be the victim, and a counselor is working toward family reunification after treatment.  He said the legislation would allow an option to communicate; however, the decision would not be made solely by the P&P.  It would be a triangle approach between the offender, counselor, mental-health provider, and the Division of Parole and Probation. 

 

Senator Wiener commented, because communication is not allowed at present, an attempt for reunification cannot be done.  Mr. Dillard maintained, currently communication can be allowed by returning to the court, or parole board, to petition for removal of the condition, which requires an officer’s time and effort, as well as the counselor writing additional reports for the court and the parole board.  He said, should S.B. 412 be approved, that function would be accomplished by DPP in conjunction with the counselor.   

 

James F. Nadeau, Lobbyist, Captain, Washoe County Sheriff’s Office, and Nevada Sheriffs and Chiefs Association, pointed out the practicality of electronically transferring data, rather than sending the sexual offender to another location.  He noted the offenders “fall through the cracks” and are not motivated to follow through.  Therefore, he expressed support for that aspect of S.B. 412.  Referring to page 6, line 17, section 5, subsection 6, paragraph (a), of S.B. 412, Captain Nadeau indicated DPP would continue to take sexual offenders’ annual fingerprints and photographs, rather than the local agency.  He pointed out the number of sexual offenders would undoubtedly increase because registration continues throughout their lifetime, which puts a burden on the local entities.  The captain said DPP had agreed to continue that function.  He expressed support for the initial point of contact and said it was a logical way to proceed.

 

Following up, Director Kirkland stated he agreed with P&P continuing to be responsible for annual registration, fingerprint, and photograph requirements. 

 

Steve Asher, Sergeant, Sparks Police Department, indicated the Sparks Police Department concurred with the annual registration, fingerprint, and photograph requirement.  He distributed a document entitled, “Senate Bill No. 412” (Exhibit C), which listed the fiscal impact to the agency, and clarified some of the language. 

 

Robert J. Fuller, Community Affairs Officer, Sparks Police Department, expressed support for electronic transmittal of sexual-offender data. 

 

Teresa Wiley, Records Supervisor, Sparks Police Department, expressed concern about processing annual registrations, including fingerprinting and photographing; however, the previous discussion regarding P&P continuing that function laid her concerns to rest. 

 

Adam Wygnanski, Detective, Reno Police Department, indicated he was neutral on S.B. 412.  He said the legislation would eliminate the failure rate for sexual offenders registering in both places.  The detective noted registration at law enforcement is an excellent idea, particularly for individuals no longer on parole and probation, who question why they are required to go to P&P to register.  Referring to section 1, subsection 1, paragraph (b), subparagraph (4), of S.B. 412, “The duty to notify the local law enforcement agency in whose jurisdiction he formerly resided, . . . in writing,” Detective Wygnanski, in his experience interviewing approximately 1,000 registered sex offenders, said it is very difficult for these individuals to provide anything in writing to the central repository or P&P.  He suggested the language be clarified to require sexual offenders to appear in person rather than allowing them an option to report in writing, because they find it difficult to comply.  

 

Patricia A. Hines, Lobbyist, Nevada Cure, indicated her main concerns were points of clarification.  Referring to section 1, subsection 1, paragraph (b), subparagraph (4), Ms. Hines said she supported sexual offenders being required to appear in person to change their address.  She suggested a standardized form be filled out and the offender given a copy to provide proof he reported, should there ever be a question.  In addition, she expressed a concern regarding accessibility of probation officers during a time frame of Monday through Friday, from 8 a.m. to 5 p.m.  She pointed out the difficulty of checking in with a probation officer in a timely fashion when a person is employed, dependent upon public transportation, and the hours are not compatible.  Ms. Hines suggested extending the reporting hours for sexual offenders.  In addition, she noted, offenders experience problems communicating with their probation officer by voice mail, which sometimes is erroneously erased, and then they are accused of not reporting.  Ms. Hines said she foresaw a fiscal impact on P&P in the attempt to achieve the goals.    

 

In reference to section 3, subsection 1, paragraph (m), of S.B. 412, “Comply with any protocol concerning the use of prescription medication prescribed by a treating physician, including, without limitation, any protocol concerning the use of psychotropic medication,” Ms. Hines pointed out the language should be clarified regarding the probation officer directing the offender to take medication.  In response, Senator James pointed out the bill said “a treating physician.”  She inquired whether the physician’s requirement would be in writing.  The senator said the bill stated “prescription medication prescribed by a treating physician,” and explained, if the offender has a prescription from a physician, he/she must abide by the doctor’s orders.  Ms. Hines reiterated the language needed clarification. 

 

Further, in reference to section 7, subsection 3, and section 13, subsection 4, of S.B. 412, “If the central repository does not receive a verification form from an offender,” Ms. Hines asked, “If P&P is going to assume the responsibility for annual registration, who will send out the form?”  She expressed concern that an offender could be blamed for not submitting the annual form because of ignorance of the procedure.  In addition, Ms. Hines asked the manner in which the Nevada Department of Prisons would inform the offender of the procedure upon parole. 

 

Continuing, Ms. Hines indicated there was concern regarding section 3, subsection 1, paragraph (k), of S.B. 412, “ . . . and permission has been obtained from the parole and probation officer assigned to the parolee in advance of each such contact . . .”  She expressed the opinion that the “old law,” with respect to contacts in a park, church, or a theatre, allowed the offender to do those activities if accompanied by another adult. 

 

Director Kirkland indicated the central repository was reorganized, and P&P now operates out of the central repository due to electronic transference of material. 

 

In response, Senator James pointed out, section 10, subsection 3, paragraph (a), of S.B. 412, “The department of prisons or a local law enforcement agency in whose facility the sex offender is incarcerated or confined shall (1) Inform the sex offender of the requirements for registration . . .”  The senator said, with further perusal of the bill, Ms. Hines would find most of her concerns answered.  Ms. Hines inquired whether or not the offender would be notified of the procedures upon parole, and Senator James answered, “Yes.”

 

Judge Cynthia Dianne Steel, Family Division, Eighth Judicial District, indicated she took the position of juvenile delinquency judge in January 2001.  She said, upon assuming the position, she was asked to work with a study group on juvenile justice for the state of Nevada in regard to juvenile sex offenders and their probation requirements.  The study group asked for further examination of the issue to ascertain whether it could be “fine tuned.”  Although she was uncertain how the subject fit into S.B. 412, Judge Steel noted, she refers to chapters 62, 179 and “the 200s” in the Nevada Revised Statutes (NRS) when sentencing.  The judge indicated, Robert W. Teuton, Chief Deputy, Juvenile Division, Office of the District Attorney, worked on the amendments with Patricia Hoover, Juvenile Probation Officer, Sex Offender Unit, Clark County Probation, Family and Youth Services Department.  She reported Ms. Hoover was ill and unable to attend the hearing; however, her written testimony was submitted as Exhibit D.  Judge Steel said she had been approached by several district attorneys and probation officers who were concerned that the laws, as presently written, would impact the number of juveniles eventually coming into the system.  She deferred to others in attendance better qualified to follow up on her testimony.

 

Ben Graham, Lobbyist, Clark County District Attorney, and Nevada District Attorney’s Association, stated there are new laws and legislation dealing with sexual predators and high-risk individuals.  He said S.B. 412 lumps a “whole bunch of people” into the sexual-offender category, with no differentiation between sexual offenders and high-risk offenders.  Mr. Graham explained that S.B. 412 will allow flexibility for the courts and probation officers to provide high-risk offenders special care and attention, and the more youthful, “wild oats” type situations less intensive care. 

 

David S. Gibson, Lobbyist, Clark County, indicated he perused the amendments submitted by Mr. Teuton (Exhibit E), which fill a need and revisit areas of concern in the original legislation.  Mr. Gibson said he was in accord with the issues and requested the amendment be added to S.B. 412.     

 

Senator James suggested a work session tomorrow on S.B. 412 to draft an amendment in accordance with Mr. Teuton’s proposed amendments. 

 

Senator James closed the hearing on S.B. 412 and opened the hearing on S.B. 479.

 

SENATE BILL 479:  Provides public with access to information on Internet concerning certain offenders. (BDR 14-1304)

 

Senator James pointed out S.B. 479 would not be processed and offered the following explanation for the decision.  He said sex offender notification laws were initiated in the Legislature by the Senate Committee on Judiciary in 1993, but did not provide access to the central repository to anyone but law enforcement.  He noted, in 1993, registration was made available to some members of the public, including school officials and others.  In 1995, the committee passed a sex-offender notification law which allowed information regarding the release and presence of a sex offender in the community to be accessed by the general public.  Senator James said the law was applicable to sex offenders already incarcerated.  He pointed out, the motivation and intention of the Legislature in enacting these kinds of statutes was public safety.  The senator explained a law that attempts to notify the public of potential risk is not a punitive law.  He further explained, nobody is punished for a crime on which he/she has been convicted and sentenced when the law providing the punishment is enacted after the fact, which is called an ex post facto law, “A law passed after the occurrence of a fact or commission of an act, which retrospectively changes the legal consequences or relations of such fact or deed.”  Senator James maintained that an ex post facto law is unconstitutional under the Constitution of the United States and of every state.

 

Continuing, Senator James indicated, statutes in Kansas, Minnesota, and Washington were the only ones in existence when Nevada sex-offender notification laws were enacted.  He said the laws ultimately withstood constitutional scrutiny at Supreme Court level because they were not deemed to be ex post facto laws.  The laws were judiciously and narrowly crafted to be addressed toward public safety, not toward further punishment by “painting a scarlet letter” on someone, or other such stigmatic-type mandates put down by the Legislature. 

 

Further, Senator James said S.B. 479 will make information available when there is reason to believe an individual is a danger to the community.  The information would be available on the Internet, which would make it available worldwide.  The senator noted a decision was handed down yesterday by the Ninth Circuit Court of Appeals, which strikes down the Alaska statute making sex-offender registry available on the internet.  He said the law was struck down because it is punitive, and remarked, there is no reason for a person in Guam to obtain information on the worldwide web about a sex offender in New York.  Therefore, Senator James said, the narrow crafting to ensure the law is not additional punishment, and just public safety, goes away when it is published on the Internet.  The senator indicated the court said as follows:

 

In Washington, information about sex offenders was disseminated only if authorities determined on an individual basis that the offender posed a risk of recidivism.  Furthermore, we found it significant that Washington’s statute authorized dissemination of the information about a particular sex offender only within a narrow geographic area.  In contrast, in Alaska, information as to all sex offenders is made available worldwide on the Internet without any restriction and without regard to whether the individual poses any future risk.  Broadcasting the information about all past sex offenders on the Internet does not in any way limit its dissemination to those to whom the particular offender may be of concern.  Like the statute at issue in Meyers, Alaska’s statute is exceedingly broad.  The unlimited breadth of the Alaska statute weighs strongly in favor of a termination that its effect is punitive.  Therefore, the court held yesterday that because the Alaska sex-offender registration act increases the punishment for sex offenses, the ex post facto clause limits its application to those sex offenders whose crimes were committed after its enactment.

 

Senator James said there is no reason to process S.B. 479 because Nevada is in the Ninth Circuit Court of Appeal.  Until the decision is otherwise changed by the Supreme Court, it will be the applicable interpretation of the United States Constitution in Nevada. 

 

Senator James closed the hearing on S.B. 479 and opened the hearing on S.B. 548. 

 

SENATE BILL 548:  Makes various changes concerning sex offenders and other persons convicted of crimes. (BDR 14-512)

 

R. Warren Lutzow, Chief, Parole and Probation, Division of Parole and Probation, Department of Motor Vehicles and Public Safety, requested some changes to S.B. 548 to provide more efficient operation for Parole and Probation.  He indicated the first issue is genetic markers, and remarked that A.B. 54 encompasses everything requested in S.B. 548.  Chief Lutzow suggested perhaps the issue would be better resolved by passing A.B. 54 which addresses the requested language changes on genetic markers. 

 

ASSEMBLY BILL 54:  Revises provisions relating to time within which prosecution for certain felonies must be commenced and certain provisions concerning genetic marker testing. (BDR 14-296)

 

In regard to the second issue, Chief Lutzow explained, when an individual is convicted of a sexual offense, they are required by statute to receive a “psychosexual evaluation” to determine their ability, or need, to participate in a treatment program, and the material is provided to the court by a therapist.  He said the offender is also required to submit to an additional examination performed by a psychologist or psychiatrist to determine whether he/she is a threat to the community.  Both reports are sent to the court.  Chief Lutzow requested the evaluations be merged and the psychosexual evaluation be done and presented to the court.  The chief cited a case in which a therapist performed one evaluation and one set of testing, and provided two separate reports, charging the county for one set of reports, and billing P&P for another report, which was basically the same information and amount of work.  Therefore, Chief Lutzow suggested the statute allow P&P to utilize the individual who performs the psychosexual evaluation to also produce the other report.

 

Chief Lutzow indicated, upon successful completion of a period of probation, after 6 months an offender is allowed to petition the court for restoration of some of his/her civil rights.  He said, currently, the statute indicates the individual must approach and petition the court.  However, in reality, the offender contacts P&P in writing, requesting his/her civil rights be restored, and P&P prepares the petition and sends it to the court.  The chief said the procedure does not negate the ability of the offender to go directly to the court if they so desire; however, P&P considers it their responsibility to attempt to get the offender back into the community with their civil rights restored.  Chief Lutzow pointed out language changes are requested and affirmed that P&P currently performs the function. 

 

Senator Wiener indicated the issue was addressed in a prior session regarding the difficulty of restoring an offender’s right to vote, and asked the percentage of individuals who qualify for restoration of rights and those whose rights are restored.  Chief Lutzow said he did not recall any request for restoration of civil rights ever being denied by district court judges when an offender remained crime-free and tended to his/her financial obligations.  He maintained the difficulty is due to misunderstanding and ignorance of the petition process on the part of the petitioner, which is the reason P&P provides the service.     

 

Asked whether offenders are informed of the process to obtain their civil rights, Chief Lutzow answered, candidly, P&P does not do a very good job in that area for a couple of reasons.  He indicated some members of the community, who work with the offender population, are publishing the information in a brochure.  Additionally, at discharge, the offenders should be provided information telling them that if they remain free of any charges for 6 months they may petition for restoration of their civil rights.  The chief said, at one time P&P actually provided the information; however, the practice ceased.  Senator Wiener queried whether the 6-month time frame had changed.  Chief Lutzow responded the time period was the same.      

 

Senator James inquired whether the language that specifies a person must apply to the court if they meet the requirements for restoration of civil rights had changed.  Chief Lutzow said the language had not changed.  He clarified should P&P decline to provide the service the individual would be given a reason.  The reason would fall under some narrow parameters, such as arrest or conviction for another offense.  The chief noted that P&P had no desire to stand in a person’s way who legitimately could return to normalcy, and restoration of civil rights is a big step to reaching that goal. 

 

Senator James, referring to section 5, subsection 2, of S.B. 548, “If the division refuses to submit such a petition, the person may, after notice to the division, directly petition the court for an order granting the restoration of his civil rights,” asked whether it was still valid.  Chief Lutzow answered, “Yes sir.  It certainly needs to be open to them.”  Senator James remarked the only way to restore offenders’ civil rights is to have P&P do the petition.  The chief said that was the most efficient way to do it.  The senator commented the court would rely upon the information provided by P&P.  Chief Lutzow said if it is sent to a full hearing, it is protracted, which the courts usually do not want to entertain.  Senator James maintained, since the offender had been under the supervision of P&P, the agency was in a position to ascertain whether or not the person complied with the conditions of probation and had not committed any further crimes.       

 

Mike Ebright, District Administrator, Division of Parole and Probation, Department of Motor Vehicles and Public Safety, submitted a document entitled, “Explanation for the Request of Amendments to S.B. 548” (Exhibit F), and explained it was additional clean-up language to the existing bill.  He pointed out the first request is in regard to a typographical error in the bill which cites a nonexistent statute.  Mr. Ebright said the statute meant to be recorded is NRS 176.0913, which is the statute that lists offenses for which people must submit to deoxyribonucleic acid (DNA) testing.  He noted, section 1 through section 5, of S.B. 548, could easily be merged with A.B. 54.  The language is similar and it would clear up matters by having one bill that covers all bases, rather than two bills that say the same thing. 

 

Senator James commented since the committee would receive A.B. 54 in any event merging S.B. 548 and A.B. 54 might be the best way to deal with the issue should there be inconsistencies.  He asked whether A.B. 54 carried a fiscal note.  Chief Lutzow answered there would be no fiscal impact on P&P in gathering genetic markers.  Asked from whence the fiscal note came, the chief explained, originally the genetic-marker procedure included blood draw, which was an extensive process and required a public-health nurse.  Subsequently, the process was changed to oral swab and the equipment was provided P&P by the laboratory.  He said the test is performed on all individuals placed on probation.  Chief Lutzow indicated it was his understanding the fiscal note was changed due to the less expensive genetic-marker process.

 

Mr. Ebright indicated subsections 6 through 8 of section 1 of S.B. 548, included clean-up language regarding the psychosexual and certification evaluations.  He said it was necessary to have the psychosexual evaluation satisfy the requirements of the certification evaluation in order to avoid paying for two evaluations on the same person.  Mr. Ebright noted the amendment also cleans up language initially overlooked, which is, the requirements of individuals performing the certification evaluations and psychosexual evaluations are different.  He recommended the wording used in NRS 176.133 be used for both evaluations, which says the person who conducts evaluations must be trained in conducting psychosexual evaluations, be a psychiatrist and/or a psychologist licensed in the state, a social worker holding a master’s degree in social work and licensed in the state, a registered nurse holding a master’s degree in the field of psychiatric nursing, or a marriage and family therapist.  Mr. Ebright indicated the treatment and evaluation of sex offenders has become a specialized field.  Trained people are needed who specifically deal with sex offenders in order to perform the best evaluations, and provide the best information to the courts, P&P, and prisons.  Questioned whether there would be a fiscal impact, Mr. Ebright noted the change would carry no fiscal impact.   

 

Ms. Hines indicated she was neutral toward S.B. 548, but pointed out it is a “loaded bill” with seven different issues.  In regard to the psychosexual evaluations and combining the certification panel, Ms. Hines expressed support for considering the qualifications of individuals performing the evaluations.  She noted, sexual-offender treatment and evaluation is a specialized field, and those who have been performing evaluations in Nevada have had little, if any, training.  Ms. Hines expressed concern that the cost of genetic marker testing, and the psychosexual evaluation, can be ordered by the court to be paid by the defendant.  She opined it would not be reasonable. 

 

Further, Ms. Hines, in reference to section 9, subsection 8, paragraph (b), subparagrah (2), of A.B. 54, “The fingerprints, voiceprint, retina image and iris image of a person,” expressed uncertainty whether P&P is qualified to do that, and expressed a concern there might be a cost affect. 

 

John C. Morrow, Lobbyist, Washoe County Public Defender, noted the standard involved in the psychosexual evaluation has the wording, “health, safety, and morals,” which had previously been addressed in the Senate Committee on Judiciary.  He indicated he wanted to ensure the issue did not “slip through the cracks” and escape the updating and modernization of the definition.  Senator James pointed out that Senator Wiener raised the issue earlier and it would be considered.

 

Steven Ing, Marriage and Family Therapist (MFT), American Forensic Counseling, indicated he is an individual qualified to make a psychosexual evaluation, as described in S.B. 548.  He said he took a neutral position in regard to S.B. 548.  In regard to the amendments brought forth by Mr. Ebright, Mr. Ing said, due to burgeoning amounts of information in treatment of sex offenders, it would be highly appropriate to synchronize the wording and definition requirements for someone providing the certifications.  Senator James stated his suggestion would be considered part of the amendment. 

 

John Hines, Concerned Citizen, referring to section 3, subsection 1, paragraph (a), of S.B. 548, “If a psychosexual evaluation of the person is required pursuant to NRS 176.139, the person who conducts the psychosexual evaluation certifies in the report prepared pursuant to NRS 176.139 that the person convicted of the offense ‘is not a menace to the health, safety or morals of others‘,” opined, no one could certify the person is not a menace, and suggested the language be changed to “our evaluation shows they are not a menace.”  Referencing section 5, subsection 1, of S.B. 548, “If a person is granted an honorable discharge from probation, not sooner than 6 months after his honorable discharge, the person may apply to the division to request a restoration of his civil rights,” and section 5, subsection 2, of S.B. 548, “If a person applies to the division to request a restoration of his civil rights,” Mr. Hines questioned whether any convicted felon could apply for restoration of his/her civil rights, or whether the section refers only to probationers.  He suggested the sections require clarification. 

 

In answer, Senator James remarked there was no change in S.B. 548 in terms of who could apply for restoration of civil rights. 

 

Senator James closed the hearing on S.B. 548 and opened the hearing on S.B. 411.

 

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

 

Senator James pointed out S.B. 411 was being heard for the second time in the Senate Committee on Judiciary.  He said S.B. 411 could be termed a “sunshine and litigation” bill, but essentially requires notification to the public of certain hazards.  He said 16 states have enacted this type of legislation, which ensures the court system is not used to secrete information that would be important to protect people from unknown risk in the stream of commerce.  The senator cited examples from a document entitled, “Secrets that Kill:  Dangers Buried in the Courthouse” (Exhibit G). 

 

Asbestos:  In the past, asbestos became a problem in the workplace.  Much of the pain and injury caused by asbestos used as an insulator could have been avoided.  In 1933, 11 former employees of the Johns-Mansville Company sued the company claiming that workplace exposure caused their asbestosis.  The company settled their claim but sealed the records.  The plaintiff’s lawyer accepted a payment conditional on his refusal to help other plaintiffs bring similar lawsuits.  Parenthetically, that particular activity, under current rules of ethics for lawyers, would be considered unethical conduct and subject to discipline.  The settlement was not disclosed until the late 1970s, by which time hundreds-of-thousands of additional workers had been exposed to asbestos.  One can only guess what would have happened if the original 1933 settlement had been made public.  If the hazards of asbestos had been known during the time, a generation of workers could have been spared horrible respiratory diseases, their families would not have been affected, and dozens of companies would have avoided a costly wave of asbestosis and mesothelioma litigation during the 1980s. 

 

Automobile hazards:  A recent example are the problems associated with Ford Motor Company’s use of Firestone tires, which had a tendency to separate and cause accidents. 

 

Although he was unaware of the history in terms of secret settlements, Senator James said it was an area in which people appeared to be exposed to a dangerous product when the manufacturers of the product knew it to be dangerous and, in fact, settled lawsuits with them. 

 

Senator James continued:

 

The issue goes back to the General Motors’ Corvair, in which, a man in 1962 drove more than 100 miles every day to work and developed permanent brain damage.  Unlike other cars, the Corvair used the same air that cooled the engine to heat the passenger compartment, allowing the driver to breathe deadly carbon monoxide.  The senator indicated General Motors settled the claim but demanded the settlement be kept secret and the victim amend his original complaint to say the car, not the design of the car, was defective.  A design defect could trigger other claims, while a manufacturing defect would only affect one driver’s car.  As a result, the Corvair continued to be sold and driven, and drivers were not warned about the risk of breathing engine-heated air. 

 

Senator James continued reading from “Secrets that Kill:  Dangers Buried in the Courthouse” (Exhibit G).

 

General Motors sold nearly 10 million pickup trucks between 1973 and 1987, with dangerously placed fuel tanks, which caused at least 750 fire deaths during crashes.  In 1973 a General Motors engineer wrote a memorandum that the tanks could be expected to cause hundreds of deaths each year, but the cost of fixing the problem would exceed the cost of settling those death claims. 

 

The senator said the first victims all settled their cases and General Motors insisted upon confidentiality as part of the settlement. 

 

Senator James continued:

 

The risk of the trucks was not made public until nearly 15 years after the design was first introduced.  All of the hazards affect thousands of drivers across the nation and, certainly, affect probably hundreds-of-thousands of drivers in Nevada. 

 

Senator James continued reading from “Secrets that Kill:  Dangers Buried in the Courthouse” (Exhibit G):

 

Environmental Hazards:  The Xerox plant in Rochester, New York, was a major user of toxic chemicals for years, when two families nearby filed lawsuits claiming the improper release of chemicals used at the plant injured them.  The families settled their claims with Xerox in 1988, but agreed to seal the settlement.  Public health departments then sued to gain access to the files to determine whether other families were at risk.  Instead of allowing public officials to review the documents, which had been produced in a public forum, Xerox sought to keep the records sealed.  When public officials prevailed, and won the right to review the materials, they learned that Xerox had been playing a “shell game” all along.  As part of the settlement, the documents were not included in the court records. 

 

Recently BP Amoco settled claims because its workers at the Naperville research facility contacted a rare form of brain cancer from an unknown toxin, and the deaths mystified officials for years.  In the fall of 1999, health experts, working under a contract with BP Amoco, determined the cancers were likely caused by occupational exposure.  However, BP Amoco officials declined to explain what those exposures could be.  Should the settlements be sealed, other workers at the same facility, some of whom have already developed tumors, could not review the records to help measure their own health risk.  Also, outside researchers could not review the records to determine if, and under what circumstances, workers at other facilities could face a similar threat. 

 

Senator James continued reading:

 

Children at risk:  Children also are at risk from public hazards concealed by the sealing and confidentiality of litigation settlements.  Many sealed settlements have come to light that underscore the need to protect children with legislation, such as S.B. 411.  A 16‑month-old-child, weighing 22 pounds, was in a car accident in 1989 that resulted in a broken neck and paralysis from the waist down.  The boy was properly secured in a car seat that the manufacturer claimed was safe for children weighing at least 20 pounds.  The National Highway Traffic Safety Administration, which regulates car seats, and most car-seat makers, believes this type of car seat is inappropriate for children under 30 pounds.  The family agreed to a confidential settlement that forbade them even to publicly name the manufacturer, and required that all media contacts be reported to the manufacturer. 

 

A boy playing on a water slide in his backyard pool broke his neck resulting in paralysis from the neck down.  It was later learned that seven others had broken their necks playing on the same model slide.  His lawyers discovered a videotape made during an earlier sealed trial involving one of the seven that demonstrated how the slide was dangerous.  Yet the manufacturer issued no recall, made no public announcements, and did not warn other owners of the slide of the risk of neck injury.  The manufacturer insisted the victim sign a similar confidentiality agreement, and the victim refused.  After a trial which resulted in the plaintiff’s verdict, the earlier confidential settlements then became public. 

 

Health care:  Thousands of senior citizens and others who suffer from arthritis were prescribed the pain medication Zomax during the 1980s.  Within 5 years of its release, Zomax had been identified as a factor in 14 deaths and 403 life-threatening allergic reactions.  Victims in 43 states filed lawsuits.  McNeil Laboratories, makers of Zomax, settled the first cases, but insisted on confidentiality.  Not even the Food and Drug Administration (FDA) was notified of the drug’s lethal side effects.  Not until victims began to refuse to agree to confidentiality agreements did the dangers become public. 

 

Thousands of heart patients were implanted with Bjork-Shiley heart valves between 1980 and 1986, but Shiley hid evidence from the FDA during the approval process that the valves were prone to fracture.  By 1990, hundreds of valves had fractured resulting in 248 deaths.  While the first victims agreed to settle confidentially; as their numbers grew, more and more realized the seriousness of the problem and demanded public accountability.  The FDA ordered the product removed from the market in 1986.

 

Senator James indicated there are number of other examples.  He stated it was not his intention, nor the intention of the committee, should it choose to process the legislation, to create a problem for business that does not exist.  The senator said a common factor in these cases, and other cases, involving silicone breast implants, the Dalkon shield, and so forth, as the risk becomes great enough, and the deleterious effect of the product or activity affects more and more people, it will eventually become known.  The result will be a class action or some other resolution in the courts.  Senator James said the issue is not that the legislation will make the hazards public and cause more lawsuits to be filed; indeed, during the first hearing on S.B. 411, the Nevada Trial Lawyers Association lobby was not even present to support the bill.  He opined they are probably ambivalent about the issue. 

 

Further, Senator James pointed out, confidentiality settlements include two parties.  On one side are the trial lawyers who are able to get a person to settle, and perhaps part of the inducement is the settlement will be confidential.  At the same time, the business is hoping to keep it a secret and avoid all the other lawsuits.  The senator said, with this kind of public policy and legislation, everybody would know the rules and realize that if a lawsuit, or whatever else it might be, brings to light a public hazard, then steps must be taken to eliminate the public hazard in order to not expose others.  He said it is not only a smart thing to do from the standpoint of morality and concern for public safety, but ultimately business would realize it is also economically the best thing to do.  Instead of a memorandum from General Motors that says, on one hand, it would cost this much to settle all the death claims that will be made, and on the other hand, it would cost this much to correct the problem, the senator asserted that particular analysis does not occur; rather, a recall is issued and the product is made safe.  Senator James indicated recent public attention in the Firestone tire cases will eventually come to light, including how long the problems with the product were known and what steps were taken, or not taken, or should have been taken, to protect the public from the hazard. 

 

Continuing, Senator James pointed out Senator Titus championed the bill in the 1991 Legislative Session; he commended her for that action, and said she was ahead of her time.  He asked the committee to consider what would be different if Senator Titus’s bill passed in 1991; how many lives would have been saved, and how many injuries and deaths would have been prevented in cases that have recently come to light.  Senator James urged those opposed to S.B. 411 to view the issue in that light.  He indicated the legislation would require a policy adjustment within business to disallow these kinds of public hazards and not to take steps to conceal them from the public. 

 

Senator James noted a grave problem in Las Vegas, where a company subject to prevailing wage law was paying the prevailing wage to its workers.  He said, through intimidation and other means, the company required the workers to “kick” the money back, which is a gross violation of Nevada law.  The senator indicated the labor commissioner was prevailed upon to keep the settlement of the violation a secret; therefore, the agencies before whom the contractor would report, would not be privy to the violations of the labor law and the contractor could continue to obtain public jobs.  Senator James pointed out that kind of activity is also against public policy.  Therefore, S.B. 411, in addition to addressing litigation issues, would require settlements of violations of labor laws with the labor commissioner to remain public, and nobody would be allowed to prevail upon the commissioner to sign an agreement that the violation would not become public.     

 

Concluding his remarks, Senator James said that was the sum and substance of S.B. 411.  He pointed out that Kent Lauer, on behalf of the Nevada Press Association, requested the bill last session, testified in favor of it when it began, and was present at today’s hearing.

 

Senator Titus indicated she would give the same speech on the Senate floor that she gave 10 years ago.  She mentioned the bill was named the “sunshine and litigation bill,” but in 1991 it was known as the “lobbyist’s full-employment act” because so many companies rushed out and hired lobbyists to oppose it.  Observing the crowded room, Senator Titus speculated the bill would have the same consequences this time around as well. 

 

Kent F. Lauer, Lobbyist, Nevada Press Association, pointed out he testified earlier on S.B. 411 and appreciated the opportunity to do so again.  He indicated the Nevada Press Association represents approximately 40 newspapers.  Mr. Lauer said he was unsure whether he could add anything to Senator James’ comments, which went to the heart of the matter, but he would try. 

 

Mr. Lauer asked, “When do you suppose the first lawsuits concerning Firestone tires were filed?  One year ago?  Two years ago?”  He said most members of the public think it is a recent event.  He declared the first lawsuits regarding Firestone tires were filed in 1992, nearly 10 years ago.  In 1997, a 19-year-old college student was thrown from a Ford Explorer while returning to school.  He filed suit against Firestone and the case was settled secretly in November 1999.  Mr. Lauer indicated, a few months later the mother of a 2‑year-old was killed while driving a vehicle with Firestone tires.  She and her family were not aware of the dangers associated with those tires. 

 

Mr. Lauer asserted any arguments against S.B. 411 do not outweigh the need to protect the public from dangerous products and hazards.  He said, “It’s not even a close call.  There is a fundamental principal involved.”  He said secrecy agreements can lead to more injuries, and even death.  Mr. Lauer declared, those who oppose S.B. 411 are asking courts to sacrifice the public’s well being in favor of private interest.  They are asking to have public disputes settled privately. 

 

Continuing, Mr. Lauer indicated his next point concerned consumer awareness.  He said the best way to prevent injury and death is to alert consumers about dangers and public hazards; it certainly is not to conceal or hide them.  Secret settlements not only conceal information about hazards from the public and press, they also conceal the information from government regulators and consumer safety groups, Mr. Lauer asserted. 

 

Further, Mr. Lauer said his last concern was the courts.  He noted, courts are public institutions and supported by the taxpayers.  One of the principal roles of the court system is to safeguard people’s rights.  There is a presumption of openness in the courts which extends to civil disputes.  Mr. Lauer indicated secret settlements that conceal public hazards erode the public’s confidence in the court system.  He urged the committee to perform a “balancing test” and determine which side of the argument should prevail. 

 

D. Taylor, Culinary Workers Union, Local 226, indicated his position on S.B. 411 was not controversial.  He said public entities, such as school boards, county governments, and others awarding public contracts, should be aware of prevailing wage law violations regarding any contractor doing business with them.  Although wage law is not his area of expertise, Mr. Taylor said he became aware of the issue because a large percentage of the members of Culinary Workers Union, Local 226 have friends or relatives who work in the industry and are affected by the wage law.  He indicated those individuals do not view the issue as controversial.  Mr. Taylor said he considered S.B. 411 an extension of “sunshine” allowing public entities to peruse the facts, weigh the issues, and make decisions.  He noted confidential settlements with the labor commissioner are impossible unless employers who play by the rules are penalized by withholding public money that could be going to them.  Mr. Taylor asserted good employers should not be penalized for playing by the rules.  He indicated it was a fundamental principal with which the Legislature must agree. 

 

In regard to confidential settlements and public hazard, Mr. Taylor pointed out, he was from the state of Virginia where tobacco settlements have affected and been detrimental to the industry.  Recalling friends and relatives who suffered grave illnesses due to tobacco products, Mr. Taylor speculated, if information had come out earlier, perhaps, they would have been spared.  He added, perhaps the industry would also have been spared an enormous financial burden, and said maybe they were penny-wise and pound-foolish.

 

Samuel P. McMullen, Lobbyist, indicated he represents the Las Vegas Chamber of Commerce, which includes 6000 businesses, and the Retail Association of Nevada, which includes pharmacies, grocery stores, and retail stores.  Mr. McMullen stated, the issues encompassed in S.B. 411 are most important to business operations and conduct in the state of Nevada.  He noted many individuals at this hearing were present 10 years ago during one of the hardest fought battles he could remember, due to the sponsor of the bill.  Mr. McMullen asserted the battle would, again, be hard fought this session because it is of concern to the business community.  He said the issue is not that business entities like to keep secrets, or believe public hazards should never be disclosed, or are in favor of injury or death, it is an issue of balance and reason.  

 

Continuing, Mr. McMullen indicated things have occurred in the last 10 years that differ from 1991, such as the Firestone cases.  However, the point made 10-years-ago, and will continue to be made in 2001, is there are many other ways information is disclosed, could be disclosed, and was actually disclosed.  He pointed out the federal government, in all its regulatory mechanisms, is aware of accident records of vehicles, and whether or not the process is perfect is not the question.  Mr. McMullen said it would be wonderful if everything was done in a timely manner and every life was saved.  He indicated the issues are capable of being disclosed by other resources, are open and scrutinized, and business cannot take responsibility for whether or not the system acts fast enough.  However, business can peruse the issues that affect its ability to do business, and its cost of doing business.     

 

Further, Mr. McMullen noted a second change.  He indicated a concerted research study was done by the Conference on Rules of Practice and Procedure of the Judicial Conference of the United States, an august body consisting primarily of federal judges.  Mr. McMullen pointed out the Judicial Conference’s Advisory Committee on Civil Rules studied the federal rules of civil procedure in almost every state, including Nevada, regarding proposed amendments to Rule 26(c) of the Federal Rules of Civil Procedure dealing with protective orders.  He said the Judicial Conference’s Advisory Committee on Civil Rules came up with four points which were contained in a letter, dated March 23, 1998, to the Honorable Henry J. Hyde, Chairman, Committee on the Judiciary (Exhibit H).  Mr. McMullen said, after a full analysis was done on the issue, it was decided a change was not necessary, required, nor prudent.  He said the decision was based on a number of studies.  In regard to the studies, Mr. McMullen read from a portion of Exhibit H:

 

These studies all suggested that there is no need to make it more difficult to issue discovery protective orders.  The studies generally showed:

 

That there is no evidence that protective orders in fact created any significant problem in concealing information about public hazards or in impeding efficient sharing of discovery information;

 

That much information can be gathered from parties and nonparties during discovery that no one would have a right to learn outside the needs of a particular lawsuit;

 

That discovery would become more burdensome and costly in the parties can not reasonably relay on protective orders; and

 

That administration of a rule creating broader rights of public access would impose great burdens on the court system.

 

Mr. McMullen indicated the arguments made in 1991 were confirmed by a study that had nothing to do with business interest, but was based more on the efficiency of litigation and protecting public interest.  He noted, the judges who served on the advisory committee were in a much different position than legislators, and if there had been any indication that public hazards were being inadequately disclosed by other means, or anything could have been done to make a proper difference, they would not have recommended it.  Mr. McMullen stated the decision is a significant piece of additional information. 

 

From a business point of view, Mr. McMullen indicated, the issue is understanding how business is affected.  He said the definition of “public hazard” in S.B. 411 is extremely broad and basically anything that can hurt anybody.  Mr. McMullen said:

 

What happens in these cases is that you have a plaintiff who has been injured, and we take it as some sense of not only solemnity, but I think of . . . the sensitivity of the issue.  If that plaintiff has decided that as badly as they were injured that an agreement between the two, which may include trade secrets and/or proprietary information, or may not, but just is a resolution of the case in the most responsible and efficient way . . . that plaintiff, . . . is certainly not going to lay down and not protect their rights.  And the business entities that are represented have decided . . . that is how they will settle it.  Then we take that as great assurance . . . at least in that case and for the future, that that means there isn’t anything in there that, frankly, should be disclosed.  

 

But the issue goes beyond that.  This information is trafficked by the trial lawyers.  There are actually exchange services that actually say, “Hey, do you have a case about Blue Stone Tile?”  If it’s not Firestone Tires, it could be Blue Stone Tile.  We’re looking for slip and falls relating to this.  They advertise for the information around the country.  They will then come to some store, could be a grocery store, that happened to use that tile, and say, “Since you’ve had 20 other cases that we’ve been able to find out about, we’re now going to sue you for more, and we’re going to sue for punitive damages, because you shouldn’t have had that tile in.  You should have known.  And the litigation escalates.  We all know that issues of frivolous litigation and the cost of litigation are of great concern to the business community.  [They] always have been, always will be.  That doesn’t mean we don’t think there should be litigation . . . but what we are looking for and continue to look for, and this, we think throws it way out of balance, is the sense of balance that says that those things will be properly done, but our interest will be fairly treated as well. 

 

And so, the very fact that this information can be trafficked and sold, and cases can be worked up, just as you’ve watched construction defect litigation become sort of a cottage industry in the legal form.  Those are the kinds of things that concern us.  We’re not against people filing lawsuits against us, but we would like it to be basically on an unleveraged field.  It’s hard enough to pay the cost of litigation and to make sure people are protected without worrying about those types of things. 

 

And let me just talk about the definition of public hazard, and I’ll use an example we used 10 years ago.  You could be a gaming facility, and a patron could sit on a slot chair, and that chair could fall off because the swivel might be bad.  And in the interest of your customer, in the interest of resolving that case, in the interest of customer relations, and just efficiently resolving that case, you might actually settle that case.  And you might say, “Hey look, we just want to get out of this.  We’re not really admitting what happened, or didn’t happen, but we don’t want to have any more problems with you as a customer.”  So there’s no admission whatsoever on the record, shouldn’t be any admission that even that casino facility or business did anything wrong, or is even admitting they did anything wrong. 

 

But under this, because that could have injured a person, that case theoretically is disclosable.  So the settlement ends up being something that you will live with for a long time.  The way those things work, is that is used against you as an admission.  And we all can say, “Oh, no, no, it doesn’t work that way, a jury will take it into consideration, or the judge will understand that . . .”  There are two issues there, one is public relations, and that all of a sudden you’ve had these problems; and second of all, that you as a company then are being put in the position that you made an admission indirectly, impliedly, somewhere in the intricacy of that settlement, you made an admission that you, in fact, did something wrong, or somewhere in your facility something happened . . . but it just puts you in the position of saying, “Wait a minute, if I settle these cases, then theoretically to the outside world I am admitting that something happened on my facility, in my facility, with my equipment, in our operation.  And, now, wait a minute, if a settlement is going to be taken that way, I don’t think we better settle, I think we better litigate.”  And so the cost of litigation will unbelievably escalate under that, because you basically have to sort of fight to prove that you are not a problem, or at least that it maybe wasn’t you.  And it takes years of working through the cases, and much, much cost, just to get it allocated as to who was responsible in that case.  It could’ve been a defective chair manufacturer, but you, as a casino or a business, are then saying, “Gosh, wait a minute, we don’t want it to be against us, because they used us as the lead defendant, and we better figure this all.  We could have settled it, it would have been great if we could have settled, but, boy, we want to work it through.”

 

Now, you can take that logic and go into much more egregious cases.  Sometimes the best thing is to get the case over with, to get it settled; not to bring every piece of information in front of a judge, have them ask, and then have them decide whether or not it is confidential information, as this bill would basically require.  Sometimes the best interest of all parties, particularly the plaintiffs, is to resolve something.  This does great damage to our interest in resolving cases efficiently with a settlement because . . . [then] we are sort of impliedly admitting things.  It is a difficult bill to talk about because it had always put us in the position of looking like we don’t care about kids and mothers, and all that; that is really not the issue here.  The issue is one that we are a nation of laws, we have had a system that works, you now have a Judicial Conference that has looked at it and said, this still works, it’s not broken, don’t fix it.  And we want to be able to rely on those laws and that balance.  And that’s all we’re asking for. 

 

I will say, Mr. Chairman, that we’re not here necessarily talking in any sense about section 10.  I don’t necessarily want my remarks to be taken against that because we haven’t, frankly, focused on that.  So, for you and Mr. Taylor, I wanted particularly to indicate that.  But I think you have gotten some of the sense of it.  I guess I should have started out with an apology.  I think the whole world thought that this bill was so serious that there would be tons of witnesses against it.  All of us had our other things to do last week.  I apologize for that.  I, particularly, [apologize] for not showing up.  I thought that a number of the other companies that you’re going to [hear] from now were basically going to be there and were going to explain this.  So, I apologize.  We do seriously appreciate you giving us the additional time.  We could talk about it for hours.  I’ve just tried to hit in some summary fashion the critical points for us and the reasons that it is very important.  But I do not want this committee to misunderstand how important this piece of legislation is to us, and how difficult we think our life would be if it was passed, and how strongly we are against it.  Thank you.

 

In response, for the edification of Mr. McMullen and the committee, Senator James stated that protective orders under Rule 26(c) of the Federal Rules of Civil Procedure are a very broad power of the court.  He expressed uncertainty regarding what the Judicial Conference was talking about in regard to it.  However, first of all, he stated, there are protections in S.B. 411 to ensure trade secrets, intellectual property, and other commercially protectable information is not compromised by virtue of this legislation.  Senator James said, secondly, nothing in S.B. 411 would interfere with the power under Rule 26(c) of a court to issue protective orders to protect that kind of information, or do whatever else it would need to do to protect litigants from disclosure of information that is not necessary for the public to know in terms of the administration of justice.  The senator said that is not the issue. 

 

Further, Senator James mentioned Mr. McMullen’s example of a person being injured by a stool in a hotel, and explained the reason for the injury is important.  He pointed out, if all the stools in the hotel are defective, then, just like Ford Motor Company or anybody else, the hotel should not conceal the fact there is a public hazard, and fix the problem.  The senator indicated the theoretical discussion did not mean there are defective stools in hotels, it could be anything, but the point is, if it is not a public hazard that will create a problem in the future, it will never come up.  Senator James pointed out a scenario: 

 

If you are the owner of a hotel, S.B. 411 is not in existence.  You have a confidential settlement of a stool case.  I am representing a person who was hurt on a stool.  Whether or not you have a confidential settlement, and I ask you under oath in a deposition, if you have ever had anybody hurt on a stool in your hotel, you cannot say, “That is confidential and I will not answer that question.”  You must answer that question truthfully.  Therefore, the issue of whether or not it is out there, and you have notice of a problem, will come up whether or not S.B. 411 is passed. 

 

Continuing, Senator James explained S.B. 411 does not attempt to “get at” hotels or local tile companies, it tries to get at the Ford Motor Companies of the world.  The senator said he understood Mr. McMullen’s concerns and the business community’s instant reflexive action against S.B. 411, but asked everyone to try to see it in a different light and begin to work cooperatively with people who have been injured to discover whether or not there is a public hazard, and then rectify the problem.  He pointed out, since he has been chairing the Senate Committee on Judiciary, he has heard nothing but frivolous lawsuits, tort reform, punitive damages, capping damages for medical malpractice, and so forth.  The senator emphasized he resisted all of it because good administration of civil justice is a good thing and had exposed all the problems.  Senator James said bad cases should have the book thrown at them.  He said:

 

In 1995, a bill entitled the Attorney Responsibility Act was processed, which said if a lawyer in Nevada files a frivolous claim or defense, they can be sued personally and be required to pay the damages.  We should use motions for summary judgment under Rule 56, we should use Rule 11, and we should use the Attorney Responsibility Act to nail bad, frivolous lawyers. 

 

However, Senator James cautioned, “We should not throw the baby out with the bath water.”  He said a lot of these other problems have been exposed through the appropriate use of the courts to not only address people’s grievances, but also help prevent problems in the future.  The senator pointed out, the United States has a very safe society and safe products, and one of the reasons is due to this kind of litigation. 

 

Senator James stated, if S.B. 411 passes, it will save businesses money.  Referring to D. Taylor’s comment regarding the tobacco companies, the senator asked what would have happened if the cigarette companies had “smelled the coffee” 20 years ago and realized they could not settle cases.  Quoting an article in USA Today, he said:

 

Firestone Tires, year after year, agreed to pay plaintiffs millions of dollars to settle cases and thereby hush up tire problems.  In dozens of cases the court made it illegal for anyone to divulge the financial terms of the settlements and possible evidence about safety defects that are allegedly hurting or killing people.  Only 2 weeks ago the public finally learned that 101 United States’ deaths are linked to persistent problems with Firestone tires.  Had those documents been made available to the public, those lives could have been saved. 

 

Senator James indicated he would consider amendments to S.B. 411 that would ensure the legislature was not attempting to do something unintended.  He said the major problem is a plethora of products that are put into the stream of commerce that have a public hazard associated with them. 

 

In response, Mr. McMullen expressed appreciation for Senator James’ comments regarding tort reform.  He pointed out his clients had not requested tort reform in the last decade because they believe the laws are in a good state of balance.  He said this is not a situation in which he is asking to win or lose on the policy field, it is more a plea for balance.  Mr. McMullen stated part of the feeling about it is extremely lynch-pinned to what is dealt with today and goes to the heart of operating and litigation costs.  He indicated he only mentioned frivolous lawsuits in order to say they are of interest because they cost money and affect business operations.  On the other side, Mr. McMullen said settlements end up being self-curing. 

 

Further, Mr. McMullen gave the following testimony:

 

It is not in our interest to have another lawsuit on something identified as a problem.  It is not in our interest to hurt customers.  It is not in our interest to do anything more damaging than hurting them.  So there is a self-fixing part of this.  The fact that there is litigation, and we are that interested in litigation cost, and we worry about these things, doesn’t mean we just settle it, we set it in a box, and we hope another doesn’t come up.  In the case I used, I’ll bet you money that within the next “X” months, probably within the next year, there will be a capital request in a budget to make sure those slot chairs, if they have a defective swivel, are changed out or fixed.  And so the process does work right now to cure things, to save lives, to, in fact, protect patrons.  It is not in our business interest to have those things continue. 

 

Legal departments and lawyers are, frankly, cost centers for business.  They are not profit centers.  We need to make sure those costs are reduced and we do that, not only for the cost side, but because we care about our customers.  There is a business incentive to fix it every time there is one of these fixes.  You do not need this bill to provide any more incentive on that. 

 

Actually we are sitting here discussing things that, by the breadth of this law, will affect every business in the state of Nevada.  If there wasn’t a track record of watching how these things can be leveraged, and increase the cost of doing business, and your actual ability to operate, we wouldn’t be here.  The bill is extremely broad.  It is an interesting thing to talk about the Firestone case, because in a sense, like it or not, again, that is working.  Yes, we lost some lives and, again, I’m not going to ever stand up and say that is an acceptable result, but the bottom line is that the process does, in many ways, work.  America, again, is not perfect, but to use cases like Firestone that are of notoriety, the bottom line you need to think in your mind [is] just how many other cases there haven’t been.  We’ve gone 10 years, and there are a few cases.  Dina [Senator Titus] used some in her opening statement on this bill on the floor.  But, again, Dalkon Shield, Thalidomide, you go through all those cases, those things actually, in their own way, have been settled.  Maybe they weren’t settled immediately, they weren’t fixed to public satisfaction or [for] the quickest public protection, but the other process does work. 

 

The hard thing for us to do is to sit here today and say, “Oh sure, change our business operations, and change our business practices because the federal government isn’t doing the job fast enough for you people in terms of regulation.”  It is really hard for us to accept the fact that we’re going to be thrown into these kinds of twists and turns just because that doesn’t work, or at least work fast enough. 

 

I will say again, and that’s the problem with this bill, it looks good, it acts good, but if you look at page 2, line 9, [section 7, subsection 2, of S.B. 411, “Any portion of an agreement or a contract that has the purpose or effect of concealing a public hazard or information concerning a public hazard is void as against the public policy of this state.”] our interpretation of that, Mr. Chairman, is that if you had a stipulation regarding discovery, and many, many, many things that happen in lawsuits happen by stipulation.  That is a contract.  It certainly is an agreement.  And we are scared enough about the language in its breadth to believe that if you had discovery limitations, not an order of a court, but discovery limitations, that you put in, somebody could come back and say just because there is a public hazard in it.  A toothpick could hurt somebody, okay, if it’s discovery about toothpicks.  That is now void and unenforceable.  It doesn’t say there is any discretion whatsoever exercised there.  So those things, rightly or wrongly, and people can interpret bills differently, and that’s the problem.  We’ve always looked at this as extremely broad, and it’s unnecessary.  Again, I just want to say it’s not necessarily saving just dollars, it’s really just trying to maintain what we think is a system that works.  It doesn’t need to be fixed.

 

Mary F. Lau, Lobbyist, Retail Association of Nevada, stated support for Mr. McMullen’s comments and gave the following testimony: 

 

During the interim we attended several national conferences, as does every legislator, one of which was on the subject of lawsuits and the problems that are happening.  Mr. McMullen mentioned shopping the lawsuits.  Two of our stores were talking about problems they had, one of which was connected to flooring.  Their loss-prevention people, and bear in mind we spent a lot of dollars, it’s loss prevention for customers, as well as employee safety, discovered a problem with flooring.  They had paid some settlements on those, they ripped up the flooring, they changed the flooring.  The next thing they know, they checked an Internet site, that case was being shopped because they had discovered a loophole, and that they should have replaced the flooring earlier.  This company felt that they replaced the flooring in a very timely manner, and part of which was the settlements that did it.   

 

The next one that was discussed was shelving in our warehouses and in consumer areas that you can go in and they have larger items and stuff.  There is a website currently out there selling cases where they have sued on these.  The companies have changed their warehousing, and they have changed how to get things to the customers.  Some of these are in stores where you can go in yourself.  You have to call an attendant to get things off of those shelves.  However, not only are they being shopped and selling of the cases, but this particular industrious attorney is also selling the how-to kit.  It’s not a sharing of information; he will assist in the lawsuit.

 

Interestingly enough, Sam’s figure of the toothpick, we settled a case when I was in gaming for a $25,000 toothpick that a customer jammed underneath her toenail, and her husband happened to be an attorney.  This sounds like an anti-attorney speech but it isn’t.  I actually have a copy of “Erin Brockovich” at home.  Some of the stuff I objected to during the previous hearing of this bill was actually discussing things like Dalkon Shields and Thalidomides, and everything else, where the government has also given approval of those products.  Later [they] found they were unsafe, but it is the companies that bear the burden.  I have no further comments, Mr. Chairman.

 

Kami L. Dempsey, Lobbyist, Las Vegas Chamber of Commerce, indicated 85 percent of the members of the Las Vegas Chamber of Commerce have 15 or fewer employees.  Recalling Senator James’ comment that S.B. 411 attempts to target Firestone Tire Company or Ford Motor Company, she commented, because of the public hazard language in the legislation, it opens up any small business to be sued or have constant lawsuits.  She maintained, many businesses with 15 or fewer employees, lack the same legal departments and resources available to companies like Firestone or Ford.  She cautioned against disproportionately damaging small businesses in Nevada due to the legislation. 

 

Senator James said he did not envision many cases that would affect small manufacturing businesses that are putting their products into the stream of commerce, or operating major facilities that affect a lot of workers.  He pointed out NRS 7.085 is the law that makes an attorney personally liable for advancing frivolous claims or defense in the state.  The senator noted Rule 56 states a person with a claim can get a summary judgment, and said judges need to grant those summary judgments and throw out those claims.      

 

John P. Sande III, Lobbyist, Nevada Bankers Association, and International Game Technology, referred to Mr. McMullen’s reference to the report by the Judicial Conference of the United States (Exhibit H).  He said the reason the study took place was because in the early 1990s attorneys attempted to amend Rule 26 of the federal rules of civil procedure to virtually mirror what is in S.B. 411.  A study was conducted by an impartial group who found there was no evidence that protective orders create any significant problem in concealing information about public hazards or impeding efficient sharing of discovery information.  More importantly, the group said it would be burdensome and costly to members of the public. 

 

Mr. Sande acknowledged, the intent of S.B. 411 is honorable, and in most cases it would discover a lot of public hazards.  However, the real problem is it would allow a lot of confidential information to be disclosed that may not be protected under law.  He gave an example:  A person is taking a drug for some type of sexually transmitted disease.  Somebody claims the drug causes problems and they sue the pharmaceutical company.  As part of discovery, they ask for a list of all people who have used the drug, or a list of any person with whom the company had settled a claim over the drug.  Mr. Sande said, clearly, that would not be protected under normal circumstances; therefore, that type of information would be disclosed.  He emphasized there was a battle in Florida on behalf of Dale Earnhardt, who was recently killed, as to whether or not his autopsy pictures should be distributed to the public.  Mr. Sande said, “I perceive there would be a potential, especially for certain types of confidential information, which you normally would think was confidential, but under the law would not be confidential, such as a settlement to be made public as part of the discovery process.”  He remarked, S.B. 411 should be perused carefully as to what negative implications could occur besides those stated in the Judicial Conference Report. 

 

Alfredo Alonso, Lobbyist, Citibank (Nevada) NA, echoed Mr. Sande’s remarks.  He said the burden on the court system and the added expense troubled him greatly, and the potential release of information not pertinent to the case is of concern as well.  Mr. Alonso expressed his willingness to help create amendments and attempt to get the industry involved.  Senator James stated, although he would not consider gutting the bill, he would consider amendments. 

 

Raymond Bacon, Lobbyist, Nevada Manufacturers Association, gave the following testimony:

 

Obviously, from your early comments, I’ve got the bull’s-eye painted on me.  We have problems, as has already been mentioned, with the definition of a public hazard.  We think it needs to be refined and defined down to something that is reasonable. 

 

If you take a look at some of the cases we have had, we have had businesses, because of regulators, threatened to be shut down in the state because of an odor.  The odor was absolutely nontoxic, but the way the thing was defined, that agreement wound up being a confidential agreement that was no public hazard, but you could go back and argue that somebody may later discover that element, or the odor, has potentially a public risk 15 years later, and we could still wind up opening up files.

 

The biggest problem is section 9, which fundamentally, as we read it, requires a company to go to court to protect their trade secrets.  In the 1997, or 1999 session, Nevada passed a very strong trade secret law, and effectively, this [S.B. 411] reverses a lot of that.  We have companies that have built facilities here specifically because of that trade secret law, or they have modified facilities here, and now you start to open that up.  So, somehow, we think the burden needs to shift that the trade secrets are protected unless there is, for something that comes out in the disclosure, an obvious and necessary need to disclose that thing.  Whether we are talking software issues, process issues, or whatever. 

 

Finally, I think most people are aware that I spent 14 years of my life, before getting into this nonsense, at Bentley Nevada Corporation.  Bentley’s business is to protect rotating machinery: big compressors, big turbines, and pumps like that around the world.  We wound up with a defective process that created defective circuit boards.  They had to be in place in a relatively nasty environment of a refinery for 3 to 5 years before it became known it was a problem.  The first case we thought was just a fluke, the second case that we found, we discovered the problem, we went back, duplicated the thing, went out and checked a half-dozen more cases.  We had those circuit boards scattered around the world.  We had vice presidents, we had the owner, we had senior members of our engineering operation; we flew people around the world and we fixed every one of them. 

 

Consequently, this [S.B. 411] has the potential to damage that.  Was that ever part of a confidential agreement?  The answer was no.  But . . . out there in the world, when you go to Japan, or you go to Eastern Europe, or you go to someplace like that, is when you talk about Bentley Nevada, the Japanese have almost one word, it’s “Bentley fix,” because the perception is that a responsible company is going to go out there and fix their problems when they find them. 

 

I think this thing [S.B. 411] is so broad that it has the potential to take responsible companies and put those guys with the black “X.”  I don’t think that is your intent, but I think it potentially winds up being the result. 

 

Peter D. Krueger, Lobbyist, Nevada Petroleum Marketers and Convenience Store Association, Cigar Association of America, said he agreed with the comments in sections 6 and 9 of S.B. 411 in regard to public hazard.  He indicated his members on the petroleum side are involved in self reporting of “environmental sometimes hazards,” “sometimes not hazards,” spills, and so forth.  Mr. Krueger expressed concern that S.B. 411 would have a chilling affect on self-reporting and the self-reporting process. 

 

Additionally, Mr. Krueger said section 10 of S.B. 411, calls out the labor commissioner, but there is no language affecting the Occupational Safety and Health Administration (OSHA).  In regard to many decisions, whether fork lifts, roofers, the whole gamut, Mr. Krueger expressed uncertainty how OSHA and businesses who deal in a very confidential manner, would be affected by the bill.  

 

Robert Barengo, Lobbyist, Nevada Consumer Finance Association, pointed out he was concerned about S.B. 411 for all the mentioned reasons.  In regard to repairing the damage, he noted that section 4 of S.B. 411, “‘Information concerning a public hazard,’ means any information concerning a public hazard that may be useful to members of the public in protecting themselves from injury which may result from the public hazard.”  Mr. Barengo gave the following testimony:

 

That is a very open standard.  We haven’t proven that there is a damage out there yet and haven’t done a lot of things.  The burden of the whole bill is now shifted upon companies to come back in and defend themselves from actions because I, as a consumer, file a request.  It’s a purely administrative function for me to file this request, and all of a sudden, companies have to come in.  They don’t have to allege anything.  They have to allege I’m a member of the consumer [group] and I think it affects me, period.  That should not be sufficient to open up this reversal of the burdens here. 

 

And specifically we’re talking about burdens of proof down in section 9.  The burden on this now is the public person files, and I have to come in and defend myself.  Why shouldn’t they have to file and show the court why this may . . . be a public detriment.  It should be disclosable, it should be an injury, not just [to] say I want it, and I have to come back in and protect myself.  It should be the other way around. 

 

Back to the definition of the public hazard.  It says any instrumentality, which means anything of any nature, device, a person, that is likely to cause injury.  What is the definition of injury?  Great substantial bodily harm, monetary injury, physical injury?  We don’t know.  If it costs me a buck, then I am entitled to know what the information is.  Is that what your intention is in this?

 

Another thing about settlement of cases, doctors get sued all the time.  They have medical malpractice cases.  They cause injury.  They are a person.  Their insurance company settles it.  They don’t want it settled, but their policy of insurance requires the insurance company to make the decision, and it gets settled.  So now I’ve got a medical malpractice case where I settle, and the inference, as Sam [Mr. McMullen] said, is that I committed medical malpractice.  It’s open to the world.  I now become a target for other lawsuits.  I think there is a lot of problems in this, and those are just a few that I can think of as we’re sitting here today and looking at the bill.  I would be happy to work with you.  

 

One last one.  Mr. Lauer and I are friends and we appear on the same side of some bills, and we appear on other sides of some bills.  But I am concerned in section 3, page 2, lines 24, specifically line 26, [which says] a member of the media includes an organization that reports general news.  The internal organ of the Nevada Hospital Association, in a monthly report, publishes general news about the members of that company and other things that happen in the state.  Is that person . . . who publishes that now, or any member of it, now a news media? 

 

Senator James expressed appreciation for Mr. Barengo’s comments.  He pointed out that most of the language of the definitions were taken from the existing Florida statute. 

 

Elizabeth M. Pederson, Lobbyist, League of Women Voters of Nevada, expressed support for S.B. 411.  She said it is a very important issue of public information to have informed consumers who are better able to protect themselves and their families.  Ms. Pederson encouraged the committee to pass the bill.

 

A letter to Senator James from Pat Coward, Lobbyist, Pharmaceutical Research and Manufacturers of America (PhRMA), and Tom Wood, Lobbyist, Task Force Chairman, Nevada, PhRMA, dated April 9, 2001, was submitted as Exhibit I. 

 

Senator James expressed appreciation for testimony in opposition to S.B. 411.  He encouraged amendments to address the concerns and said it was his fervent desire to process the bill and make it the best legislation possible.  The senator indicated he would be happy to meet with proponents to address concerns and create amendments that would eliminate any unintended consequences of the legislation. 

 

Senator McGinness introduced Mark Morris, from San Carlos, California, who attends Central Middle School.  The senator explained that Mark chose Nevada as a project and his parents brought him to the Legislature.  He invited Mark to sit with him on the Senate Floor.  Senator McGinness expressed appreciation to Mark’s parents, Jack and Terry Morris, for going the extra step to bring Mark to the Legislature. 

 

There being no further business, Senator James adjourned the hearing at 11:01 a.m.

 

RESPECTFULLY SUBMITTED:

 

 

 

Barbara Moss,

Committee Secretary

 

 

APPROVED BY:

 

 

 

                       

Senator Mark A. James, Chairman

 

 

DATE: