MINUTES OF THE ASSEMBLY COMMITTEE ON JUDICIARY Sixty-eighth Session June 10, 1995 The Committee on Judiciary was called to order at 8:20 a.m., on Saturday, June 10, 1995, Chairman Humke presiding in Room 332 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mr. Bernie Anderson, Chairman Mr. David E. Humke, Chairman Ms. Barbara E. Buckley, Vice Chairman Mr. Brian Sandoval, Vice Chairman Mr. Thomas Batten Mr. John C. Carpenter Mr. David Goldwater Mr. Mark Manendo Mrs. Jan Monaghan Ms. Genie Ohrenschall Mr. Richard Perkins Mr. Michael A. (Mike) Schneider Ms. Dianne Steel Ms. Jeannine Stroth STAFF MEMBERS PRESENT: Dennis Neilander, Research Analyst Joi Davis, Committee Secretary OTHERS PRESENT: Robert D. Faiss, Attorney at Law Marc H. Rubinstein, Vice President, General Counsel, Caesars Palace Mark Lerner, General Counsel, Becker Gaming, Inc. William A. Bible, Chairman, State of Nevada Gaming Control Board C. Brian Harris, Board Member, Gaming Control Board Roger S. Trounday, Executive Vice President, John Ascuaga Nugget Patrick M. Thorne, Director Administrative Services, Station Casinos Sydney H. Wickliffe, C.P.A. State of Nevada Gaming Control Board Linda Bernstein, Manager, Hilton Gaming Corporation Carolyn Ellsworth, Asst. General Counsel, Mirage Resorts William Thistle, Associate General Counsel, MGM Grand Sandra McHenry, Employment Manager, The Mirage David Sisk, Controller, Casino Operations, Caesars Palace Andrew Barbano, Deciding Factors Ken Braunstein, President, Forensic Science Consultants Nancy L. Stagg, Attorney at Law Paul E. Larsen, Attorney at Law Kathleen Stoneburner, private citizen Mark Fiorentino, Nevada Resort Association Harvey Whittemore, Nevada Resort Association William Vassiliadis, Nevada Resort Association Danny Thompson, Nevada AFL-CIO Bill Bradley, Nevada Trial Lawyers Association Victoria Riley, Nevada Trial Lawyers Association Valerie Cooney, Nevada Trial Lawyers Association Ben Graham, Nevada District Attorneys Association Joe Cronin, Attorney at Law Paula Coughlin, private citizen Judy Jacoboni, Mothers Against Drunk Driving Amy M. Meedel, Nevada National Organization for Women Mary Sanada, Nevada National Organization for Women Diane Loper, Nevada Women's Lobby George Glanville, Family of Murder Victims Florence McClure, Rape Crisis Center Bill Hornbrook, Family of Murder Victims Eva Collenberger, Family of Murder Victims Chairman Humke announced the bills would be heard in the following order: Senate Bill 432, Senate Bill 496, Senate Bill 474, Senate Bill 399, Senate Bill 513, Senate Bill 375. Additionally, the proponents of Senate Bill 400 asked the bill be pulled from the agenda and be re-posted at a later date. In that regard, Chairman Humke recognized an opponent of Senate Bill 400 wished to make a statement. SENATE BILL 400 - Limits civil liability of gaming licensee, its affiliate and employer for certain communications regarding employee, former employee or applicant for employment. Danny Thompson, lobbyist, Nevada State AFL-CIO, stated their concerns were given the late date of the session and understanding the rules may be suspended at any time, they would appreciate prior notification of the rehearing of this bill as there were persons who traveled to testify against S.B. 400 and he would like to be assured they will be notified when the hearing will take place. Chairman Humke pointed out it was the right of the proponents of a bill to request it be removed from an agenda. In addition, the co-chairmen will see that a proper re-posting of the bill and notification thereto is accomplished. Chairman Humke announced the hearing today was being audio conferenced to the Grant Sawyer State Office Building in Las Vegas. SENATE BILL 432 - Ratifies technical corrections made to NRS and Statutes of Nevada. 1993. Brenda Erdoes, legal counsel, Legislative Counsel Bureau (LCB), stated S.B. 432 is a ratification bill as a result of a constitutional provision. Section 17 of Article IV of the Constitution requires that all sections of the Nevada Revised Statutes (NRS) be re-enacted and published at length. Ms. Erdoes remarked at the end of a legislative session many bills amend the same section of NRS so a conflict system is designed to screen the sections then ratification needs to be confirmed. Ms. Erdoes provided a blue booklet which explains all items considered for ratification. Ms. Erdoes stated if any member had any questions after reviewing the booklet, to give her a call. The booklet is attached hereto as (Exhibit C). Mrs. Monaghan asked what the difference was between the First Reprint and the Second Reprint of S.B. 432. Ms. Erdoes replied there was one difference in that Section 4.5 was added to the Second Reprint at the request of the LCB. Chairman Humke stated S.B. 432 and Senate Bill 496 were both very technical bills and the information provided by Ms. Erdoes was very adequate. Chairman Humke asked the committee to study the explanations provided by LCB and look up the provisions of NRS at their leisure as the co-chairmen intend to vote on the bills at the next work session, Wednesday, June 14, 1995 at 6:30 p.m. SENATE BILL 496 - Makes various technical amendments to provisions of Nevada Revised Statutes. Brenda Erdoes, Legal Counsel, LCB, continued that S.B. 496 was a reviser's bill which differs from the ratification bill in that these changes have not already been made to the NRS but are suggested to the committee by authority of the LCB. An example of the items to be revised is the name change by the federal government of the Veterans Administration to the Department of Veterans Affairs. Ms. Erdoes set forth more changes to the bill. Ms. Erdoes pointed out one section in particular was Section 34 which amends NRS 281.501 which is a voting standard for legislators. There have been many questions regarding subsection 4 which requests clarification. Ms. Erdoes explained this section in furtherance explaining the research LCB has reviewed in this regard. In addition, LCB has made an amendment which has been discussed with the Speakers of the House and that would be to make the effective date October, 1995 even though traditionally revisers' bills become effective upon passage and approval. However, because of the potential for this section to affect the way legislators vote this session they recommend the October effective date. A further explanation of S.B. 496 is attached hereto as (Exhibit D). SENATE BILL 474 - Revises provisions governing civil liability for wrongful acts and revises provisions relating to punitive damages. At the request of the co-chairmen the testimony pertaining to S.B. 474 has been prepared verbatim, with minor language clean-up. William "Billy" Vassiliadis, Nevada Resort Association: "As you all know this past week much has been written and much has been said about the intent of this legislation and about the intent of the proponents. An issue this complicated, an issue that seeks this kind of change, an issue that affects so many different people from so many walks of life, it is often the case that perceptions take on a life of their own. That has clearly happened this week. Our intent in seeking this legislation is to seek tort reform. We think we are representing the mood of the country and the mood of this state. I think you all know from speaking to your constituents, from reading accounts of what has gone on in Congress, and in other states, clearly people want to see an end to frivolous, needless and irresponsible legislation. One of the misperceptions that has been formed this week is somehow this resort industry seeks to avoid and shirk its responsibility and seeks to avoid liability. That is not the case. What we seek to do and what we urge you to do is place responsibility where it belongs. We do not feel that any business, not just the gaming industry, should be held accountable for the criminal actions of others. We also feel no business nor any person should be held accountable when something so totally unforeseen happens. We accept the responsibility for protecting our citizens and employees. We know one of the primary concerns of tourists and visitors is their safety and we very deeply feel the obligation to keep them safe while they are here. Not only is it the responsible thing to do, but it is just good business. However, we do not feel we should be held accountable because some nut straps a propeller on his back and lands in the middle of a fight. We will do our part. We will meet our obligations. We will uphold our responsibilities. We will do everything we can to insure the safety of our visitors. While there are incidents here like anywhere else, I think Nevada has a pretty good record considering 40 to 50 million people visit this state every year." Harvey Whittemore, partner with the law firm Lionel, Sawyer & Collins, appearing on behalf of Nevada Resort Association: "With me today in support of S.B. 474 are Richard Bunker, President, Nevada Resort Association; Mark Rubenstein, Vice President General Counsel and Secretary, Caesars Palace; Roger Troundy, Executive Vice President, John Ascuaga's Nugget; Mark Lerner, General Counsel, Becker Gaming, Inc.; Sandra McHenry, Mirage Resorts; Carolyn Ellsworth, Assistant General Counsel and Vice President General Counsel,, Mirage Resorts; Pat Thorne, Station Casinos, Inc.; David Belding, past chairman, Nevada Resort Association, Principal, Circus Circus; Linda Bernstein; William Thistle, MGM Grand Hotel; Bruce Agulara, Vice President General Counsel, Mirage Resorts; and Marilyn Sade, Tropicana. Also members from my firm present today are Bob Faiss, expert in gaming law; Paul Larsen and Mark Fiorentino. With that, I would like to personally thank the chairmen of this committee for their extraordinary efforts in scheduling NRA's legislative package for your review today. In respect to this bill, I would like to thank each member of the committee for your extraordinary efforts on behalf of the citizens of this state. It goes unsaid but when I have the opportunity on behalf of the NRA lobbying team to meet with people as early as 6:30 a.m. and as late as 8:30 p.m., on legislation of this type, the public is well served. S.B. 474 deals with punitive damages and the liability of innkeepers to patrons injured by third parties. By this bill, punitive damages are extended to wrongful death cases but are restricted to the punishment and deterrence of deliberately wrongful conduct rather than mere errors of judgment. In a like fashion, this bill restricts the liability of innkeepers for the wrongful acts of third parties. The innkeeper should not be liable for the criminal acts of third parties unless the innkeeper has failed to exercise care by taking precautions against foreseeable wrongful acts by a third party. Section 1 of this bill amends NRS 41.085, Nevada's wrongful death statute, to make it clear that a decedent's estate can recover punitive damages when the decedent could have recovered such damages if the decedent had survived. This provision rejects the contrary holding reached in Alsenz v. Clark County School District, 109 Nev. 1062, 864 P.2d 285 (1993). Punitive damages are to punish and deter wrongdoers, not to compensate the victims. Consequently, unlike the death of the tort feasor, the death of the victim should not prevent punitive damages since the tort feasor remains susceptible to punishment. This provision was sought by the trial lawyers and we agree with the policy that is expressed herein. Sections 2 through 5 of the bill--these sections amend Nevada's punitive damages statute and insurance statutes in three significant respects. Section 3 of the bill adopts in large part the California statutory standards for the imposition of punitive damages. Let there be no mistake about this. What we are doing is unique to Nevada but not unique to this country. The suggestion that somehow Nevada is unwilling to take care of its citizens and do something different is an unfair characterization. The Nevada Supreme Court opinions in Craigo v. Circus-Circus Enterprises, 106 Nev. 1, 786 P.2d 22 (1990) and Granite Construction v. Rhyne, 107 Nev. 651, 817 P.2d 711 (1991) reveal deep divisions in the court about the proper standards for punitive damages in this state and the Craigo plurality opinion expressly requests legislative action on this issue. The Craigo opinions noted Nevada originally adopted its punitive damage standards from California but neither Nevada or California courts have consistently followed the standards adopted. Furthermore, as Craigo makes clear, the courts have often used the same words to describe significantly different mental states and thereby reach significantly different results. The resulting confusion not only violates the fundamental precept that punishment should only be imposed when statutes give clear notice of what conduct makes someone subject to such punishment. It also makes punitive damages a wild card, significantly inhibiting the settlements of disputes. By adopting the California statutory standards, the bill effectively adopts the standards advocated in both the plurality and concurring opinions in Craigo. The three statutory grounds for punitive damages are fraud; oppression; and malice. Each of these standards share a fundamental requirement that wrongful conduct with knowledge of the injury will probably result. This separates the conduct that makes punitive damages from the negligent, grossly negligent, and reckless conduct that does not. Bad judgment, even unconscionably irresponsible conduct fully justifies compensating someone injured by that conduct. But such conduct does not reflect the evil mind or motive that both the American College of Trial Lawyers and the Nevada Supreme Court have viewed as being the proper object of punishment through punitive damages. Sections 4 and 5 of the bill sets for the circumstances under which employers will be liable for punitive damages for the deliberately wrongful conduct of their employees. Employers are properly punished when the employer itself engages in wrongful conduct with the requisite mental state for punitive damages. If I can refer you to Sections 3 and 4 you will notice we have provided definitions for separate terms: conscious disregard; fraud; malice (express or implied); and oppression. The existing standard is set forth in Section 5 that talks about, on line 45 of the bill, that under existing Nevada Law you must have the above standards. The use of the terms are identical to existing case law. What we are doing is providing definitions which adopt the California standards and the Craigo plurality opinion standards in Section 3. I want to make that very clear so you can see the inter-relationship between Sections 3 and 5. As I have indicated, employers are properly punished when the employer itself engages in wrongful conduct with the requisite mental state for punitive damages. Increasingly, however, punitive damages have been sought from employers because of the conduct of lower level employees when no responsible officer, director, or other member of management intended for deliberately wrongful conduct to occur. That violates the fundamental reason for punitive damages. The punishment and deterrence of willful and deliberate wrongdoers. Consequently, the bill follows the adopted standards in California by permitting punitive damages against an employer for acts of an employee. Section 4 follows and tracks that California standard. One, when the employer knew the employee was unfit and consciously disregarded the rights of safety of others in employing him. Two, when the employer expressly ratifies or authorized the wrongful act and three, when the employer was personally guilty of oppression, fraud or malice. If the employer is a corporation, these requirements must be satisfied by an officer, a director, or management person expressly empowered to authorize or ratify the employee's conduct. Why do we need that standard? Express authorization or ratification is required to avoid situations such as those that existed in Ramada Inns, Inc. v. Sharp, 101 Nev. 824, 711 P.2d 1 (1985). In that case, the Nevada Supreme Court held that authorization or ratification was satisfied simply because the employer gave its employee wide latitude in handling such situations. Obviously, giving employees broad discretion does not mean the employer itself, its officers, its directors, and management personnel, possess the requisite mental state to make punishment of the employer appropriate. Sections 6 through 8 of the bill amend NRS Chapter 651, Nevada's innkeeper's statutes to clarify the liability of motels, hotels, and other innkeepers when third parties cause personal injury to guests or other patrons. It does not affect the liability of such entities or their employees acting within the scope of their employment when their own wrongful conduct causes personal injury. Let me restate that, if we're negligent or our employees are negligent to a guest or patron, this statute has absolutely no application and that has been the huge misperception within the press and within the community that does not follow this language closely enough to understand what the intent of the legislation was. Obviously, we believe the patrons are entitled to the exercise of care by innkeepers to prevent injuries. It is equally obvious that the exercise of care cannot amount to an absolute guarantee of the safety of guests. An innkeeper cannot guarantee a guest that an airplane will not fall out of the sky onto the hotel causing injury. Perhaps a better example would be the relatively recent event involving an outdoor championship boxing match hosted by a Las Vegas casino. Despite beefed-up security and other extra precautions, a stranger calling himself `fanman' flew over the hotel and into the boxing arena with a gasoline powered contraption. He landed on the ring, fell into the first rows of the audience injuring people. The hotel had exercised appropriate care to protect its guests but it could not insure them against such unanticipated, negligent or criminal acts of third parties. This bill will make it clear that the innkeeper is not liable unless there was an absence of care or the providing of care to prevent a foreseeable, wrongful act by a third party. Under this bill and amendments we are going to propose today, foreseeability will be found when a) the owner failed to exercise any care for a patron's safety; or b) the owner had actual knowledge of prior similar incidences on the owner's premises. Under the first standard, any wrongful acts by a third party will be deemed foreseeable if the owner or keeper has failed to exercise any care whatsoever for its patrons' safety. This puts obvious pressure on our industry and any other industry that has substandard properties to address patrons' safety. Under the second standard, foreseeability will be found if the owner or keeper had notice or knowledge of prior incidents of similar wrongful acts occurring on the premises. To use a current example, if the `tailhook' convention returned to the Hilton and the same allegedly wrongful acts occurred then those acts would be clearly foreseeable to the Hilton under this bill. Section 8 also seeks to correct an aberration that seeks to radically alter the functions of judges and juries and effectively making innkeepers insurers of their patrons' safety. Traditionally, the question of whether one has the duty to protect others from injury from third parties has been decided by judges as a matter of law. When the jury deciding if there has been a breach of duty. In Doud v. Las Vegas Hilton Corp., 109 Nev. 1096, 864 P.2d 796 (1993), the Nevada Supreme Court followed interpretations of a California case to hold that whether the injury was foreseeable so as to create a duty was a question of fact for the jury and such foreseeability did not require prior similar instances. So in Section 8 of this bill we are taking care of a situation and making sure the judge decides those questions. The Doud case has been frequently criticized by a number of commentators. More importantly, the Doud case, which was following a California decision, that earlier California decision, was in fact reversed so the body of law which the Nevada court relied, has in fact been reversed and this section addresses that. Section 9 of the bill deals with innkeeper liability. The bill came out from bill drafters in a way that was not consistent with how we had presented it. I would suggest to you the intent of the bill is simply to include property brought on the premises by a patron to make it subject to the same liability standards in existing law under 651.010 and that language would be as follows: "that an owner or keeper is not civilly liable for the theft, loss, damage, or destruction of any property of a guest left in a guest room if the owner/keeper provides a safe." Again, the way this came out it suggests an opposite. It is not clear to follow the intent originally requested in the bill so we do have an amendment we can discuss. Section 10 of the bill makes punitive damages insurable. A number of courts in a number of states allow insurability of punitive damages: Arizona, Idaho, Montana, New Mexico, Oregon, Texas, Wyoming are states that have this provision. We would suggest to you that the policy expressed by this section is appropriate. In all cases, punitive damages are shifted to someone. They are either shifted to the shareholder, they are shifted to the consumer, to the employees in lower wages, they are shifted to creditors in bankruptcy, or they are shifted to plaintiffs and their lawyers through non-payment. There is nobody that pays punitive damages except collectively all of us. Therefore, this bill makes a very large policy statement that insurability of punitive damages in certain instances are appropriate and that is where there is no wrongful and intentional act committed with the intent to cause injury to another. Only those cases falling within a certain class of punitive damages would be insurable but if there was an intent to cause injury you certainly could not insure that because then you would not have the deterrence effect we are trying to have both through punitive damages and the fact of insurability. I want to make a point here with respect to Sections 11 and 12 of this bill. Section 12 of this bill makes the act effective upon passage and approval. Section 11(a) of the bill is written in such a way that this would have application to cases which were pending. We have engaged in discussions through the auspices of leadership of both Houses, the chairmen of this committee, as well as through the fine efforts of Assemblywoman Buckley and Senator James, to try and come up with a resolution with respect to subsection (a), lines 41-42. I know it is the chairmens' intent to speak to this immediately. To make the record clear, if this committee decides to go forward with the processing of this bill, it is fully our understanding that particular provision will be taken out and we will accept the judgment of this committee that that is an appropriate thing to do. We did not intend, I want to make this clear, to retroactively impact any vested right of any plaintiff whatsoever. We attempted to craft this language broadly enough so if there were procedural matters pending in cases they would be covered but it was not our intent to impact unconstitutionally the vested rights of any party in a pending case in this state. I want to make that very, very clear. We said it on the record in the Senate. We said it on the record with conversations with anybody we talked with. In response to a question I was asked by one senator if this could have the possibility of impacting the Coughlin v. Hilton Hotel Corp., 879 F.Supp 1047 (D.Nev. 1995) case, I said that it could, not that it would, I said that it could. I tried to do so in a way that was honest and in a way that expressed some concern that indeed this was a broad policy issue for you to face. It is our desire that this bill could be processed and not have any impact on anybody who thinks it would be an untoward decision for this body to take and apply this retroactively. I want to make that very clear. I would be happy to answer questions with respect to any matter. We have a number of amendments I would like to go through generically with the committee at this time if I could Mr. Chairman." Ms. Buckley: "There has been a lot of press this week concerning this bill indicating that the casinos wanted immunity for all that happens to their guests regardless of whether or not they are at fault. I just wanted to comment for the record that I feel that is not true. I believe the intent of this bill, especially Section 8, was to immunize casinos from liability for the unforeseeable acts of a third party. The reason I feel sure of this intent is because I had a concern about Section 8. My reading of the bill was that a casino might be immunized where they failed to exercise due care but where there had not been any criminal act. I wanted to insure that a casino had to exercise due care for their guests regardless of whether or not there had been prior incidents. When I voiced this concern that this might be the intent of the bill, I was assured that it was not. The industry worked on a revised section of the bill because they told me that was not the intent and they wanted to insure that security was still provided as it is now and only to insure they would be immunized where an act was unforeseeable. I wanted to state, before Mr. Whittemore goes over the specific amendment of Section 8, that I think this is an appropriate balance to protect anyone in our state from unforeseeable acts of third parties while protecting victims and insuring security is still met in our state." Chairman Humke: "Thank you very much Ms. Buckley. I should have stated this at the outset. It is the chair's intent to limit the time for proponents and opponents of the bill. Mr. Whittemore, the co-chairmen have discussed various time limits and it would appear reasonable to offer one hour for each side. Does that appear appropriate to you?" Mr. Whittemore: "That is more than adequate from our side. As we go through the amendments and answer questions, I am sure we will be done in the next 15 minutes." Chairman Humke: "In anticipation of your amendments as spoken to by Ms. Buckley, I expect the amendments you offer in a moment will allay some of the fears of many of the opponents so one hour appears to be reasonable. The time will be recorded by co-chairmen Anderson and that time will be reckoned exclusive of committee questions and answers. It is also the chairs' intent to accept a motion at the appropriate time which deletes section 11(a), the retroactivity provision, as alluded to. It is anticipated the committee will not have a problem with that part of the motion." Mr. Anderson: "The only part I wish to note for the record and maybe on behalf of the committee for some have approached me with concerns about this particular bill. Maybe the peculiar nature of this state is often portrayed in the media nationally and locally that the tourism industry which is obviously a major part of the engine that operates the fiscal nature of this state, that it stands in a peculiar spot. Oftentimes the unusual nature of Nevada gaming gathers a great deal of national attention and people living in this state are often criticized because of the uncommon industries we have here. The Legislature has a legitimate concern over making sure people who come to this state are treated fairly by the hotels and gaming establishments. By and large, we would like to assure the public they will be treated . . . we believe that is the legitimate business of the Legislature and we applaud the efforts of the gaming industry in making this a hospitable ground. At times we become somewhat resentful of how the Legislature and other bodies are portrayed because of the nature of the gaming industry in our state. I want to make sure we all know what I am talking about--Nevada gaming is controlled by the state Legislature and I want that clearly understood. We have sitting here a chairman of the gaming control board who does an excellent job of making sure the circumstances of that business is clearly regulated in a fair and equitable way. I want to make sure we are concerned not only with the gaming industry, but also the hotel industry that often supports it and that is our legitimate concern and we will deal with it." Mr. Whittemore: "If I might conceptually go through the areas of amendments and I would like to point out the areas I believe will require further review when it comes back from bill drafting if this committee decides to process the bill to make sure the language meets with everyone's approval. On behalf of our industry, I would recommend the following changes. With respect to page two, lines 13-14, take out the word "dangerous" and put in "harmful" because the original definition the characterization was that under the definition of "conscious disregard" the use of "dangerous" may limit the application of the term to things that might be inappropriate and substitute probable harmful consequences of a wrongful act. With respect to Section 9, leaving Section 8 for a moment, Section 9 the language which I read into the record earlier would apply regarding property patrons and guests bring to the entire property not just their rooms or their cars. Last year we added cars and now we are going to try to cover the entire premises. The language posted attempts to do that but there is some problem with the language. If we could turn our attention to Section 8. The intent of Section 8(1) is to provide a standard that if you did not exercise due care that every property . . . it simply says `we are not civilly liable for the death or injury of a patron or other person caused by another person unless there is preponderance of evidence that shows the death or injury was foreseeable and that we [the industry] did not exercise due care.' If we did not exercise due care, we are liable. That is the point Ms. Buckley made with respect to this section and we agree with that intent. Section 2 of the bill, there was some confusion as to the application of the phrase `incurred pursuant to subsection 1 on line 44'. The use of this phrase is a reference to the fact that what we are referring to is third party liability cases. Therefore, in an attempt to make sure Section 2 is limited to those sections, we had recommended that you repeat the language in subsection 1 that this applies to an owner or keeper of any hotel in Motel Motorcourt Boarding House and that you repeat that phrase and then carry forward the language in subsection 2 with the addition of the following very important phrase, `the owner or keeper failed to exercise due care for the safety of the patron or other person on the premises.' This was the language which was so important that Assemblywoman Buckley and I and various members of our legal counsel from the various properties worked out in discussions yesterday. We believe that appropriately addresses, in subsection 2 the concerns she had expressed. Again, the language is read from a version we would be happy to provide in more detail to the bill drafter. As early as this morning we were working out final details. Those are the amendments we have suggested. There are other parties supporting the bill who have other amendments which we do not oppose but will allow them to propose them to you. With that, we would be happy to answer any questions generally regarding the intent of the bill and specifics to the language as best I can provide." Mr. Carpenter: "I have a question on page 2, Section 4(1), lines 29-31, where it says the employer has advanced knowledge that the employee was unfit for the purpose of employment and employed him with a conscious disregard as to the rights of safety of others. How would that work in the real world?" Mr. Whittemore: "I can give you an example. Someone in human resources takes a look at an individual's application and notes there have been some potential past examples where incidents of sexual abuse have occurred. Immediately upon hiring this individual, they put him in charge of a childrens' summer water program. You have then consciously disregarded the rights and safeties of others by hiring an individual who is unfit for the purposes for which you hired him. Here is an individual who has a past which indicates to the employer that this person may not be appropriate to be placed in that type of a situation. In the real world, someone should be held responsible for the conduct of your employee. That language is taken from a long line of cases . . . from California statutory language as well as a number of other cases discussing what responsibilities an employer has to make sure you hire appropriate personnel." Mr. Carpenter: "Under most instances if we knew the facts like the example given, you would not do that would you?" Mr. Whittemore: "Of course not. The point is that if you did and you saw someone who said I'm simply willing to take that chance. That would be conscious disregard. That is a willful act. It is highly unlikely but you asked for an example that may indicate where a person would be particularly unfit for that particular employment. Another example would be in the construction industry when you put someone on a crane and say how many hours of training do you have, and they say they have ten hours, and then you immediately put them in charge of a job where they are coming into exposure of a number of individuals. In the real world, you would hope employers do not do that but if they do then that employer is responsible. This bill is about personal responsibility. This bill is about assuming responsibility for your own conduct. If a corporation or a personal employer makes that kind of mistake they should be subjected to those types of damages associated with punitive or exemplary." Ms. Buckley: "I just wanted to note for the record the changes outlined by Mr. Whittemore are those that we discussed for hours yesterday. I think it accomplishes the very delicate balance of meaningful tort reform and protecting victims. I also wanted to pass on for the committees' information, Senator James reviewed these changes, does agree with them, and thinks they accomplish a balance. Also, Senator James wanted to pass on that he indeed supports the elimination of "retroactivity." I would like to thank the resort association for working out these very fair changes to the bill." Chairman Humke asked if Mr. Whittemore or Vissiliadis had any concluding remarks. Mr. Whittemore thanked the entire committee on behalf of the Nevada Resort Association. Chairman Humke recognized Bill Bradley and others from Nevada Trial Lawyers Association (NTLA) in support of the bill. "My name is Valerie Cooney. I am here this morning on behalf of Nevada Trial Lawyers Association. We are here today in support of S.B. 474. I have with me the Executive Director of NTLA, Mrs. Victoria Riley. I also have Mr. Bill Bradley, a member of the board of NTLA. Mr. Bradley will present to you today NTLA's position on this bill." "Good morning chairmen, members of the committee, my name is Bill Bradley. We are in support of S.B. 474. You heard earlier the term `tort reform' and if tort reform means acting safely for the consumers and citizens of Nevada then this bill does that. We had expanded in one of the most important aspects of this bill which we are very pleased to see, is the expansion of punitive damages in the area of wrongful death cases. To use an example, 10-15 years ago, when Ford Pintos were being rear-ended and burning people, normally those people would die because of the burns. Under the existing laws, the Supreme Court said approximately one year ago, anybody that died as a result of that defective design had a right to punitive damages against Ford Motor Company. As we all know, Ford Motor Company made a conscious decision to burn people as opposed to fixing the cars. We had that law and about a year ago, the Nevada Supreme Court said that was no longer the law and people who are killed as a result of conscious disregard of their rights, have no right of punitive damages. That was a surprise and shock to see come out of our court. Consequently, when this bill was first discussed and the discussion centered around expanding punitive damages to include those actions arising out of wrongful death, that is an expansion of the current tort liability and an appropriate public policy for this Legislature to embody. We support that very strongly. Mr. Whittemore mentioned the definitions that give rise to punitive damage conduct and we agree with those comments regarding the uncertainty in the Nevada Supreme Court opinions regarding malice, oppression, and fraud. We do support the amendment Mr. Whittemore mentioned at lines 13-14 because the word `dangerous' could possibly only apply to where people are physically injured. There are cases where people are mentally, financially, and psychologically injured that are not necessarily `dangerous' but are certainly harmful. It is a positive step to amend that to take out the word `dangerous' and use the word `harmful.' In Section 4, I know the intent is there but I want to make sure attachment of liability to the superior officers . . . Sections 1, 2, and 3 are in the disjunctive. In other words, perhaps it could be clarified if LCB agrees, that there be an `or' placed after the number 1 to make sure it indicates each one stands on its own as opposed to conjunctive. We are also proposing an amendment to this bill that will protect Nevada consumers from the bad faith conduct of insurance companies. Currently, Nevada law has gone to great extent to protect Nevada consumers from the bad faith, deliberate, willful and conscious disregard actions of insurance companies. In 1989, when this bill was last visited by the Legislature, there was an exception created for insurance companies from the cap of three times compensatory damages on punitive damages. One of the exceptions to that rule was insurance companies. We think it is a very strong public policy statement and in total reliance with Supreme Court opinions that actions involving bad faith be exempted from Sections 3 and 4 of the bill. That is a strong statement to make sure Nevadans who are egregiously treated by insurance companies who are deprived benefits who are strung out when they need those benefits desperately, will not go away unpunished by the concept of punitive damages. The Nevada Supreme Court is continually recognized in the area of insurance law that there truly exists a special relationship between consumers and insurance companies based on trust and reliance. Because of that special relationship, insurance companies must take appropriate actions to protect Nevada consumers. We think it is imperative to include an amendment which we have proposed language that will exempt out from Sections 3 and 4 such bad faith conduct on behalf of insurance companies. There has been a great deal of press that indicates asking for the term `preponderance of the evidence' the industry and on the other side of the trial lawyers the industry is boiling us over and trial lawyers are bound by the fact we are allowing the concept of `preponderance of the evidence' to rule in the burden of proof that must be proven against a hotel in a negligent security case. That also is a misstatement by the press of current Nevada law. Preponderance of the evidence is the standard in all civil cases. It is the standard we are used to accomplishing in all civil cases and it is language we support as a clear restatement of current Nevada law. At Section 8 of page four, line 4, much has been said about the term, `prior, similar wrongful acts' and we want to make sure the legislative history is clear on what is meant by `similar wrongful acts.' That is, if there is unfortunately a murder at a hotel, `prior, similar' does not mean that a casino is responsible only if there has been a prior murder. So, `similar' should never be interpreted as being `identical.' Similar should be defined and construed as such activity that gives rise to the notice of criminal activity afoot on the premises. We want to make sure `similar' is defined broadly under this statute and not narrowly. If there have been prior assault, assaults and batteries, armed robberies, that is sufficient to give an operator sufficient knowledge that criminal activity exists on the property and additional steps have to be taken to protect the patrons of that particular property. Finally, we have always been concerned with the retroactivity clause. However, to set the record straight, this was never a retroactive portion. We are talking specifically about paragraph 11(a). This was an intent on the behalf of the trial lawyers as well as the industry to allow the decision whether this would be applied retroactively up to the courts. Although, we are extremely pleased to see that section has been withdrawn and we are in support of that section and urge this committee to follow the suggestion to withdraw that section from the bill. That is the end of our presentation." Mr. Schneider: "I would like you to go over `similar' again because it appears you want it as legislative intent a very broad definition." Mr. Bradley: "If I said `overly broad' I do not think that is right. I think that is ultimately a decision that will be left up to the judge under this law which is also the current existing law. A judge is going to determine whether prior similar acts are similar enough to determine foreseeability. Consequently, if you have a car burglary on the outside part of the premise, the parking lot, would that put an operator on notice that there is a murder--I don't think so. But if you have armed robberies in the elevator, on the floor, or in a bathroom, that may very well give rise to the fact that additional steps need to be taken. The intent here is to make sure `similar' is interpreted reasonably." Mr. Manendo: "I wanted to make a statement earlier and then I do have a question. Along the same lines that there has been a lot of publicity on these particular pieces of legislation, I have had numerous constituents call me regarding articles in the paper that these hotel bills are directly related to the amount of campaign contributions we receive. I promised a constituent for the record it be noted that I feel as an individual and as an elected official I have a responsibility to look at each piece of legislation on those merits regardless of the amount of campaign contributions received. I did not accept one penny from the hotel industry in this last campaign. My question is, in Section 8, talking about civil liability, and I am not an attorney, but in my house, if I have a guest in my home and at that time someone breaks through the window and hurts my guest, am I liable for the actions that occurred." Mr. Bradley: "I am sure everyone on this committee would like a simple yes/no answer and having appeared before this committee many times, you know that lawyers never give that kind of answer. If you had prior guests at your home and prior break-ins where your guests were injured and you have failed to warn your guests and you have failed to take adequate precautions to protect your guests because now you are on notice that you have prior problems, you could be held liable. But if this is a first-time occurrence, you will not be held liable." Mr. Manendo: "If no other incident happened, then they cannot turn around and sue me?" Mr. Bradley: "I do not think so. Although, let's say you live in a very bad part of town and every other home around you has double locks on the doors, bars on the windows, and you are a free-living, fun-loving guy, and you do not have any of those things, then you could be criticized because you should have been on notice that you were in a bad area and you did not take any reasonable precautions to protect that guest and you may be held liable. That is exactly what Ms. Buckley, our organization, and the casino industry, have been trying to address so under both scenarios lack of due care and foreseeable deeds are taken care of and people in this state are protected under those circumstances." Mr. Manendo: "There is so much going on with people suing people because they looked at me wrong, let alone if you are injured. There are so many frivolous lawsuits happening and I wanted to have an understanding how that would relate to someone who is a guest at a hotel or someone who is a guest at a home or apartment." Mr. Bradley: "As you know, Mr. Manendo, we have introduced a bill that will hold lawyers personally liable for filing frivolous cases. It is a very responsible bill and a bill we are extremely proud of. I have not met one person that does not think it is a great bill. It is something that should get the attention of the press so people in this state know the trial lawyers, this Legislature, and everyone is concerned in doing something about frivolous lawsuits." Mr. Goldwater: "In Section 10, why do we need `express authorization' in the statutes to offer that sort of an insurance policy? And, what are the pitfalls, if any." Mr. Bradley: "There are no pitfalls to that. I think there are certain instances Mr. Whittemore related where someone acts in conscious disregard of another's rights. That does not reach the standard of intent to harm someone. Under those conscious disregard cases, there should be insurance to cover those punitive damages because we are still short of intent. But where there is a pure intent to injure, you should not insure because that takes away the deterrent effect of punitive damages." Mr. Anderson: "In Section 8, page 4, line 4 of the bill it talks about `similar, wrongful acts.' The phrase concerns me. Would a rape incident be considered to be similar to a mugging or a robbery? What are we talking about with `similar, wrongful acts?' Rape is an assault . . ." Mr. Bradley: "I think the concern here is to make sure that whenever you have sufficient activity . . . and I'm not a judge but if I were a judge, I would think that an aggravated assault on a property would give the operator sufficient notice that there is a criminal activity afoot and precautions need to be taken to protect the patrons from such activities. But a break-in on a car on the outside of the property may not be. I think it is going to be interpreted by the judge, which is appropriate, on a case-by-case basis and I think that is what is important. Both sides would be given the opportunity to argue you had three prior bad acts at a particular property or one extremely bad act at a property, does the judge in his or her opinion feel that was sufficient to make it foreseeable that another bad act had occurred. Chairman Anderson, I do not think that can be defined within the statute but it certainly, with the legislative history, will give judges proper direction that reasonable interpretation of prior, similar acts is the goal." Mr. Batten: "Mr. Bradley, on page two, line 32 the word `expressly' and again on line 38, `expressly' the word is used. In your opinion, does that place an unfair or high burden on the victim?" Mr. Bradley: "It does Mr. Batten, and I believe that the intent of punitive damages has always been . . . I mean punitive damages I don't agree are awarded as frequently as we are told in the newspapers. But you are going to have to prove that there was express ratification or express authorization by hierarchy in the corporation or property or casino. I believe it is going to increase the standard but I do not necessarily believe it is going to destroy in any way a person's right to seek punitive damages when the conduct is appropriate." Mr. Batten: "So that word does not bother you at all?" Mr. Bradley: "Well certainly it bothers me. Every word in this section has always bothered us but I believe overall the bill is appropriate and I believe we can live within the language of that bill. Ms. Cooney: "I simply want to stress that should the committee be of a mind to pass this bill, that they seriously consider the removal of section 11(a) the retroactivity provision and would ask the committee seriously consider the admission or inclusion within the provision and the exclusion excluding bad faith actions. I simply wanted to stress again those issues." Chairman Humke announced the time left for persons wishing to testify on the bill and announced there were four persons in Las Vegas wishing to testify on the bill and a determination was being made as to whether those persons are for or against the bill. Chairman Humke asked if anyone else in Carson City wished to testify in favor of the bill. Noting no raised hands, Chairman Humke stated he would go to those persons wishing to testify against the bill, excluding one more question from Mr. Batten. Mr. Batten: "In Section 8, line 48, `the court shall determine as a matter of law whether the owner or keeper had any duty to take reasonable caution . . .,' in that instance would the court, referring to the judge I'm sure, him making that determination, does that take anything away from the jury?" Mr. Bradley, NTLA: "No that has been another misconception in the press that we disagree with. Whether duty exists in the law has always been a question for the judge. So, consequently all we believe this language does is say what all the case law says that when there is a question of duty, that is interpreted by the judge. Once the judge makes that decision, if the judge decides that a duty exists, the case goes forward and the jury decides whether the duty was breached and whether someone was harmed as a result of that breach of duty. If the judge decides there is no duty, then the case ends at that point." Mr. Whittemore, NRA: "If I can respond and add something to Mr. Bradley's explanation, the entire reason that is in the bill is to restate what is an aberration under Nevada law which people are suggesting under the Doud case would have reversed the roles that Mr. Bradley accurately reflected is the appropriate statement of who should decide the question of duty. In Doud v. Las Vegas Hilton Corp., the court suggested they would follow a California case which had reversed those roles as you will recall in my opening, that case in California was reversed but we are left with the Doud v. Las Vegas Hilton Corp., case which suggested the jury would decide the question of foreseeability and duty and somehow the judge would not be involved in those questions. This makes it clear that the initial question will in fact be answered by the judge." Mr. Batten: "So this is not a `mini trial' first and then on to the jury, second." Mr. Bradley: "It's called a Motion for Summary Judgment and they are filed for this . . . and during the medical malpractice hearings we talked about all those motions and one of those is a Motion for Summary Judgment questioning whether or not a duty to take affirmative action exists. They have been filed before this bill and they are going to be filed after this bill." Chairman Humke thanked the witnesses, reiterated the time remaining for proponents of the will and announced the committee would go to persons wishing to testify in opposition to the bill, taking into consideration the four persons in Las Vegas wishing to testify. Ken Braunstein, Associate Professor, Criminal Justice, University of Nevada, Reno: "Many of the people in front of me and behind me are my former students some of whom have suggested that I not speak in opposition to this bill but they know me far better than that. My opposition to the bill has waned significantly during the past hour. I was very much opposed to certain portions of the bill and many of those have been addressed by amendments that take away the sting. I need to give you a couple moments of background so you understand what I am talking about. I am the only Nevada licensed professional security consultant. I am licensed by the Attorney General's Office and there are no other people so licensed. I have been a security consultant for more than a decade. I practice consulting security on a national basis and serve on the national board of directors of the International Association Professional Security Consultants. In that capacity, I serve on a committee that is working with HESM to devise national minimum security standards. In addition to that, I serve on the national lodging security advisory board of the American Society for Industrial Security. I have testified as an expert witness in security cases in six states and in five federal district courts. With that background, I think I am well qualified to talk about Section 8 of this bill. I am concerned only with `prior, similar acts' and `foreseeability' and some of you are confused by that. In that regard, I would like to assist you. Mr. Whittemore has spoken repeatedly about the California case on which Doud is based. The case he refers to is Issacs v. Huntington Memorial Hospital, 38 Cal.3d 112, 695 P.2d 653, 211 Cal.Rptr. 356 (1985); Issacs v. Huntington Memorial Hospital, 158 Cal.App.3d 487, 240 CalRptr. 765 (1984). At the time it was written, more than a decade ago, the opinion was written by then chief justice Roseburd and it was a unanimous opinion of the California Supreme Court. Part of that decision said that to be a first victim and to be denied the ability to seek compensation is to deny the fourteenth amendment right of equal protection under the law. Although Issacs has in fact been overturned, that question about the denial of the rights under the fourteenth amendment has been upheld by several other states. With Doud we have adopted the totality of the circumstances as opposed to prior similar acts of foreseeability. It is a good move we made when we did that, in my opinion. Nationwide, we, as professional security consultants, are almost unanimous in that the test is to become the totality of the circumstances. Certainly, prior similar acts has not done well for either side. The meaning of `prior, similar acts' is different in everybody's mind. The comments made by Mr. Bradley, and I agree with him completely, are that prior similar acts should be broad in its scope. In fact, in security consulting, we use the Uniform Crime Reporting of the Federal Bureau of Investigation violent and nonviolent crimes as prior similar acts. Violent crimes include murder, felonious assault, rape, and robbery. Consequently, as was previously answered, if a number of robberies or assaults occur, is that prior similar act for a rape occurring. Our answer would be yes it is without any question whatsoever. However, nonviolent acts are not predictors of violent acts to follow. Mr. Carpenter asked a question that was answered by Mr. Whittemore that in the real world we would have an individual who had a prior sexual assault against a child working with a child's program. A more realistic answer to that is in cases where casino hotels do not run background investigations on the security officers they hire, as high as 33% of them have prior felony convictions that are not known at the time they are hired. That is a realistic example for you Mr. Carpenter. It has been asked of me by proponents of the bill what relationship I have to Joe Cronin. My relationship to Joe Cronin is I have worked with him on one case. He was plaintiff's counsel, I was defense expert." Mr. Manendo: "I was curious, about 33% of the security guards having priors, could you . . ." Mr. Braunstein: "Yes, in an example where no background investigations were done on security guards hired by a particular casino, investigations determined that almost 33% of them had prior felony convictions. We do not run background investigations. . . it is not required on our security guards in casinos." Mr. Manendo: "Could you provide something in writing on that?" Andrew Barbano: "Good morning chairmen. My name is Andrew Barbano. I am a 26-year Nevadan living in Reno for 24 years and two years in Las Vegas. I am a union member and radio/television/newspaper commentator and I work for organized labor doing media advertising. I am an old politician as some of you may know. I come before you this morning wearing my media hat as well as my Nevadan's hat. Look at me as just another citizen but one that is concerned for the state. This bill is beneath this body. No matter what amendments have been proposed, no matter how you may try and cure its defects, much damage has already been done. A message has been sent. A message that our principle industry cares less for its guests than it should. During testimony on the `tailhook' case in Las Vegas, it was brought forth that fire alarms, or fire sprinklers, or smoke detectors, excuse me, were turned off during the `tailhook' incident. This, at a hotel which in 1980 had about 8-13 people die weeks after the MGM fire in which about 90 persons died. Don't get yourselves into a position where you will have to do a job over because it was not done right the first time. The MGM Grand in Las Vegas was built non-fire safe after 100 people died. The Legislature had to enact legislation to enforce retroactive sprinklers. Don't put yourself in that position here. The bill in question reminds me of 1989 when Hilton lost a case, 38 million dollars to 38 male casino dealers who alleged and won on age discrimination. That award grew to 50 million in interest and Hilton came before this body in 1989 to cap punitive damages and it had an impact on that case which was up on appeal and the dealers ended up splitting 4 or 5 million dollars, Hilton saved a lot of money, punitive damages were capped, age discrimination was basically legalized in the state of Nevada because it made it pretty nonproductive to sue unless you were already rich. Do yourselves a favor, do Nevada a favor, kill this thing." Paula Coughlin: "I come from Virginia Beach, Virginia and I thank both co-chairs and vice-chairs of this committee for allowing me to speak to you this morning and for allowing me to express my concerns about S.B. 474. This has been a difficult week for me and I guess it has been a difficult week for this legislative body in that it was a fact-finding week for everyone including the proponents of this bill. I am relieved and ready to go home. Now that I have seen the process work and that this body has taken a viewpoint of adopting a fair law for victims and a fair law for its industry and I encourage you to adopt the bill with that in mind. Any other changes that this body makes I cannot expect to make an impact on, but I just appreciate that you all have taken the time to look at the far-reaching effects that S.B. 474 would have not just on me, not just on victims of crime, but for anyone who travels and you have made a step to preserve the laws that are good for the country as a whole and I commend you, especially, Assemblywoman Buckley, thank you very much for taking the time and the effort to make this a palatable bill. Thank you all." Chairman Humke: "I would state that you did an effective job in lobbying and I would go beyond that to say that you did as good a job as any professional lobbyist I have ever seen and that is intended as a compliment for your professional approach. I know that when we talked in my office you described your naval career and I know that your leaving the Navy must be a bittersweet experience but I would like to thank you for your service to our country." Ms. Coughlin: "Thank you very much and you all have a good day." Judy Jacoboni: "I am the chapter president of Mothers Against Drunk Driving (MADD), Lyon County Chapter. I am a level one victim advocate for our chapter working as a trained volunteer. Most of my work with MADD involves injury and fatal victims and their families toward recovery. Today I am speaking against S.B. 474 as it would adversely effect the victims of crime to win damages in civil court. S.B. 474 will effectively insulate businesses from damages by granting exclusion from liability for the harmful acts of their employees and it is my duty as an advocate for victims of crime to oppose any measure which would restrict or limit the rights of victims to seek and win damages." Ms. Jacoboni's prepared testimony and letter from the National Victim Center is attached hereto as (Exhibit E). Ms. Jacoboni concluded the bill is bad public policy. Joe Cronin, Esq.: "I am a lawyer in Minden, Nevada. I have provided you with two separate packets of written materials. The first packet was about 15 days ago and the other was provided this morning which includes a proposed amendment. [The handouts so referenced are attached hereto as (Exhibit F)]. I was very pleased to hear about the proposed amendment articulated by Mr. Whittemore that Ms. Buckley was working on tirelessly. When I heard the language read, I heard `owner failed to exercise due care for the safety of patrons or others' it was not clear to me whether preceding that there was the word `and' or `or' and I am now told the word is `or' and I would like the record to reflect that whomever has the authority has to make that . . . I guess it was Mr. Whittemore that suggested `or' be placed before that language. Let the record reflect the word is `or.' I would like to say the process works. The crucible is not anything more than a hunk of metal unless there is a lot of heat and what comes out of it is something precious after the heat is applied. There was an example of this `fanman' and I saw this on television as well as everyone else and `fanman' is not what I came here to talk about. I was asked by members of this committee to bring in my crime victims then one of the members of this committee told me that you heard from a lot of crime victims and that member was very sincere and I agreed with that member that you did not need to hear from any more. All victims suffer from psychological damage. The re-telling of the horror is almost too painful to bear so I made the judgment to not bring them here but they can be here through me because they are all my clients. I just want to tell you a sentence or two about some real people not the `fanman.' Darwin Doud, the man after whom this case is named is a farmer from Nebraska who came to Las Vegas two or three times per year in his motor home to play in the Sportsbook at the Las Vegas Hilton. It was his joy. He thought the parking lot at the Sportsbook was as protected as the Sportsbook itself. He entered his motor home one night and was beaten with a hammer by an assailant who had a hammer in one hand and a handgun in the other. He screamed and fought for ten to twelve minutes. Ten to twelve minutes is the time it takes to fight an Olympic boxing match. He screamed so loud he attracted a crowd. No one in that crowd was a security officer. That was because that parking lot was not being patrolled. April, I won't use her last name, another client and the property involved is the Flamingo Hilton. April returned from a show to go to her room and she was in one of the upper floors. She walked into her room, the door closed behind her, she went to make a telephone call because the message light was on. The door burst open, a guy came in, and no telling what it was he wanted to do. It was clear from his actions that he wanted to substantially harm her, or kill her, or rape her, because he got on top of her and beat her. April, although slight but tough, drove him off. The reason that man was able to get up on that floor is because the Flamingo Hilton does not have a policy to restrict access to the upper room and floors to persons who have business there. Caesars Tahoe does and has for the past decade. They put it into place as a result of a security audit that Ken Braunstein did. I did not hear that from Ken Braunstein but heard it from executives of Caesars hears ago. Caesars Tahoe does not have those types of crime, the Flamingo Hilton does. The Flamingo Hilton had their own internal audit performed in 1982 and 1984 suggesting there be a security podium at the elevator bank to restrict access to the upper room floors to people with a room key or persons with business to be there--a reasonable inexpensive preventative measure that works. Nonetheless, April was assaulted and has permanent psychological damage as a result of that beating. The amendment I propose (Exhibit F) is language taken directly from the Doud case and it requires the court making the determination of duty based on prior conduct together with the totality of the circumstances. The Doud case never stated the judge does not make the determination as to duty any more. It stated the judge does make that ruling and makes that ruling considering the totality of the circumstances rather than the very narrow test of prior, similar misconduct. With that, I will respond to any questions anyone may have. I thank you for your attention." Mr. Carpenter: "What is your interpretation of Section 4, lines 29-31?" Mr. Cronin: "I have restricted my comments from the very beginning to the narrower portion of the bill that deals with the restriction of crime victims' access to the civil justice system in cases involving hotels and motels. I have not studied the bill with regard to punitive damage measures and did not come here to testify in opposition to the punitive damage measures. I understand there are others that are going to speak to that." Amy Meedel: "I am Amy Meedel, state president of the National Organization for Women and we are here to testify in opposition of S.B. 474. I would like to introduce one of my officers who will provide testimony, Mary Sanada." Mary Sanada: "First of all, I would like to say we are quite impressed with the amendments that have been suggested here compared to the testimony we heard on the floor of the Senate a week ago where apparently this bill was so good there was no need to process any of these types of amendments. However, we still have certain concerns about this bill. As Mr. Batten pointed out, the words in Section 4 saying that punitive damages are only going to be allowed when the employer expressly authorizes or ratifies an act . . . the word `expressly' seems a bit too strong and difficult to prove. There can be ways that employers can give tacit approval to what their employees are doing simply by not directing them and by ignoring the actions and there would be no way that a victim could prove that the employer had `expressly' authorized the act and yet simply by not doing anything to correct the act, he is not `expressly' authorizing it but he is giving tacit approval to it. The law has always recognized that an employee is an agent of his employer and that the employer is responsible for his acts. We are concerned with such language that narrows the time when an employer can be held liable. Employers have a duty to properly train and supervise their employees. If they do not do that, they can be authorizing those acts by neglect rather than by `expressly' so we would like to see the language of `expressly' removed from Section 4. I would also like to talk about Section 8. I am very concerned about the language starting on page 3, line 4, `a wrongful act is not foreseeable unless prior incidents of a similar wrongful act have occurred on the premises.' Now that is a pretty tough standard and I know there has been some amendment language but I ask, why do we need language in there that says they cannot be held liable unless it is not considered foreseeable unless there have been prior incidences. Instead of the word `not' say that for purposes of this section a wrongful act is considered foreseeable when prior incidences of a similar wrongful act have occurred. I have a real objection to `on the premises' as pointed out by the last witness. Under these standards, the Hilton could not have foreseen the attack on that woman. So I would like to see the language removed from the bill that requires those acts to have been commited on the premises of that particular hotel." Chairman Humke stated the committee would now go to the witnesses in Las Vegas and a reallocation of the remaining time would be allocated pro rata. The testimony of Las Vegas witnesses has not been transcribed verbatim. George Glanville, past president and assistant executive director of Families of Murder Victims stated S.B. 474 if passed, would allow employers to escape responsibility to provide safety and security to the citizens of Nevada and visitors to this state. Employers must be required to make reasonable efforts to prevent acts of violence against the citizens who frequent their establishment. When citizens enter a place of business such as a hotel or casino, they should expect no less protection by the management of this business. Mr. Glanville stated it was his understanding the bill, if passed, will degrade security which is already, in his opinion, in bad shape. He concluded by urging the committee to vote no on S.B. 474. Florence McClure, a 29-year resident of Las Vegas stated in 1973 she co-founded the rape crisis center and she has been active ever since. When the center was started, rapes were occurring in hotels and hospitals. Back then, the few lawyers in Las Vegas would not handle these types of cases. Ms. McClure stated finally a woman who was raped at a strip motel brought a lawsuit in Nevada but she brought her lawyer in from Chicago to handle the case because no lawyers would handle the case. Ms. McClure redirected her testimony to state her work history would indicate background checks are not performed. Ms. McClure went on to state the reason she wanted to speak on S.B. 474 was because the retroactive clause in the bill brought forth much anger on CNN broadcasting and the LA Times so Nevada is hurting itself by telling people we will not be watching out for you when you come to visit Nevada. Ms. McClure stated that was just not right and she would like to see the bill killed and we should beef up security and take care of the people who visit this state. Bill Hornbrook testified he was a relative of a murder victim in Las Vegas. Mr. Hornbrook asked how can you limit the liability on life and how can a value be placed on life. Why can not the owners be held responsible for the well-being of their customers. If they were held responsible, more care would be taken. Mr. Hornbrook stated Las Vegas advertises to get persons to town and then neglect their safety in that the cameras are there to protect the casino's assets, not to protect the customers. Eva Collenberger, Executive Director, Family of Murder Victims, testified although they are based in Clark County, they offer their services to out-of-state families who have had a family member murdered by visiting the Las Vegas area. Ms. Collenberger stated they support every measure that would prevent murder and make life safer for visitors and residents of Nevada. Ms. Collenberger stated S.B. 474 does not support this effort and they therefore oppose the same. Ms. Collenberger said many murders could be labeled `unforeseeable.' In 1994 eight murders were committed in different establishments in Clark County, including hotel casinos, restaurants, bars, hotel parking garages. This does not take into consideration the patrons that survived an attack at these same locations. She then read a letter from Linda Craffone, the wife of a murder victim, murdered in a local casino while visiting from Michigan. Ms. Collenberger's prepared testimony and the letter are attached hereto as (Exhibit G). Chairman Humke announced a reallocation of the remaining time pursuant to Mr. Anderson's calculations, announcing the opponents have 11 minutes remaining in testimony as desired. A show of hands indicated persons wishing to utilize that time. Chairman Humke noted no one in Las Vegas wished to testify further on the bill and recognized three persons wishing to testify further on the bill within the 11 minute time frame. The following testimony is again prepared verbatim at the request of the co-chairmen. Joe Cronin: "My thanks to the committee for additional time. I have lodged with the secretary an article from the ATLA Advocate dated March, 1987 entitled, "Cases that made a Difference: I. The Key to Hotel Safety" [attached hereto as (Exhibit H)]. The lawyer Ms. McClure referred to was me although I had moved from Chicago to Minden by that time and that was the first inadequate security case I took. The significance of it is the technology of key card locks other than hardware locks was available although it was not widely being purchased by hotels and motels before that case. After the plaintiff was brutally raped and suffered irreparable permanent damage nothing happened for two or three years while that case pended. When the jury spoke and awarded her $750,000 in compensatory damages and $500,000 in punitive damages the hotel industry took notice and, according to the key manufacturers and their representatives in Las Vegas, within the six months following that verdict, not the crime, 15,000 to 20,000 hotel rooms in Las Vegas were up-graded to state of the art key technology and that is now the standard in the industry. All of that has had a change in the industry about ten years ago when plans were made in Las Vegas and now Reno a more family- oriented town. For 30+ years the Disney Corporation has been doing this and their security is a hallmark in the industry and they do it better than anybody else. If we are going to compete with them for those tourist dollars, we have to do it at least as well as they do. If that is the message that is sent from these hearings and the body as a whole then we will all be well served." Diane Loper: "I am here to represent the Nevada Women's Lobby and we thank this committee for removing the retroactive clause. However, we have the same concerns voiced by Mary Sanada about the foreseeable acts on the premises and we feel Ken Braunstein has some very important points to make about the standard of totality of the circumstances and I think you should take his comments very seriously." Ken Braunstein: "When I previously spoke I was going to give you some examples and I would like to do that now in response to what is `similar' circumstances. I refer you to two cases, Maxi v. Summa Corporation, dba Frontier, filed November 30, 1987, wherein a woman was murdered on the 12th floor of the hotel. In its request for summary judgment, counsel for Frontier indicated that there had never before been a murder on the 12th floor therefore there was no foreseeability. This is a narrow view of what foreseeable and prior circumstances are. Likewise, when a lawyer's Mercedes was stolen from the valet parking lot of a Las Vegas casino, the casino sought summary judgment by stating that a Mercedes had never been stolen from valet parking before. The suggestion that the definition be broad, is one that is extremely important you understand. The narrowness of these kinds of defenses are ludicrous and I use them for their degree of lack of common sense. The cases we read about in the paper are the common, ordinary ones but we do not often hear the details of the cases. Two pending cases have facts that include things like this: as the husband is ripped from the car in the parking lot by two young thugs and kicked in the head into submission and his wife yells at the two armed security guards to assist, one of them replies `we're here to protect property ma'am' and a second, as the woman is unconscious from drunkenness on the floor of a casino and the security guards are tending to her well-being, a man approaches and says, I'm sorry about the condition of my wife, would you assist me in returning her to our hotel room which the two security officers do. They carry her to the car, drive to the hotel and place her on the bed in the room. Unfortunately, after they left she was raped by the stranger who duped the security guards into taking the woman victim to the bed of the rapist. These are the kinds of cases that should inflame the public. These are the kinds of cases that should not be limited in how many dollars should be used to teach the industry that it needs correction sometimes. Following Craigo, better security occurred throughout the state of Nevada. Following the case of Shoji v. Sands, a 1992 case filed in the federal district court of Hawaii, and the 1.25 million dollar judgment against the Sands, better security throughout the state was the result. If you limit the punitive damages the way the bill suggests, you will not find that security improves in the future, in fact, it will go backwards." Mr. Goldwater: "Exclusive of this bill, the intent is to limit the civil liabilities for unforeseeable acts. In your opinion, do you feel this is a worthwhile intent under our statutes. Is this something that needs to be done, exclusive of S.B. 474?" Mr. Braunstein: "Yes I certainly do." Chairman Humke asked the proponents if they wished to utilize the remaining 14 minutes. Mr. Whittemore and Mr. Vassiliadis, NRA, came forward. Mr. Perkins: "As this issue developed in the other house of the Legislature, it became apparent that it would be a complex and difficult issue and one that would attract a lot of attention, thus complicating it further. As Speaker Dini stated earlier on another issue, we are here to make difficult decisions because anyone can make the easy ones. Our responsibility as legislators is to develop public policy that strikes a balance between the rights and interests of all parties and as we know so well, this is not always the easiest thing to do. I believe this bill, as amended today, strikes that balance. No one questions the importance of the gaming industry in this state and its importance to our economy. No one questions the need to make sure that tourists feel safe in coming to Nevada and staying in our hotels. No one questions the need to cut down on frivolous lawsuits plaguing our society today and no one questions the need to protect every individual's legal and constitutional rights. I commend all the parties who have worked so hard on the language to strike this balance. In closing, Mr. Chairman, I would like to address an issue brought earlier that is about campaign contributions. The gaming industry is important to our state and it is entirely appropriate that that industry, like thousands of other credible industries in this state, be involved in campaigns via support in the form of contributions or other resources. I know that it was not the implication made, and I hope it is not the inference drawn that anyone on this committee, either democrat or republican, is acting unethically or otherwise without integrity regarding this or any other piece of legislation. Thank you Mr. Chairman." Mr. Schneider: "I need some clarification for myself and for the record on `similar.' Now, I felt real comfortable after Mr. Bradley gave his description of similar. Then we hear from a security expert and Mr. Cronin and Ms. Sanada. `Similar', I guess to Mr. Cronin is a hotel 500 miles away in Lake Tahoe being compared to a hotel in Las Vegas. To me, that is not similar. They are not similar in the way they handle security. If we are going to do that, we could say a hotel in downtown Detroit is similar to a hotel in Las Vegas. I am really having problems with that. I was thinking about the Frontier Hotel in Las Vegas who has had pickets out there and a history of some violence on that picket line and they have security out there 24-hours per day along with cameras and everything else. So, they have a history of violence and they have taken precautions. They are a low-end to a middle-range casino right across the street is the Desert Inn which is high-end casino and they do not have security so if something happens in their lot, to me that still is not similar because they do not have a history of that. Some of the testimony today would indicate that would be similar." Mr. Whittemore: "In response to Assemblyman Schneider's comments, again the concerns he has expressed with respect to reading this too broadly I think are appropriate for inclusion in the record. If I might make the following point. The word `similar' modifies `wrongful acts.' It does not modify anything else and the comments made by Mr. Bradley that `similar' not be read as `identical' are those which I think should guide the committee in its deliberations with respect to the use of the term. When we crafted this language we used the term `similar' for purposes associated with its common usage. That is, letting the judge decide whether in fact the particular wrongful act was similar to another wrongful act. We specifically chose not to use `identical' but the comments about proximity between hotels I think the points you made are very important ones and I commend you for making them. Again, the bottom line is that what Mr. Bradley said with respect to `similar' is that which we have agreed in terms of the legislative record that it is not to be turned on its head. Black is not white, white is not black, similar is not identical. The phrase we used was chosen very specifically to allow the judge to have some leeway to make the determination as to whether they were alike and that is the way the bill was drafted." Mr. Carpenter: "After the passage of S.B. 474 as amended with your amendments, will the industry let down on their security efforts?" Mr. Vassiliadis: "No, Mr. Carpenter as I stated before it would be terrible business. If people are getting hurt in our hotels and in our resort areas, then I got to come back, it is as simple as that. Right now, in Clark County and in Washoe County, there is extensive work being done in police departments with the District Attorney's offices, the hotels have linked among themselves with facsimile and other communication methods between security chiefs and they meet on a very regular basis. They meet with their respective chiefs of police on a very regular basis. They meet with prosecutors and inform each other of problems that may be occurring either in hotels on the streets. The police warn the industry or hotels whenever there are incidents or things to be concerned about. I believe Las Vegas and Reno have been exemplary in their resort areas. You see what has happened in Florida and other areas. In fact, there have been national news stories on that and I think we have been fortunate to some extent but I also think we have been very diligent. Both the police departments and the security services that the casinos provide have had a lot to do with that. We are going to continue to do nothing but improve in those areas." Mr. Whittemore: "I would just simply like to confirm for the record one more time. This bill has to do with two very important concepts. One, when punitive damages are awarded, the standard under which they are awarded and two, when employers are responsible for the conduct of employees and their own activities. Another piece of this is Section 8 which goes to premises liability but read as a total, the bottom line is the industry certainly is not going to change its behavior to make Nevada a less friendly or less safe place to come visit. It would be stupid business and it is not the policy of this industry to do things that are stupid. It is the policy to engage in very creative and meaningful ways to make this the preeminent resort state and area in the world, not anything less." Mr. Carpenter: "I think that is very important and I want to get that on the record because most of the witnesses that I heard testify against this bill, that was their prime motivation. It would seem to me that the hammer is going to be on you now because you came here and testified to this and it is actually down in writing and there are some standards and they are going to be able to come at you if you don't live up to those standards." Mr. Batten: "I still have a problem with that word, `expressly' and I think it places too much of a burden on the victim. Also, when you turn to page three and limit the punitive damages, I tend to agree with the professor. Sometimes you can't lock somebody up and you can't go in their pocketbook . . . I think you can wake them up. I have a problem with those two areas in the bill. My other questions have been answered and I am pretty well satisfied. Just the word `expressly' and I do not know what other word could be used but I would sure like to see some different language." Ms. Buckley: "I wanted to make a comment on Mr. Batten's observation. I too examined the `expressly' language at great length yesterday and I wanted to point out that `expressly' on line 32 is just one option and you can also go to paragraph three which holds an employer liable if there is oppression, fraud, or malice, which are defined in Section 3 not to just be limited to `express' circumstances but `implied' as well. The `expressly' on line 38 is not referring to the wrongful act they expressly authorized because that is not likely to happen. But it is referring to were they expressly responsible for the employee's conduct. I think I would agree with Mr. Batten if number two was all we had but because there are other standards set forth in the bill, I think it strikes a fair balance." Upon Mr. Humke's request, Mr. Neilander went over the proposed amendments. There are no changes to Sections 1 or 2 of the bill. In Section 3 of the bill, it has been suggested at lines 13-14 the word "harmful" be substituted in place of the word "dangerous." Also, Sections 3 and 4 of the bill, NTLA has suggested the exclusion of bad faith by insurance companies. Mr. Neilander set forth particular language in that regard. Also, in Section 4, add the word "or" on line 31 although statutorily constructed it is probably already provided. Mr. Neilander continued to Sections 5, 6, and 7 wherein no amendments were suggested therein. Section 9 includes an amendment to dealing with property brought onto the property by a patron adding language regarding "similar, wrongful acts", "due care", and prior knowledge. No amendments were proposed to Section 10. Section 11(a) would be deleted in its entirety regarding the retroactivity issue. Lastly there were amendments proposed by Mr. Cronin regarding Section 8 and from NOW to take out "express" on page two and clarify on page nine the term "premises." ASSEMBLYMAN STEEL MOVED TO AMEND & DO PASS S.B. 474 AS SET FORTH BY MR. NEILANDER EXCEPT FOR THOSE AMENDMENTS PROPOSED BY MR. CRONIN AND THE NOW ORGANIZATION. ASSEMBLYMAN BUCKLEY SECONDED THE MOTION. Mr. Carpenter stated most of the testimony has centered around Las Vegas and Reno but in the "cow counties" there is a substantial gaming interest as well. He believes this bill will hopefully put people on the record of what their responsibilities are and it should go a long way to help statewide situations. Mr. Goldwater stated his district, Assembly District 10, encompasses part of the strip in the Hilton area. He knows many persons who frequent the casinos in this area and he would never do anything to compromise their security and S.B. 474 does not in any way compromise that. He concluded he will be voting for the bill because it is needed and does not compromise the security of the people. Ms. Ohrenschall echoed Mr. Goldwater's concerns stating there is a casino in Assembly District 12 that caters primarily to senior citizens of Nevada and her concerns are similar in that she would not want to compromise the safety of those persons or other visitors to the state. Mr. Manendo concurred that in Assembly District 18, the casinos cater to locals, especially senior citizens, and he believes the bill does not sacrifice their safety. He commended both parties for working out this bill as the casino industry is so vital to our state. Chairman Humke brought the motion back to the floor for a vote adding the amendments to the bill would be brought to the committee for their final approval prior to bringing the bill to the Assembly Floor. THE MOTION CARRIED UNANIMOUSLY. SENATE BILL 399 - Clarifies term "gross revenue" for purposes of gaming statutes. Bob Faiss, Esq., Lionel, Sawyer & Collins, counsel for the Nevada Resort Association (NRA) stated their panel was present today as introduced by Harvey Whittemore under S.B. 474. Briefly, Mr. Faiss reflected on Mr. Anderson's comments on the peculiar nature of the state of Nevada and gaming and commented further on the history of gaming in the state. Today, approximately 20 other states have discovered gaming should be accorded equal status in the business community to be utilized as economic development. However, those states and others in the industry have determined Nevada has the best form of gaming control. Mr. Faiss' prepared testimony is attached hereto as (Exhibit I). The law maintained in Nevada pertaining to gaming is comprehensive and tough and many states are modeling their standards in the same fashion. He concluded S.B. 399 would affirm that a gaming licensee must pay a gross revenue license fee when winning cash. That is legislative policy consistently upheld by the Legislature over the past 50 years. Marc Rubinstein, Vice President General Counsel, Caesars Palace, stated S.B. 399 is intended to clarify existing law to insure gaming licensees do not pay a license fee in specific circumstances where they have not received cash as winnings. Licensees pay a monthly license fee based on a percentage of the gross gaming revenue. He stated gross revenue is defined to mean "the net cash won by the licensee." Net cash won has always been the basis for determining the monthly fee. S.B. 399 attempts to change NRS 463.0161(2). Mr. Rubinstein declared S.B. 399 was consistent with existing Nevada law which assures licensees do not pay a fee unless and until they actually receive cash winnings. Mr. Rubinstein stated a credit instrument provided to a patron from a licensee is a perfect example. Sometimes members of the industry give customers gifts or discounted chips or tokens to entice customers to come play at their property. The use of such chips and tokens effectively produces gaming revenue and has been approved by the Legislature in 1981. These chips are most often seen in the game of baccarat which has realized a substantial increase in the past ten years. S.B. 399 would encourage the licensees to bring more revenue to the state by high-end players and use of discounted chips and tokens by clarifying licensees only pay a license fee on that portion of the face value of the chip or token for which they actually received cash. Mr. Rubinstein's prepared testimony is attached hereto as (Exhibit J). Mark Lerner, General Counsel, Becker Gaming, briefly explained the smaller to middle sized licensees he represents and the promotional programs they have implicated. Mr. Lerner declared S.B. 399 contemplates a common-sense approach to the tax treatment of free plays where a player is given an opportunity to play a gambling game without risk in the hope the player will continue to play by providing a $100 chip or coupon, or token voucher. If the winner loses, the House gets their chip back. The licensee should not have to pay 6% tax on that chip and it applies regardless to the amount of the chip, token, or coupon issued to the patron. If the player continues to play and thereafter wins, those winnings would then be taxed. Mr. Lerner's prepared testimony and proposed amendment is attached hereto as (Exhibit K). Mr. Lerner concluded a licensee will not promote a free coupon if their bank cannot sustain the losses. In addition, S.B. 399 affects the small and the large licensee in their promotional offers. Mr. Lerner urged the committee to pass S.B. 399. Brian Harris, member, Nevada Gaming Control Board, introduced Sydney Wickliffe, deputy chief, audit division, Nevada Gaming Control Board, both testifying in opposition to S.B. 399. Mr. Harris stated taxes in this state have always been assessed upon gross gaming revenues. For the most part, that means cash received at winnings less cash paid out as losses to patrons. For the most part, 6.25% the state assesses is taxed on the gross gaming revenue. Mr. Harris explained after licensees have paid their taxes on gross gaming revenue, they are allowed to take certain other deductions, for income tax purposes, to arrive at net income. Nevertheless, the state has already received its money from the gross gaming revenue. Mr. Harris stated S.B. 399 came about as a result of Caesars giving away chips to some high-end players to attract future play. Mr. Harris acknowledged that the few hundred thousand dollars in chips given out brought in a lot more money in revenue to the state of Nevada as a result. However, there are 412 non-restricted licensees in the state and S.B. 399 would apply to every one of them, not just Caesars. Mr. Harris provided examples of free coupons or tokens redeemable at a casino simply by cashing your check, etc. For instance, if a patron dropped a hundred silver tokens into a slot machine, under today's law, the patron would have gotten back 93 of those dollars, the machine would have held $7 and the patron would take the $93 and cash out. However, the $7 sitting in the machine, in his opinion, is gross gaming revenue to the licensee upon which 6.25% tax is assessed. Under this bill, the $7 kept by the machine would not be taxable and not included as gross gaming revenue and the $93 is considered a loss to the licensee. Mr. Harris concluded if the committee intends to process S.B. 399 they believe the bill should include a sentence at the end of paragraph c) at line 19 to include: "provided however that any losses incurred by a licensee on the wager of such chip, token, or other representative of value, are not deducted from gross gaming revenue as losses paid to patrons." Mr. Batten asked for clarification on the amendment brought forth by Mr. Harris. Mr. Harris responded under the bill as proposed, the industry does not believe they should have to pay a tax under a chip or token which has been given free to a customer. However, if that patron walks from point A to point B and does not lose the free token then you cannot deduct the loss. Mr. Batten argued that it is still the casino's money. Mr. Harris responded by discussing the 1983 case of Harrahs v. State, wherein the Nevada Supreme Court decided certain disbursements given to patrons along with premium points that can then be cashed in for merchandise, then those items were deductible from gross gaming revenue. Mr. Harris and Ms. Wickliffe then attempted to respond to a hypothetical situation posed by Ms. Ohrenschall. The committee recessed to attend the Assembly Floor Session at 11:35 a.m. and reconvened with a quorum present at 1:45 p.m. Chairman Humke announced the committee may have to go to a subcommittee due to the Committee on Taxation meeting at 2:00 p.m. which will remove at least three members. In addition, Assemblyman Batten was excused from the afternoon session to attend to legislative business in Reno. Chairman Humke asked Brian Harris, Nevada Gaming Control Board, to come forward once again. Mr. Schneider commented the collecting of revenue on the promotional tokens and chips as described by Mr. Harris appeared to be an "accounting nightmare." Mr. Harris declared it would not be an accounting nightmare for them; however, when the audit division goes in the industry would have to demonstrate it is their money they won back and not a chip they could receive cash for so the burden is upon them. Mr. Schneider compared the way they want to tax this to "chumming" while fishing and concluded how could they tax the "chum" and what is the logic. Ms. Wickliffe, audit division, Gaming Control Board, clarified they are not proposing to tax it. They have no objection that it is included in revenue. Their objection is that the pay-outs are deducted from revenue and they are not attempting to add a tax. Further discussion ensued by the committee. Mr. Goldwater asked if the token which is being treated as currency could be converted or be made something of value anywhere other than the house which provided it. Mr. Harris responded not necessarily. Ms. Wickliffe added it would depend on how the house structured the promotion. Bob Faiss returned to thank the committee for their patience. Mr. Faiss also stated with regard to the amendment proposed by the Gaming Control Board, Mrs. Monaghan was correct in that it would neutralize S.B. 399 and render it ineffective. In addition, the amendment would discourage promotional activities which have increased tax revenues to the state by millions. For example, one casino increased its annual winnings from $32,000,000 to more than $90,000,000 through promotional use of chips and tokens. Mr. Faiss stated the Legislature two years ago set forth language in the law that uncollected baccarat commissions are not cash received as winnings. That key language is an essential element of the statutes and contained at line 3 of S.B. 399. Mr. Rubinstein addressed earlier comments and stated when a customer signs a $100 credit instrument, plays and loses that chip to the house there still is no tax consequence because the house has yet to receive any cash as winnings. Mr. Rubenstein declared the reason promotions are not utilized as a credit instrument is because the promotion chips are given out as a marketing tool. Further, the effect of the promotion is defeated, especially for patrons from other countries, if you ask the patron to sign a credit instrument. Mark Lerner, Becker Gaming, concluded the only way the state would be hurt by S.B. 399 is if the licensees get hurt. The only way the state would lose money is if the licensee loses money and they are not in the business of losing money. Further, they do not give away money and they do not give away a $100 promotional chip in order to save $6 in taxes. Mr. Lerner said they make more money having promotional offers than they would without the promotions. Mr. Faiss, upon Chairman Humke's inquiry, stated the proponents and opponents of the bill have indeed exhausted all possible remedies in an effort to resolve the disputes between the two groups and he does not believe a resolution is possible. However, if the committee would like, they would be glad to meet again if so directed. Chairman Humke thanked the witnesses and announced the committee would proceed with the bill. ASSEMBLYMAN SCHNEIDER MOVED TO DO PASS S.B. 399. ASSEMBLYMAN OHRENSCHALL SECONDED THE MOTION. Mr. Schneider defended his motion that the gaming industry has developed aggressive marketing techniques all to the betterment of the state and they should be allowed to continue such practices. Ms. Buckley concurred. Mr. Manendo and Ms. Ohrenschall concurred. Chairman Humke brought the motion back to the floor. THE MOTION CARRIED. ASSEMBLYMAN PERKINS WAS NOT PRESENT. ASSEMBLYMAN BATTEN WAS EXCUSED. Chairman Humke appointed Ms. Ohrenschall for floor assignment of S.B. 399. SENATE BILL 513 - Authorizes gaming control board to investigate certain crimes and increases fines for certain crimes related to gaming. William Bible, Chairman, State Gaming Control Board, stated in 1985 the federal government exempted Nevada casinos from compliance with the Federal Bank Secrecy Act which is the government's anti-money laundering measure. In exchange for that exemption, Nevada agreed to adopt a regulatory system substantially the same imposed by the Act. S.B. 513 evolved out of discussions with the Department of Treasury due to changes in the Federal Bank Secrecy Act so they suggested the statute be amended in compliance with the Act. The bill would accomplish two things: 1) increase the fines for violations of regulation 6(a) from $10,000 to $25,000; and 2) sections 1 and 4 would allow the control board to investigate crimes against patrons relating to money laundering. SENATE BILL 375 - Prohibits performance of act or neglect of duty in willful or wanton disregard of safety of person or property. Bob Faiss, attorney at Lionel, Sawyer and Collins, discussed the "fanman" situation occurring at Caesars Palace in Las Vegas. Mr. Faiss stated people were shocked that Nevada law lacked the authority to punish this offender. S.B. 375 would allow the prosecution of individuals for such conduct. Mark Fiorentino, attorney at Lionel, Sawyer and Collins stated S.B. 375 prohibits the performance or neglect of duty in willful or wanton disregard for the safety of persons or property and provides punishment as a gross misdemeanor or felony if resulting in substantial bodily harm or death. Mr. Fiorentino stated S.B. 375 is consistent with Nevada law and would be a companion to NRS 484.377. Mr. Faiss and Mr. Fiorentino had prepared statements which are attached hereto as (Exhibit L). Ben Graham, Nevada District Attorneys Association, stated he prosecuted the "fanman" and the charges explored for that incident ranged from "flying without a license" and "trespass",etc. Fortunately no serious injuries occurred. Mr. Graham stated S.B. 375 fills a void because at the time of the "fanman" there was no definitive charge to be brought against the man other than a misdemeanor. Further discussion was held regarding the "fanman" case. Chairman Humke noted no other persons present to testify on the bill and announced a short recess at 2:25 p.m. to gather members from the taxation committee to vote on the bills. The committee reconvened at 2:30 p.m. ASSEMBLYMAN ANDERSON MOVED TO DO PASS S.B. 513. ASSEMBLYMAN OHRENSCHALL SECONDED THE MOTION. THE MOTION CARRIED. ASSEMBLYMEN STROTH, PERKINS, BUCKLEY, CARPENTER AND BATTEN WERE NOT PRESENT FOR THE VOTE. * * * * * ASSEMBLYMAN OHRENSCHALL MOVED TO DO PASS S.B. 375. ASSEMBLYMAN ANDERSON SECONDED THE MOTION. THE MOTION CARRIED. ASSEMBLYMEN STROTH, PERKINS, BUCKLEY, CARPENTER AND BATTEN WERE NOT PRESENT FOR THE VOTE. Chairman Humke appointed Ms. Stroth for floor assignment of S.B. 513 and Mr. Goldwater for floor assignment of S.B. 375. There being no further business before the committee, the hearing adjourned at 2:45 p.m. RESPECTFULLY SUBMITTED: Joi Davis, Committee Secretary APPROVED BY: Assemblyman Bernie Anderson, Chairman Assemblyman David E. Humke, Chairman Assembly Committee on Judiciary June 10, 1995 Page