MINUTES OF THE SENATE COMMITTEE ON JUDICIARY Sixty-eighth Session May 2, 1995 The Senate Committee on Judiciary was called to order by Chairman Mark A. James, at 8:50 a.m., on Tuesday, May 2, 1995, in Room 224 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Mark A. James, Chairman Senator Jon C. Porter, Vice Chairman Senator Mike McGinness Senator Ernest E. Adler Senator Dina Titus Senator O.C. Lee COMMITTEE MEMBERS ABSENT: Senator Maurice Washington (Excused) STAFF MEMBERS PRESENT: Allison Combs, Senior Research Analyst Marilyn Hofmann, Committee Secretary OTHERS PRESENT: Fred Hillerby, Lobbyist for Nevada Society of Certified Public Accountants Ray Moberg, Immediate Past President, Nevada Society of Certified Public Accountants John Fowler, Attorney at Law, representing Nevada Society of Certified Public Accountants Stephen F. Dodd, Nevada Society of Certified Public Accountants William P. (Pat) Cashill, Attorney at Law, Nevada Trial Lawyers Association Margaret Stanish, Senior Deputy Attorney General, Telemarketing and Consumer Fraud Unit, State of Nevada Office of the Attorney General Stan Warren, Lobbyist, Sierra Pacific Power Company Leonard I. Gang, General Counsel and Executive Director, Judicial Discipline Commission I. R. Ashleman, II, Attorney at Law, Lobbyist representing Committee for Binding Arbitration Joseph F. Carpenter, representing Chief Justice Thomas L. Steffen, Nevada Supreme Court Senator James indicated he had five bill draft requests (BDRs) which he would set forth for committee introduction. BILL DRAFT REQUEST 7-329: Ma ke s va ri ou s ch an ge s re la ti ng to co rp or at io ns , li mi te d- li ab il it y co mp an ie s an d pa rt ne rs hi ps . BILL DRAFT REQUEST 14-1047: Re vi se s pr ov is io ns go ve rn in g re po rt s re qu ir ed of st at e pu bl ic de fe nd er . BILL DRAFT REQUEST 15-466: Pr ov id es th at ce rt ai n pe rs on s ar re st ed mu st be te st ed fo r ex po su re to hu ma n im mu no de fi ci en cy vi ru s an d pr ov id es pe na lt y fo r vi ol at in g ce rt ai n lo ca l or di na nc es af te r te st in g po si ti ve . BILL DRAFT REQUEST S-1018: Ra ti fi es te ch ni ca l co rr ec ti on s ma de to NR S an d St at ut es of Ne va da 19 93 . BILL DRAFT REQUEST 9-1007: Ma ke s va ri ou s ch an ge s to pr ov is io ns go ve rn in g st at ut or y li en s. SENATOR ADLER MOVED FOR COMMITTEE INTRODUCTION OF BDR 7-329, BDR 14-1047, BDR 15-466, BDR S-1018 and BDR 9- 1007. SENATOR LEE SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS WASHINGTON AND TITUS WERE ABSENT FOR THE VOTE.) * * * * * Senator Titus stated she wished to withdraw Senate Bill (S.B.) 328. SENATE BILL 328: Makes various changes regarding removal of child from current residence by custodial parent. SENATOR TITUS MOVED TO INDEFINITELY POSTPONE S.B. 328. SENATOR LEE SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR WASHINGTON WAS ABSENT FOR THE VOTE. * * * * * Senator James opened the hearing on S.B. 347. SENATE BILL 347: Provides additional means of limiting liability of business organizations. The first persons to appear before the committee were Fred Hillerby, Lobbyist representing Nevada Society of Certified Public Accountants, and Ray Moberg, Immediate Past President, Nevada Society of Certified Public Accountants. Mr. Moberg indicated the measure would allow certified public accountants (CPAs) in the State of Nevada to organize as limited-liability partnerships or limited-liability companies. He said the society was an organization of over 1,200 CPAs in the state. Mr. Moberg said the request was made because such partnerships and/or companies "...protect the firms' partners from personal liability for unsatisfied debts and claims against the partnership, arising from the negligence or misconduct of others in the firm in the performance of professional services." He said each partner would continue to be personally liable for his or her own negligence or misconduct, or for the services of individuals the partner supervises or directs. Mr. Moberg stated this bill would not detract from the high professional standards they presently have. He said the ability of plaintiffs to recover from a firm or insurers is also not reduced by the formation of a limited- liability partnership or company. Mr. Moberg indicated all of a firm's assets would continue to be at risk, along with each partner's investment in the firm. He added limited-liability partnerships and companies "...each have their own benefits in terms of formation and administration." Mr. Moberg concluded by saying others would testify before the committee regarding tax treatment and what other states are doing concerning this issue. Mr. Moberg stated the bill had two parts with sections 1 through 16 amending the uniform partnership act to allow for limited- liability partnerships . He said currently there are 24 states which have enacted such legislation. Mr. Hillerby said beginning with section 17 of S.B. 347, the CPA statutes would be amended to allow for limited-liability companies as a form of business. He indicated in 1991, the Legislature passed an amendment to the statutes allowing limited-liability companies. Mr. Hillerby stated in order for the professions who have their form of business set forth in their own statutes to access that amendment, each profession's statutes must be amended. Mr. Hillerby provided for the record a large-type version of the bill for discussion purposes, with notes attached. That copy is attached hereto as Exhibit C. Mr. Hillerby said the bill drafters crafted the legislation by amending Nevada Revised Statutes (NRS) 628.340 and 628.360. He discussed language highlighted on Exhibit C, saying the drafters have left partnership language intact, and have deleted the reference to corporations. Mr. Hillerby pointed out the new language has been restated in section 19 of the bill. He added there were now three sections, one for partnerships, one for corporations and one for limited-liability companies, which accounts for some apparent repetition in the bill. Mr. Hillerby stated he had discussed the legislation with the Office of the Secretary of State, and had learned that in order for that office to process applications using the provisions of the bill would require substantial computer changes. He said the office has asked if the sponsors would be willing to amend S.B. 347 by utilizing the same format as is used by limited partnerships at this time. Mr. Hillerby stated the sponsors did not want to cause additional work for the secretary of state, or to create a possible fiscal note, so they have indicated language would be provided in that regard. Senator Adler asked what professional groups are presently allowed to form limited-liability companies. Mr. Hillerby answered, "None, as far as I know...in 1993 there was a bill introduced which would have allowed other professions access to limited-liability companies...we were unable to get it processed." He reiterated each profession would have to address their own licensing statute, and added there were no restrictions in the limited-liability company sections of the NRS except those that pertain to insurance companies and banks. The next person to speak to the committee was John Fowler, Attorney at Law, representing the Nevada Society of Certified Public Accountants. Mr. Fowler explained the bill, section by section, to the committee members. Highlights of that explanation are as follows: Sections 1 through 16 amend the uniform partnership act; The idea of a limited-liability partnership is that it is in all respects a general partnership, except for the provisions contained in sections 1 through 9; When partnerships are discussed in other chapters of the NRS, the intent is that those references to partnerships cover limited-liability partnerships, as well. It is that feature that make limited-liability partnerships applicable to professions other than accountants; Upon filing, an applicant become a limited-liability partnership; there is no approval process involved, unless required by the individual chapter regulating a particular profession; Section 5 clarifies an applicant would not lose its status as a limited- liability partnership because of an error in the application; Section 8 requires a limited liability partnership to set forth to the public that they are such a partnership, so the public knows who they are dealing with; Section 9 is the key part of the bill with respect to limited-liability partnerships; it provides that a limited-liability partnership formed in Nevada has the ability to do business anywhere; that the internal affairs of the partnership will be governed by Nevada law; foreign limited-liability partnership are allowed to do business in the state without registering with the secretary of state. Foreign limited- liability partnerships must identify themselves as such. Senator James asked if other states did not require registration for foreign limited- liability partnerships. Mr. Hillerby said the model act which was provided to the bill drafter contained such a provision. He said he has not reviewed the acts as passed state-by-state. Mr. Fowler said under the law, except for certain modifications, the limited-liability partnership is a general partnership, and falls under the same rules. He added, however, "You can look at it...more like a limited-liability entity...and require a qualification to do business for foreign limited-liability partnerships. Mr. Fowler continued discussing the main points of S.B. 347: Section 12 is the "heart of the bill," and changes NRS 87.150. Section 12(2) provides that a partner in a registered limited-liability partnership is not liable for the negligence, wrongful acts, misconduct or malpractice committed while the partnership is a registered limited-liability partnership (LLP), while section 12(3) clarifies that the partner is responsible for his own acts and for those under his supervision. Mr. Fowler indicated a problem may arise in a large firm, where a person may not know all of his or her partners, "...much less what they do, who they represent and what kind of work they do. Senator Adler stated he felt the language states a person could have actual knowledge of misconduct of another partner and still be immune from liability. Mr. Fowler admitted the language "...doesn't talk about knowledge." He said if the general law of negligence imposes a duty upon one partner to police and correct the acts of another, there would be negligence on the part of a person who fails to oversee and correct the actions of a fellow partner. Senator Adler asked: "If your partner is doing something...that is negligent or an act or omission...the accounting partnership is making millions off of this...you have full knowledge, and you continue to let your partner do that because you are benefitting...should you be immune from liability?" Mr. Fowler answered one measure of a partner's liability in that type of situation would be the ethical rules of the profession. He said if those rules stated a partner was required to act to correct misconduct or malpractice, it would be good authority for a court to say the partner "had the duty to affirmatively go forward...to correct those actions." Mr. Fowler added that partner could be subject to tort liability under S.B. 347 if he did not do so. Senator James stated if members of a partnership were "enriched" by the acts of another, and the monetary gains had been distributed to the partners, would there not have to have been "active misconduct" on the part of each liable partner for him or her to be responsible under the terms of the bill? Mr. Fowler answered, "Not necessarily activeness...you could have passive misconduct as well." Senator James continued: "If you don't have active misconduct, but still have received the fruits of the wrongful act...why should you be protected from disgorging those fruits?" Mr. Fowler answered, "First, you cross the line, where you have a policy of recompensing the injured partner...is the theory upon which damages would be recovered in that instance." He continued to say once the judgment amount has been determined, the partnership assets, wherever they are, would be liable to satisfy the judgment. Senator James said if the partnership itself had assets, those assets could be executed upon to satisfy a judgment against the partner who was actively wrong. Senator Adler said he still had concerns about the partner who has knowledge of another partner's misconduct, but fails to act. Senator James said that partner would be liable under the provisions of S.B. 347, section 12(3). Mr. Fowler reiterated he believed the ethical responsibility of an accountant would require him to correct or stop his partner's wrongdoing, and inaction would be a negligent act. Senator James referenced section 12(3), and said an argument would be made that a partner is not under the supervision or control of another partner. He said section 12(2) states that "...the entire world of liability is only for your own acts or omissions." Mr. Fowler pointed to the list contained in section 12(3), which indicates "what a partner is liable for...." He added an "omission" would be the failure to act when he should have." Senator Adler stated he would be more comfortable with language at the end of the section which stated, "...unless the partner had actual knowledge...and failed to act." Mr. Fowler said that would be "getting into defining what is an omission, a negligent act and a wrongful act or misconduct." He said his understanding of S.B. 347 was to "attempt to leave the tort law alone." Mr. Fowler also stated he felt including the word "omissions" covers an instance where a person "should have acted, but didn't." Senator Adler indicated his main concern was with a partner who ignored another partner's possible acts of fraud. Mr. Hillerby indicated he would work to clarify language in section 12. He then referenced section 13 of the bill, and indicated the acts listed in subsections (a) through (I), were generally contained in the accountants code of ethics. Senator James referred to the requirements for registration of a limited-liability partnership. Mr. Fowler said a foreign limited-liability partnership of practicing accountants would have to register with the secretary of state, as any foreign corporation must do, in order to comply with Chapter 628 of NRS, the provisions of which apply to accountants. Senator James asked if the partnership would then be treated as a limited- liability partnership for purposes of section 12 of SB 347. Mr. Fowler responded they would be treated according to the provisions of the law governing limited-liability partnerships in Nevada. Senator James stated he wanted to be certain that the provisions of section 9(b) of the bill meant the partnership's affairs in Nevada would be governed by Nevada law. Mr. Fowler said that section "may or may not be an attempt by statute to suggest to the court of another state that the acts in that state of a Nevada limited-liability partnership be governed by Nevada law." Senator James indicated he was referring to language which stated, "The internal affairs of a partnership...are governed by the law of this state." He added, "I am not worried about how their internal affairs are dealt with...I am worried about how they are held out and how their liability is limited under the limited-liability partnership act." Mr. Fowler responded: "The `Restatement of Conflicts of Laws on Partnerships' has generally been interpreted as providing that the internal affairs of a partnership ...are governed generally by the place where the partnership is organized...." Senator James asked: "If you have a transaction in Nevada with a Nevada resident and a Nevada branch of a national firm, wouldn't Nevada law apply?" Mr. Fowler answered Nevada law would apply to general negligence principles of malpractice, and will continue to do so under the S.B. 347. However, he added, who is liable for that malpractice is to be governed with respect to Nevada limited-liability partnerships by Nevada law. He indicated section 9(2) states that the internal affairs of a partnership organized under the laws of another jurisdiction, are governed by the law of that jurisdiction. Mr. Fowler continued with a discussion of the bill, setting forth the following points: A partner who is not liable for the acts of one of his partners, is not a proper party to a malpractice lawsuit; When a partnership dissolves by reason of death or bankruptcy, each partner is liable to his co-partners for a share of liability, unless the liability involves malpractice; The property of a deceased partner is liable for all the debts of the partnership incurred while he is a partner, including the debts he is liable for under the malpractice provisions; The provisions of sections 18 to 21 deal with changes to Chapter 628 of NRS, and cover accountants only; those sections allow accountants to practice as limited liability companies; In section 19, the bill becomes a vehicle to set out in separate statute which is now existing law regarding certified public accountants practicing in the form of corporations; the bill drafters have set out in separate statutes the matter of CPAs as corporations, CPAs as limited liability companies and CPAs as limited liability partnerships; The provisions in sections 23 and 24 remove from NRS 628.340 and 360 those provisions which have been placed into S.B. 347; `Public accountants' (6 persons who are not certified public accountants) are `grandfathered' into the legislation; Each office of a limited-liability company composed of certified public accountants must be registered annually with the board of accountancy. The next person to speak to the committee was Stephen F. Dodd, a certified public accountant representing the Nevada Society of Certified Public Accountants. He said he would provide a brief summary of the tax aspects involved in a limited-liability partnership or limited-liability company. He said the Internal Revenue Service has recognized, both through published rulings and private letter rulings, that it is possible for a limited liability company to act as a partnership for federal income tax purposes. Mr. Dodd said the partnership form of taxation is the most flexible form of taxation for business activities. He said the result is only one level of taxation, at the partner/member level. He said there was no "double taxation" as there is when doing business in a corporate forum. Mr. Dodd said the highest rate of tax to a partner in a limited-liability company would be 39.6 percent, with no taxation at the business entity level. He said the formation of a limited-liability partnership can usually be done tax-free. Mr. Dodd indicated withdrawals of partners can often be done in a tax-advantageous way. He stated special allocations in the partnership tax law also allow for differences in financial interest in a limited- liability company, i.e., "who is putting capital in versus who is putting personal efforts in." Mr. Dodd said there was "ease of conversion" under federal tax law from a general partnership to a limited-liability company. He added retirements plans were available to members of a limited liability company, and deductions for business expenses were more favorable than in other types of business structure. He concluded by saying a limited-liability company "provides significant flexibility for business partners to run their affairs without an adverse federal tax result." In response to a question from Senator Titus, Mr. Hillerby confirmed there were several forms of business, i.e., partnerships, limited partnerships, limited-liability companies and professional corporations. He reiterated each profession must act within its individual chapter of the NRS to adopt any of said forms of business, which the accountants have done by way of S.B. 347. Mr. Hillerby stated the first 16 sections of the bill would authorize the establishment of limited-liability partnerships as well. Senator Titus asked if the "model act" which has been adopted in 24 states was for accountants only, and Mr. Hillerby responded it was designed for all professions. Responding to an inquiry from Senator Adler, Mr. Hillerby stated if a profession's licensure statute allows that profession to be formed as a partnership, that profession will also be eligible to be a limited-liability partnership, upon passage of the bill. Senator James stated because of some of the technical changes and more difficult issues which needed to be discussed with respect to the bill, he would place the legislation into a subcommittee consisting of Senator Adler, Senator Titus and himself, who would work with Mr. Hillerby and Mr. Fowler on the bill. The last person to speak regarding S.B. 347 was William P. (Pat) Cashill, Attorney, representing the Nevada Trial Lawyers Association (NTLA). Mr. Cashill stated: "Whatever the accountants say about...the ethical standards which may govern their protection...has no bearing whatsoever on the duties that any other type of partnership might or might not have...." He said what the accountants' society has testified must be taken in context, since those rules may not apply to anyone else who uses such a form of business. Mr. Cashill stated the NTLA takes no position on whether the concept of a limited-liability partnership is legitimate. He added the association has concerns "regarding notice provisions, identifiability and accountability of those persons who seek to use this type of business entity to carry on business in Nevada." Mr. Cashill asked for the opportunity to submit to members of the committee by the end of the day a letter which will address specific changes to the language of the bill, as it relates to limited liability and the accountability of those persons who perform any act in Nevada or elsewhere which influences or governs an act performed in Nevada. Senator James indicated the subcommittee would be working through the specific issues raised by Mr. Cashill, and asked Mr. Cashill if he would participate in that process. Mr. Cashill indicated NTLA would pledge their support, and closed by saying there should be specific language in the statute which defines the duty to intercede when wrongful conduct is observed by a person in a limited-liability partnership. The chairman closed the hearing on S.B. 347, and after a short recess, opened the hearing on S.B. 358. SENATE BILL 358: Authorizes additional persons or entities to establish authenticity of records by affidavit of custodian of records. The first person to testify was Margaret Stanish, Senior Deputy Attorney General, Telemarketing and Consumer Fraud Unit, Office of the Attorney General. Ms. Stanish stated the bill permits the introduction and authentication of certain business documents by way of affidavit, rather than requiring testimony by a custodian of records. She said the three types of business documents which are focused upon in the legislation are records of public utilities, wire transfers, such as Western Union, and commercial carriers, such as Federal Express and United Parcel Service. Ms. Stanish said these companies are singled out primarily because there is little commercial activity today which does not involve one of those businesses. She said passage of the bill would provide "judicial economy," save litigation costs and streamline the judicial process. Ms. Stanish stated current statute provides such provisions for casinos' records, medical records, and records of financial institutions, and S.B. 358 would add the documents as set forth above to that list. Senator McGinness asked why the public utilities, wire transfer companies and commercials were not added at an earlier time. Ms. Stanish responded the increased emphasis on telemarketing fraud have compelled them to fly custodians of records from out of the state for a preliminary hearing, which often results in a mere 5 minutes of testimony. Senator James pondered whether it would be advisable to allow the admission of business records by affidavit generally in the statutes, rather than utilizing laundry lists. Ms. Stanish agreed business records could be accepted by affidavit "across the board." Senator James asked if a judge had the discretion to accept business records by affidavit, if it is not provided by statute. Ms. Stanish responded, "Only by stipulation, and the defense will not usually agree to stipulate." She added the "reliability and the commonality of these businesses is what supports an amendment to the statute," and added the information is "typically derived from computers and summarized in a document that would be admissible by a custodian of records under current law." Senator James pointed to the examples cited by Ms. Stanish of Federal Express and United Parcel Service, both nationally recognized firms. However, he added, "Within that definition [commercial carriers] is not just nationally recognized firms. It could be somebody who just delivers up and down the block...and maybe does not have these reliable records." Ms. Stanish answered if that was the case, there would be provisions as in the current law, wherein a judge could require the appearance of a custodian of record. She said sections 6 and 7 of the bill referenced such provisions. Stan Warren, representing Sierra Pacific Power Company, testified the company has found the bill to be acceptable. There being no further testimony on S.B. 358, the chairman closed the hearing on the bill and opened the hearing on S.B. 372. SENATE BILL 372: Revises provisions governing immunity from liability and action for persons associated with commission on judicial discipline. The first person to speak was Leonard I. Gang, General Counsel & Executive Director, State of Nevada Commission on Judicial Discipline. Mr. Gang provided a Memorandum containing an amendment to the bill, which is attached hereto as Exhibit D. He said the bill basically clarified that sovereign immunity applies to the Commission on Judicial Discipline. Mr. Gang stated recent supreme court decisions could raise questions concerning that subject, since it has indicated the commission is a member of the judicial branch of government. He said the bill also provides that independent contractors who the commission would hire to perform investigative services and to serve as attorneys would also be covered under sovereign immunity. Mr. Gang indicated the bill would be retroactive to 1990, and there are no lawsuits pending regarding the commission at this time. He referred to Exhibit D and said he had been under the belief that all persons who performed services for the commission performed them as independent contractors, but has since learned that was not totally correct. Mr. Gang said the amended language on Exhibit D addresses that issue. Senator asked why the retroactivity extends back to 1990. Mr. Gang said there was "no magical number to the date," but covers the commissioners who are presently on the commission and those who were on the commission at the time some of the matters now being considered were in progress. Senator James asked if sovereign immunity applied only to the executive branch of government. Mr. Gang answered "judicial immunity" applied to the judicial branch, and it was "questionable" if the commission had that immunity. He added the bill would "make it clear" that sovereign immunity applied to the commission. Mr. Gang stated S.B. 369, which is presently in the finance committee, would provide "absolute immunity" to the commission. SENATE BILL 369: Revises provisions governing commission on judicial discipline. Senator James asked if S.B. 369 conflicted with S.B. 372. Mr. Gang answered the bills did not conflict, because the commission performed different types of services, but added if the bill presently in the senate finance committee passed, S.B. 372 may not be necessary. Senator James indicated he would hold action on the bill at this time. He then questioned why S.B. 369 was not referred to the judiciary committee, and Mr. Gang answered there was a fiscal note attached which caused the chairman of the finance committee to request that it be sent there. There was no further testimony on S.B. 372, and Senator James asked Mr. Gang to advise him concerning action on S.B. 369. The chairman opened the hearing on S.B. 390. SENATE BILL 390: Revises provisions regarding arbitration of civil cases. Senator James stated he had introduced the bill to address a problem which arose last session with the Uniform Arbitration Act. First to testify was I. R. (Rene) Ashleman, Attorney at Law, representing the Committee for Binding Arbitration. Mr. Ashleman stated in connection with the 1993 legislation, "It is not often that a bill passes the Legislature that has no known father or mother, but that bill did." He said a mistake was made by the Legislative Counsel Bureau, and the bill in actuality "repealed the binding nature of binding arbitration agreed to by the parties voluntarily by contract...so all the binding arbitration cases in the state which are not covered by federal arbitration...are endangered by that bill...." Mr. Ashleman said, "This has caused considerable difficulty...to the American Arbitration Association (AAA) and others." He indicated he was also appearing at the request of the judges of the Eighth Judicial District Court, who are having trouble resolving cases because of the 1993 legislation. Senator James indicated the bill, if passed, would be effective October 1, 1995, and asked Mr. Ashleman if that provision should be changed to "upon passage and approval." Mr. Ashleman answered that would be best, since the bill has timing provisions to be sure there was no interference with a person's right. In response to a question from Senator Porter, Mr. Ashleman indicated the bill would reference cases under the Uniform Arbitration Act which are principally private, contractual arbitration cases and cases which exist pursuant to Nevada statutes which require arbitration. He added the cases were principally between public employee unions and public employers. Mr. Ashleman stated the principal reasons for such arbitration were (1) privacy; (2) arbitrators' expertise; and (3) an avoidance of delays found in judicial litigation. He said such arbitrations do a great deal to alleviate court congestion. Senator Porter asked if it would be helpful to consider raising the arbitration limit, which is $25,000. Mr. Ashleman said there was "considerable sentiment" that the limit should be raised. The last person to testify on S.B. 390 was Joseph F. Carpenter, representing Chief Justice Thomas L. Steffen, Supreme Court of the State of Nevada, who expressed the supreme court was in favor of the repeal of NRS 38.190. He said he was in accord with the testimony of Mr. Ashleman, and did not know why the statute was included in the middle of the Uniform Arbitration Act legislation during the last session. Mr. Carpenter stated, "Clearly, it does not belong there." He said the policy behind the act was to encourage voluntary binding arbitration, and including the statute "actually works against that policy." He next referenced questions concerning the arbitration which is occurring under the court-annexed program. Mr. Carpenter indicated the supreme court submitted a report to the chairman of both judiciary committees in February 1995, which report contains statistics regarding arbitrations in Clark and Washoe counties. He said there are court rules which define the structure of the program and its procedures, and added the program is working well. Mr. Carpenter stated a court committee will be considering "a whole range of proposals," which will include raising the arbitration limit, as discussed above. He said the proposals discussed in the court committee will be submitted to the judges in the state before the end of 1995. Senator Porter asked for a definition of "court-annexed arbitration." Mr. Carpenter answered the arbitration was in response to a need to alleviate court conjestion. He said the complete term which came out of a joint effort by both senate and assembly judiciary committees, was "court-annexed, mandatory, nonbinding arbitration." Mr. Carpenter stated that meant in a number of civil cases under $25,000, there is a mandatory arbitration which must occur in Clark and Washoe counties. He said the smaller counties can join the program if desired. Mr. Carpenter indicated the cases go to an arbitration and there is a right to a "trial de novo" following that arbitration, although the parties can agree not to continue to trial. There was no further testimony. The chairman closed the hearing on S.B. 390, and adjourned the hearing. RESPECTFULLY SUBMITTED: Marilyn Hofmann, Committee Secretary APPROVED BY: Senator Mark A. James, Chairman DATE: Senate Committee on Judiciary May 2, 1995 Page