The 5th meeting of the Interim Joint Committee on Judiciary was held on Tuesday, November 15, 2005, at 10:00 AM, in Room 131 of the Capitol Annex. Representative Gross C Lindsay, Co-Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Representative Gross C Lindsay, Co-Chair; Senators Carroll Gibson, Gerald A Neal, Jerry P Rhoads, Richard "Dick" Roeding, Ernesto Scorsone, Dan Seum, Katie Stine, and Jack Westwood; Representatives Kevin D Bratcher, Stan Lee, Darryl T. Owens, Frank Rasche, Steven Rudy, Kathy W. Stein, John Vincent, and Rob Wilkey.
Guests: Todd Leatherman, Director, Consumer Protection Division, Office of the Attorney General; Jason Snyder, Commonwealth Attorney, Jefferson Co.; Tracey Corey, M.D., Chief Medical Examiner; Allan W. Vestal, Dean and Professor of Law, University of Kentucky School of Law; LaDonna Koebel, Justice Cabinet, Legal Services; Gardner D. Wagers, Kentucky Co. Attorneys Association, Clark County Attorney; John Rees, Commissioner of the Department of Corrections; Margaret Case, Department of Public Advocacy; and Donna Masters, Department of Criminal Justice Training.
LRC Staff: Norman Lawson, CSA; Jon Grate; Katie Coyle; Tiffany Lockhart; and Michelle Coyle.
Presiding Co-chair Rep. Gross Lindsay called the meeting to order, the roll was called and a quorum was present. The minutes of the October meeting were approved on a voice vote.
The first speakers were Senator Gary Tapp and Ken Schwendeman of the Justice and Public Safety Cabinet. Senator Tapp spoke in favor of his 06 RS BR 79, which would provide a method for securing the release and burial of a body when the next of kin was the person alleged to have murdered the deceased. Senator Tapp indicated that earlier in the year there was a case in Indiana where a person murdered two family members and then, as next of kin, refused to release the bodies of the victims to other family members for burial until various demands were satisfied. The bill provides for a court to issue an order for release and burial of the body. Mr. Schwendeman indicated that the Justice and Public Safety Cabinet supports the proposal.
The next topic involved partnership proposals found in 06 RS BR 157 and limited liability corporation proposals found in 06 RS BR 158. Speaking in favor of the legislation which was sponsored by Representative Scott Brinkman were Secretary of State Trey Grayson, Jim Seifert and Tom Rutledge, attorneys who worked on the legislation, and Dean Alan Vestal of the University of Kentucky College of Law who also worked on the legislation. Mr. Rutledge indicated that the Limited Liability Corporation (LLC) bill was a modernization of the current LLC laws, contained annual reporting requirements for LLC's, required series LLC's to use the term "series LLC" in their name, and made various other amendments to conform with the proposed changes. Chairman Lindsay observed that previous legislation had unintended tax consequences which cost the state tax revenues. Secretary of State Grayson indicated that the new LLC proposal would provide a revenue stream for the state in that a $15 fee would accompany each annual report filed by an LLC.
Secretary Grayson indicated that if the corporation does not file the required annual report that the corporation is administratively dissolved but can be reinstituted by filing the proper paperwork. Currently if an LLC is closed no one knows about it. Sen. Roeding asked about what a "series" LLC was and Mr. Rutledge explained that each business in the series has its own assets and liabilities, which are not shared with the primary LLC. Sen. Roeding then questioned the use of the term "any other statute to the contrary notwithstanding" and urged the drafters to be more specific as to which statutes would not apply to an LLC. Senator Seum then asked if the state still had "S" corporations to which Mr. Rutledge replied yes. Discussion then turned to the advantages of an LLC and “S” corporations regard to taxes and other benefits. According to Mr. Rutledge both have tax benefits under specific circumstances. Rep. Wilkie questioned why there was an annual report required of LLC's and series LLC's to which the response was that persons dealing with the corporation know who they are dealing with and the current status of the corporation. Rep. Wilkie observed that the LLC currently seems to be more popular than the "S" corporation. Secretary of State Grayson indicated that record numbers of LLC's had not filed their annual reports and had been administratively dissolved and were considered in bad standing. Rep. Bratcher asked what were the consequences of not filing the annual report to which Mr. Rutledge replied that administrative dissolution of the corporation was done by the Secretary of State and the papers could be refiled. In a formal dissolution of the corporation the assets and debts of the corporation would have to be dealt with during the dissolution process and that there was a statutory time frame for the process. In an administrative dissolution the time bars do not apply.
Mr. Rutledge described 06 RS BR 157 relating to partnerships as an entire rewriting and updating of the Uniform Partnership Act. Senator Westwood asked about the fees in the bill and Secretary of State Grayson indicated that they are the same as for other corporations.
The next item of business was a discussion of 06 RS BR 135 sponsored by Rep. Lindsay relating to notifying persons when personal information is taken from a data base. Under the provisions of the bill when a government or private entity collects and stores personal information such as social security numbers, license numbers and other information about a person and the information is then stolen or otherwise compromised, that the organization holding the information must notify all persons whose information was compromised. Only when law enforcement requests a delay in the release of the information can a delay in the notification occur. Parties damaged by the release of information can sue for failure to notify them of the release and may sue to require the notification.
The next speakers were Todd Leatherman, Director of the Consumer Protection Division, Office of the Attorney General accompanied by Clark County Attorney Gardner Wagers and Kevin Winstead of the Attorney General's Office who spoke about the Attorney General's identity theft proposal. Mr. Leatherman described the proposal as a comprehensive attempt to deal with the loss of data, data security, and other issues relating to making it easier for a victim of identity theft to recover from the problem. Mr. Leatherman described the nature of the problem, indicated that in the past year there were 989 identity theft cases in Kentucky, and described the impact of identity theft on the victim. Mr. Leatherman described the highlights of the bill as protection for the collection and distribution of Social Security numbers by both businesses and government, security freezes on lost information, notice to consumers as to loss of data, requiring police to take identity theft reports, permitting victims of identify theft to go to District Court to have an official determination that identity theft occurred, creating a procedure for expungement of erroneous criminal charges against a person occurring as a result of identity theft, and changes to the current identity theft statutes to include debit cards and to include persons both alive and dead as theft victims. Rep. Owens questioned the necessity for delaying notification of persons when information is compromised in order for law enforcement to investigate the matter, citing the continuing harm to the victims of identity theft who do not know that the theft of the information has occurred so that they can initiate actions to protect themselves. Sen. Roeding asked about programs to let victims, particularly the elderly, know what their rights are in identity theft cases and how to extricate themselves from the problems caused by the theft. Mr. Leatherman indicated that the Attorney General has packets of information on identity theft and that the Attorney General is working on public education programs. Senator Neal asked about federal law with regard to identity theft to which Mr. Leatherman replied that there were some amendments to the Federal Credit Reporting Act in 2003 but that there are various proposals currently before the Congress with conflicting provisions but that Kentucky should not wait until the Congress acts and that Attorney General's proposal would protect Kentuckians earlier.
The next speakers were from the Justice and Public Safety Cabinet. John Rees, Commissioner of the Department of Corrections, accompanied by Ken Schwendeman of the Justice and Public Safety Cabinet and Mr. John Hall of the Department of Corrections described the features of the Prison Industries Enhancement certification program which is a federal program which permits industries to utilize prisoners laboring within the institution to produce products for interstate and international commerce. Under the proposal, which has been reviewed by labor organizations and the Chamber of Commerce, the employers participating in the program pay inmates prevailing wages to produce products for private industry. The money earned by the inmates is subject to child support payments, restitution, payment of fines and costs and the inmate retains the balance of the funds. If there are no other deductions, 20% of the funds the inmate receives will go to the Crime Victim Compensation Fund. Rep Wilkie questioned why money would be deducted to pay the Crime Victims Compensation Fund and observed that in the past the fund had inordinately high administrative costs. Sen. Rhoads asked about the employer/employee relationship to which Commissioner Rees responded that the statute specifically states that there is no employer/employee relationship and that the labor of the inmates is being leased.
Ken Schwendeman of the Justice and Public Safety Cabinet then briefly described the other proposals in the cabinet's legislative package. Those proposals include: codifying the inclusion of the Kentucky State Police and Kentucky Vehicle Enforcement in the Kentucky Law Enforcement Program Foundation Fund; adding a County Judge Executive to the Kentucky Law Enforcement Council; updating training requirements for inactive officers; allow extension of training windows for peace officers up to 180 days; provide for final revocation of peace officer certification after a due process hearing; permitting Kentucky State Police chapter 16 employees to participate in the employee suggestion program for regular state employees; giving the Kentucky State Police commissioner the power to assign local officers to task forces; authorize national fingerprint supported background checks for potential cabinet level employees; and revise KRS 17.160 to remove reporting limits on background checks.
Further features of the proposals include: a new Section of KRS Chapter 17 to permit KSP to perform background checks in support of emergency placement and exigent circumstances such as background checks on hurricane Katrina refugees; permit the Department of Juvenile Justice to have secure administrative regulations in the same manner as the Department of Corrections; require a written assessment when a juvenile violates a court order; update the Sudden Infant Death Syndrome definition and require expanded check of the incident, and a full autopsy; require inmates to exhaust administrative remedies prior to filing suit about prison conditions; require the party requesting an inmate to testify at a civil proceeding to pay the costs of transportation and guards; increase the time for the Department of Corrections to respond to open records requests to five days in all cases; and limit the amount of administrative regulations that each individual department of corrections institution must file.
Several members inquired about the additional investigation required in Sudden Infant Death Syndrome cases to which State Medical Examiner Tracey Corey replied that additional investigations are currently being done and that there would be no additional cost associated with the requirement. Rep. Wilkie asked Commissioner Rees about a situation in Perry County in which the commissioner and the department's general counsel had been held in contempt of court for not providing Department of Corrections personnel for transporting state inmates in local jails to court hearings. Rep. Wilkie indicated that he had provided an affidavit in the case specifying that the statute clearly required the sheriff of the county in which the jail was located to provide the transportation. Commissioner Rees observed that it would be virtually impossible for the department to provide transportation for inmates every time some local court wanted an inmate's appearance citing additional costs for personnel, vehicles, fuel, and the problems involved in scheduling the transportation. Chairman Lindsay urged the commissioner not to transfer an inmate from one jail to another when a civil action was pending against the inmate or the inmate's testimony might be required in a civil action.
The meeting was adjourned at 12:10PM.