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Senate | June 30, 2014 | Chamber | Judiciary B

Full MP3 Audio File

If I can bring the meeting to order. Welcome to specially called meeting of the judiciary B. Let me quickly introduce our House sergeant at arms, Reggie Sill, Marvin Lee, John Brandon, and Mike Clampett. Thank you gentlemen for being here. We have a published agenda, but to accommodate Senator Barringer who is here, we will take up your bill first. And then Representative Jordan is going to be handling the other bills for the sponsors of those bills. Senator, welcome. Representative Jordan moves that the PCS be before us. All in favor, indicate by saying aye. Opposed. The PCS is properly before us, Senator. [SPEAKER CHANGES] Thank you, Mr. Chair. What I’d like to do, the PCS is really in three parts. The first part is what I guess we call the pure business court modernization piece. We vetted that fairly significantly last week and I would like to yield to Mr. Bill Patterson from research to go through the changes that are in the PCS, and then there are also I understand two amendments, two technical amendments that Representative Jordan will be bringing forth sir. [SPEAKER CHANGES] Thank you. Mr. Patterson. [SPEAKER CHANGES] Thank you, Mr. Chair and members of the committee. So if you’ll take the PCS, and I’ll start with page two. Just a very minor change but up at the top line two we changed a which to a that. If you turn the page on page three, a new subdivision in this statute is A9, which involved contract disputes. Several conditions have to be met and one of those was that at least one plaintiff and one defendant, originally it read was an entity that was organized or authorized to transact business under these five chapters of the general statutes. In order to have this subdivision track the same class of corporate entities that benefit under subsection A1, we changed the language so that it would read like subsection A1. And now it says at least one plaintiff and at least one defendant is a corporation, partnership or limited liability company, including any entity authorized to transact business under those chapters. Moving down the page, lines 33 through 36, this was a technical change or correction required to bring back into the statute one of the two tax related statutes that under current law can be designated as a complex business case and under this bill would be required to be designated as a complex business case. It wasn’t in the previous version because I think the bill as it came over from the Senate, had the three judge constitutional panel. And one of those two statutes would have been required under that version of the bill to be heard by that three judge panel. So when that was taken out of the bill, we needed to add back in that tax statute, so that it would be heard by the business court as is the case under current law and was intended under the bill. [SPEAKER CHANGES] Representative Daughtry do you have a question on that? [SPEAKER CHANGES] Yeah, I did have a question. In qualifying them to get your case into business, what we talked about a 30 day time limit where in your pleadings you said the case must be designated a complex matter for the business court in 30 days. Is that in here now or not? [SPEAKER CHANGES] That has been dealt with. If I might, I will yield again to Mr. Patterson. It’s a little deeper in the bill, so if I might yield to him so he can point out where that is. [SPEAKER CHANGES] Mr. Patterson, can you tell us about that? Where, we don’t want it to take a year for the case to be moved if it’s going to be moved. [SPEAKER CHANGES] Representative Daughtry, if I understand your question, you’re talking about those cases where we’re saying that they have to be brought in the business court but one of the other party may not have designated it? Is that correct? [SPEAKER CHANGES] I’m saying that a case is been brought in superior court in say Johnston County and you want it moved to the business court, how do you do that unless you have something in the plea saying you have 30 days to move it or some local rule or something? [SPEAKER CHANGES] If this is the question that I’m

... thinking of that was brought up a little bit at the first meeting, was a concern expressed about whether or not cases should be allowed to be transferred too late in the case, say after they’d been called to trial. We have another statute, 7A-258, that deals with transfers, and that statute specifies that you cannot have a motion to transfer or have that motion determined after the case has been called to trial, and the AOC representative at our last meeting brought that up as an issue and we’ve added some language to accommodate that concern, and I’ll get to that in just one second. I think that’s the question and I think that’s on our next page, as a matter of fact. So if you’ll turn… if I may, Mr. Chair. If you’ll turn to page 4, there’s some language added on lines 29 and 30. I think in the previous version of the PCS, this had been an un-codified provision. We’ve just simply added it to subsection E at the end that in addition to making any appeal in accordance with 7A-27A, it also will be in accordance with the rules of appellate procedure applicable to civil cases. Now subsection G is the subsection that deals with cases that are now required to be designated, but neither party for some reason has done so. In other words, they should have been designated as mandatory complex business cases but were not, and that would be the tax-related appeals, the cases in which there is a pole attachment issue under the other statute, and the cases in which there is more than a certain dollar amount at stake, which is five million dollars, and they could have designated it under one of the specified subdivisions in subsection A. In other words, they were cases that either part could have designated under one of those subdivisions in subsection A, but chose not to. In those cases, if there’s at least five million dollars involved, this bill, this act would require them to be designated. But what if the parties don’t? So this subsection G deals with that in two ways. Cases that are brought as tax appeals, which is under subdivision B1, and cases that are brought under that utility pole attachment statute, those are cases which ought to on the face of the pleadings indicate what they are, so it should be readily apparent to the court if they’re not properly designated. The problem category for the court would be the subdivision B2. Those are the cases where you have to know how much is at stake. Typically parties don’t and aren’t allowed to say how much it is, except in excess of whatever the amount is now. They can’t specify “and you owe me five million dollars”. And in fact, we’re dealing with a category here that apparently neither party or none of the parties to the case wanted it to be in the business court, so they would probably go out of their way one would think, perhaps not, top put anything in the pleadings that would say that that much money was involved if this were the law. So in that case, down at lines 43 through 47, we’re dealing with subdivision B2. For B1 and B3, we’re saying if they don’t designate it then the court shall on its own motion stay the action until the case is properly designated, but for B2, we’re saying the superior court may stay the action, but only until it had been called for trial. So would track the same restriction that’s in 7A-258. In other words, if it’s already been called for trial you can’t move it. Only before then could the superior court move it if it realizes as a result of discovery or some other means that the case involves an amount in controversy of at least five million dollars. [SPEAKER CHANGES] Representative Glazier for a question. [SPEAKER CHANGES] Yes please. Thank you, and I know what you’re getting at and why you’ve done that. My concern is it still seems to me it would allow sandbagging of the trial court because the parties going all the way through it, by the time they’re well into discovery of a pretty darn good ideas what their cases were or might be were, and they’re going to allow it to go perhaps because they like the judge or they like the court or they… and then we get closing in on trial and finally it dawns on the judge

... after all of the discoveries concluded that this case fits that mould and the judge has wasted enormous time. We’ve sort of said jurisdictionally that judge really shouldn’t be hearing this case, and I think there’s got to be a timeframe earlier than that at which the parties ought to have to inform the court because what a waste of time to get to that point if we’re saying jurisdictionally once the judge decides it really is five million plus, now the judge doesn’t have a choice, has to transfer, I’m real concerned about that. [SPEAKER CHANGES] Senator Barringer. [SPEAKER CHANGES] ?? gone a long period of time in this process but the case has not been set for trial because if the case is called for trial, I believe is the exact language – if it’s been called for trial then at that point it can’t be moved, it’s going to stay with the superior court, but up until that time, the discretion will be with the superior court judge that’s been dealing with it to see if it makes sense to move it or not, and if a great deal of work has been invested in this through the discovery and other processes, that judge will be able to keep that in his or her ?? [SPEAKER CHANGES] Representative Glazier. [SPEAKER CHANGES] Follow-up please. Thank you Senator, and I agree if that language were writ independent of the language on B2, page 3 because as I read B, it says “The following actions shall be designated”, so that would suggest to me if I’m the trial court it’s a mandatory, it’s a jurisdictional issue. What we’re saying here is in conflict with that, and maybe what it needs to be – because I understand what you’re saying – maybe the language in G has to be clearer that we’ve allowed when it’s progressed along, the parties have sort of waved the right for the jurisdiction issue and the judge now gets to make that sort of pragmatic call of we’re too far along, because I’m not sure those two sections read well together. [SPEAKER CHANGES] Senator. [SPEAKER CHANGES] Well and I would certainly like for Mr. Patterson to weigh in on this, and certainly if you think that that would correct it we could certainly amend, but the other thing is to remember that these are venue issues and not jurisdictional issues because of the constitutional concern that we cannot create a new court here, and so I think this does work because we’re discussing venue, which is discretionary within the court to some extent. [SPEAKER CHANGES] Last follow-up. [SPEAKER CHANGES] Representative Glazier. [SPEAKER CHANGES] Thank you. And that may be, and I think you’re right about that it is venue-related and not jurisdiction, which would change it, but nonetheless it seems to me even on the venue front, those two paragraphs probably don’t fully mesh. If I was a trial court, I think I’d be a little confused about what my authority is under G completely, and maybe it’s just a question of clarifying the venue as Representative Daughtry’s pointed out, and that’s something we can do potentially on the floor in Conference, but I do think that there’s a… it’s striking me that they don’t mesh completely. [SPEAKER CHANGES] Mr. Patterson. [SPEAKER CHANGES] Well I think that you could certainly add some language that explains that it’s in the court discretion given whatever considerations of judicial efficiency that they may want to consider. I also think that because we don’t currently have a requirement that parties say how much they’re asking for to the dollar in a pleading that that’s an issue, and also I think that there’s currently, under the statute in subsection… I believe it’s subsection… a little bit earlier in this section, whatever party… I think it’s subsection B. Actually it’s subsection B2. First of all, the party whose pleading caused the amount in controversy to equal or exceed that dollar threshold has some responsibility of designating it, and then in… and I think it’s supposed to do it according to subdivision D4 on page 4, contemporaneously with the filing of the pleading, so there is in the statute as drafted right now, there is a deadline or a time by which it’s supposed to be done. The problem is just that if the part doesn’t do it, it may take a while before the court realizes it, so what was attempted to be done in the subsection G is

… give the court discretion whether or not to stay it or to keep it. [SPEAKER CHANGES] Representative Daughtry? [SPEAKER CHANGES] You don’t think it would be a good idea to put in there that either party within 60 days after the pleadings have been filed must move that the court designate this as a complex business case, and this gives time certain? [SPEAKER CHANGES] Well the parties already have a time certain. It’s the party whose pleading caused it to go over that amount that’s required, but the parties are required to designate it, and they do it by filing a notice of designation in accordance with the other procedures in the statute, and it’s supposed to be done whenever the pleading is filed that causes that amount in controversy to meet the threshold. [SPEAKER CHANGES] Representative Daughtry, follow-up. [SPEAKER CHANGES] But you don’t know what the threshold is. It’s over ten thousand dollars. I just think you need something in there that tells the court that one of these parties or both believe that it’s a complex business matter, that dispute, that meets the criteria. [SPEAKER CHANGES] Representative Glazier. [SPEAKER CHANGES] Well and either you can do that I think by saying that the venue provision is waved if it’s not, by putting in language it’s waved if they don’t do it, or you could put in G simply the phrase in front of the discretionary sentence, “notwithstanding B2, the trial judge may…” and that would seem to me to get at it. [SPEAKER CHANGES] Well we’ve solved another issue. Let’s proceed. [SPEAKER CHANGES] Thank you very much. [SPEAKER CHANGES] Mr. Paterson, are you going to…? You have other changes you want to explain here? [SPEAKER CHANGES] Yes, and we can work on that amendment in just a minute. So I think I’m still on subsection G. In the original version of the PCS that was before the committee last time, the end of this subsection I believe said the plaintiff… It designated a party that would be responsible for paying the filing fee in the business court, so again, this was a case where it was supposed to be designated, nobody designated it, the court stayed the action until it’s designated; now when it’s designated, to lift the stay and let the case proceed, under the current PCS the cost, which is the filing fee in the business court, would be payable by the parties on a pro rata basis unless the court ordered otherwise based on a party moving for some other allocation. In other words, if they didn’t think it was fair, they thought it should all be on the plaintiff, or somebody else thought it was the defendant whose counterclaim or whatever caused the amount to go over if that was the case, they could ask the court for an order allocating it in a different manner, and this would provide that the court could do so. And that is, I believe, the extent of the changes that were made to the business court provisions in the bill. [SPEAKER CHANGES] Back to you, Senator. [SPEAKER CHANGES] And I understand we have two amendments that Representative - [SPEAKER CHANGES] I was going to ask. You wanted to take those up next? [SPEAKER CHANGES] That would be good. Thank you. [SPEAKER CHANGES] Then these are amendments by Chairman Jordan. [SPEAKER CHANGES] Thank you, Mr. Chairman. First one is S853-ATG99. If you look on page 9, line 21, there is a section heading there, and because of some other changes that were made in the bill, the language of that section doesn’t match the current heading, so we want to change that heading to now say “exclusive forum or venue provisions valid”. [SPEAKER CHANGES] Any questions on the amendment? [SPEAKER CHANGES] Mr. Chair? [SPEAKER CHANGES] Senator. [SPEAKER CHANGES] And I plan to explain this section once we get it amended. [SPEAKER CHANGES] Any questions? The vote then is on the amendment. All those in favor, indicate by saying aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Opposed? The amendment’s adopted. Chairman Jordan? [SPEAKER CHANGES] Do we need to do the next amendment, Senator? The next amendment is S853-ATG100, and actually if you will… there’s a correction on there. It’s not page 34; it’s page 3, line 34. And again, if you look to that section, page 3, line 34, there is language in there because we’ve made changes to the bill and taken out a certain section of it regarding some sort of a judge panel, the language now needs to say what we have in the amendment, which is “constitutional challenge to a tax statute shall be removing the as applied to plaintive language”. [SPEAKER CHANGES] You’ve heard the amendment. Any discussion or concerns regarding it? If not, the vote is on the amendment. All in favor indicate by saying aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Opposed? The amendment has been adopted. Back to you, Senator. [SPEAKER CHANGES] Thank you, Mr. Chair/ now what I would like to do is proceed to the other pieces of the PCS that

...have not been discussed by this committee. The first one will appear on page 6, the Merger to Affect a Holding Company Organization. What I'd like to do is just give you maybe the 30,000 ft. and not the law school professor view of this because I would love to get a blackboard and start drawing diagrams, but I doubt you're interested in that level of detail. [SPEAKER CHANGES] We're not. [laughs] [SPEAKER CHANGES] This legislation is also modeled, as was the business court legislation, after the Delaware statute and some other strong business state statute. What it does is it allows companies the flexibility in how to organize themselves. With this holding company bill, home-grown, North Carolina companies will now be able, won't have to move to Delaware or one of those other states to have the flexibility to do this. Corporations just forming will choose North Carolina for this flexibility. Both parts of the bill, the business court and this, are good for the economy. In short form, what it will allow us to do, or allow companies to do, is to take a wholly-owned company and create a parent company, a holding company for itself. So basically, slice and dice itself up so that there will be a holding company that's the parent and then the subsidiary here, and without having to get shareholder approval. If you think about it, the shareholders of the holding company, the holding company's going to own, in its entirety, the subsidiaries so there's no need to put the corporation through the vote and the procedure of that, because it is very cumbersome. It's very cumbersome. So this would be something that our companies would really find very advantageous and efficient. I had this particular statute, first of all when it was brought to me as a suggestion, I'm very skeptical of anything that comes to me. So I looked through it. I had the research staff look through it and when we couldn't find any problem with it I took it to Professor Tom Hazen at the law school in Chapel Hill, who literally wrote the book on securities, it's about this thick. He was my securities professor long ago and he quickly got back to me and he said he saw no problem with it. It patterns almost verbatim Delaware except our corporate statutes are somewhat different with the way we deal with LLC's and our business corporation act, so it's obviously been modified to suit our specific statute, but it accomplishes the same goal as the Delaware and I believe Minnesota is another one of the states that has enacted it. We can certainly answer questions about it, but it is a well-vetted...by the way, all parts of this bill, except what we PCS'ed and changed, have passed unanimously five times out of the Senate. So it's been vetted in many respects. [SPEAKER CHANGES] Any...or two. We've got an amendment coming. Any discussion on the bill itself now? Questions for the bill sponsor? Mr. Patterson, we close? I think it's of the nature that we can read this one and I'd ask Representative Glazier to, he's going to offer this amendment, right? [SPEAKER CHANGES] Thank you, Mr. Chair. This is a ?? and it would be a change to line 4, I'm sorry, page 4, line 43, and that would start that, end of that sentence to read so that the end of it "has been designated as a mandatory complex business case in accordance with this section. Notwithstanding the provisions of subdivision B2 of this section, if an..." and then the rest of the sentence goes. [SPEAKER CHANGES] Does everybody understand what the amendment is? If there's no questions, the vote is on the amendment. All in favor indicate by saying aye. Opposed? The amendment is adopted. Any further discussion on the bill? Senator? Make it quick, I think you're about to get your bill, if you'll let us know. [SPEAKER CHANGES] Like Senator Tillman says, I'm about to talk myself out of a bill. The last piece is fairly simple to understand. What it does is it says that if you have a North Carolina corporation and you put it in either your organizational documents or your by-laws, that if there is a lawsuit against that corporation it has to be done in North Carolina then that's what it would be. And this also came from the Delaware statute, a review of that by myself...

Other folks and I do encourage your support. [SPEAKER CHANGES] Representative Stam, it does have a referral to finance. Do you have a motion? [SPEAKER CHANGES] Yes I move that the amendments be put in the new PCS, reported favorably to finance, unfavorable to the original bill. Fine bill, well vetted. [SPEAKER CHANGES] And referred to finance. You’ve heard the motion. Any questions? All in favor of the motion indicate by saying aye. Opposed. We’ll send, report the bill Senator. Thank you for your work on this. [SPEAKER CHANGES] Thank you very much. [SPEAKER CHANGES] We’re going to move on to Senate Bill 101. Representative Jordan will be handling this. It might be easier if you did. [PAUSE] Chairman Jordan. [SPEAKER CHANGES] Thank you. This is a simple bill. I’m kidding, it’s not. [SPEAKER CHANGES] You got a good L for lying on that one. [LAUGHTER] [SPEAKER CHANGES] Actually, the first part of this bill came before this committee one or two weeks ago and it was passed unanimously. And it regards updating current workers comp laws so that the loss of an organ is adjusted for inflation. The last time that the amount was adjusted was 1987, it was at $20,000. The PCS, oh I’m sorry we had a PCS. I move that we have it before us. [SPEAKER CHANGES] Chairman Jordan moves that the PCS be put before us. All in favor of that motion indicate by saying aye. Opposed. We’ve got the PCS before us, thank you for catching that. [SPEAKER CHANGES] Thank you. Yes, it is a PCS because we passed the information here a week or two ago. In the workers comp law, if you lose a thumb, a great toe, a hand, an arm, a foot, etc. it’s based on average weekly wages, so it’s automatically updated for inflation. The last section though, about the organs, is not. It was set at $20,000 back in 1987, and that’s the last time it was raised and it was raised from ten to twenty thousand at that point. So here 27 years later what we’re suggesting in this bill is to make that amount $42,000 which would be the updated inflation adjusted amount, based on 1987 to today. We’ve also added a section in there providing for inflation to be automatically applied to this, so that just like it is on the others which are based on average weekly wage so we don’t have to come back every year or ten years or twenty years to do this. And then the third section of the loss of organ is we’re directing the industrial commission to study whether there is a further definition of the term important external or internal organ or other part of the body is needed, because there is some question about what that term means and there’s a questions as far as some of the decisions that have come out of the deputy commissioner’s. That’s the first part of the bill. Pretty much the same as it was the last time, and there’s an additional section now, I think Representative Stam can discuss that. The Crown Cork issue? [SPEAKER CHANGES] Any questions toward the first part? Then Representative Stam. [SPEAKER CHANGES] Thanks, Mr. Chairman. This relates to successor liability and the Senate has passed this in another bill. My preliminary remarks are intended to put you at ease. 21 states have passed this, mostly on a bi-partisan basis and in many cases unanimously. That’s an attachment to what I handed out earlier. It is prospective only. If someone claims a plaintiff would need this ability to do this lawsuit, they have until January first to go ahead and file, but what it seeks to do is to stop a what I think to be a grave injustice to corporations in this situation, where 50 or 60 years ago they, well first of all they never did any asbestos, never were involved in that at all but because of merger liability, they were merged with a corporation decades before OSHA decided this was a hazardous material, or a decade before. And never involved in asbestos while they owned this other company, they just bought it to get another division of the company, and then the bill doesn’t say they don’t have any liability but rather it would be limited sort of like it were a subsidiary to what the value of that company was at the time of that merger, adjusted for inflation. So to me, it’s very reasonable and correct, it’s a grave injustice. You know, we’ve already put dozens of companies into bankruptcy out of business over asbestos, and we just don’t need to keep putting them out of business. It doesn’t help anybody. [SPEAKER CHANGES] Representative Michaux.

R. Michaux: I’m a little bit concert … I thought if you purchase another company, you would purchase all assets and reliabilities, this will be opening a door not only for asbestos related ideas, but other things that may be happening. How do we get out of that? Chairman: Representative Stam. R. Stam: Well is narrowly constructed. First of all, the merge must have occurred before January of 1972. The merge companies must have nothing to do with the asbestos after that. It does not affect workers comp claims. They are excluded. And there is liability, possible, but it would be based on the value of the acquired companies pro-rata. So is not a zero liability. One corporation that we know about is been affected by this is been named in 300, 000 lawsuit. And the effects of that is been they had the shutdown plants; they had the layoff employees and it just doesn’t do no body good. They are just names on these lawsuits Chairman: gentleman Jordan and Representative Michaux R. Jordan: I just wanted say to the committee that these two pieces were put together because one is a sort of pro-business side, and one is sort of pro-?? side. So it is kind of a balance to build as wise to come to you again with this additional provision put in. Chairman: representative Michaux R. Michaux: I’m still have a lost. You got a cooperation conglomerated that comes in and ?? a bunch of other companies. Why shouldn’t have full liability? I mean, that’s what they did. That’s what they were aware of when they did it, I’m pretty sure. Why shouldn’t they not be responsible for any liability that previous corporations inquired? Chairman: Representative Stam R. Stam: I’m trying to calculate here. Essentially is what we do all the time, and that is to put status and limitations on liabilities. In this case it would be roughly 50 years, which would be longer that any other status limitation. That is the reason, representative Michaux, after certain period of time, everything can’t be settled. I mean, you are just wasting money on lawyers by doing this. Chairman: Representative Glazier, and then representative Richardson R. Glazier: Thank you Mr. Chairman. This is more common on this section than it is as a direct question to you. Can I still go ahead? Chairman: Go ahead R. Glazier: And later I’ll have a comment and maybe some questions on the full bill. This is one of those really tough provisions because I think there are actually some acuities in both ways. First: when Crown bought Mundet, as far as I can tell, they bought both the assets and liabilities and one would assume, since we proposed that duty on the regular citizen, the people ought to know what they are buying. So if they didn’t that is a different problem. That is the first thing. Second: I don’t buy at all Crown argument on this point. The fact -and I’ll get to why I think there is an acuity on their side-, but why I don’t buy at all is the side that they didn’t know about asbestosis been occupational diseases. Because in North Carolina, in 1935 we had an asbestosis status defined as an occupational diseases. So 30 years before they did this purchase, in North Carolina, we had it there. It is irrelevant to me when Ocean came to be, and when ocean became to be a major problem. North Carolina declared it to be a problem 30 years prior. So I don’t think Crown gets a North Carolina break for not knowing North Carolina law that was in existence for 30 years before it did this. What I do think is an issue, is what representative Stam is said. And I really appreciate the prospective provision. And I think it is important that Crown hasn’t made an asbestosis product on their own on a 120 years. It wasn’t their major area for any reason. And I think there is a point at that, in which you have to sort of say: That’s the end. And I’d think anybody who is gotten the disease would have, by 2015, have been able to legitimately, unless someone can explain me why not, had filled a claim. I guess I see the merits on that. I’m a little bit concern about the president because I don’t think North Carolina what is worth what they really are trying to do. And what they are doing is getting us in line with other states so they can go to the states they really care about and press this forward, where it may affect the law more people. But I do think there are some acuities in the side of Crown…

As well, but this argument they didn't know or they didn't look or they didn't understand I think is bogus. I think the real issue is the policy issue of are we going to in the end put some liability limit on it, and I've got to say that 50 years is a pretty lengthy time. [SPEAKER CHANGES] Representative Richardson, Representative Glazier, I'll come back for other comments, but go ahead Representative Richardson. [SPEAKER CHANGES] OK. I think my answer was, I heard it presented in Glazier's comment. Thank you. [SPEAKER CHANGES] OK. Further discussion, questions, debate on the bill? Representative Faircloth and then Representative Glazier. [SPEAKER CHANGES] Thank you, Mr. Chair. If I may, Chairman Jordan, you brought this topic up so I want to talk about it a little bit. This is a bill with two good groups of folks involved. A company that's obviously a hardworking company that's over the years done many things right and made a couple mistakes, and one of their mistakes perhaps was not looking close enough when they made a purchase, but they're good folks. And on the other side there's a whole bunch of good folks, and I really sort of am concerned that we've built this box here for ourselves. I don't, for instance, see with the organ issue a description of what an organ is, you've got a study in there to try to determine what that is. It seems to me a good thing to do would be to have that study, find out what an organ is and then come back and address what an organ's worth, so I had mixed emotions about this. I'm torn between it because I do feel for that company on the other side of the issue, but I'm going to have to vote no on the organ issue. [SPEAKER CHANGES] Representative Glazier. [SPEAKER CHANGES] I have some of the same concerns as Representative Faircloth, but let me put them in a different perspective. First, I think as a matter of policy what Representative Jordan is trying to do is exactly right. I don't have any doubt that we ought to be, and Representative Stam made this argument when it was last in JB, that the numbers on the compensation haven't been changed in many years. It long ago should have been agreed upon by the parties to tie this to CPS. It ought to have been to the Consumer Index. It also long ago ought to have been increased beyond where it was. That being said, there apparently are real issues in the case law over the lack of the definition. I know as I said to Representative Jordan before the hearing, only enough to be dangerous here and don't practice in the area. What I am more concerned about is the agreement between the parties, and I know that doesn't bind us. It just doesn't. And again I want to go back to the fact that I think the policy Representative Jordan's bill is getting at is where we ought to be moving, but I am really loathe to undo what I believe was one of the few times we have done it really right in the last couple of years about a really controversial issue where all the stakeholders got together and they really hammered out full agreements. It is an area that there is never going to be full agreement on between the plaintiff's bar and the defense bar. The tension will always be there and we ought to be encouraging them to work everything out and each side to give. There isn't a lot of doubt in my mind that this provision breaches that working agreement between the plaintiff and defense bar. I am worried about the ramifications of that, not based on legislators, because I believe that Representative Jordan would honor, and Representatives Stam and McGrady would honor any agreement that they ever entered into. I am worried about the war that breaks out between the bar and the parties and the infliction of damage that could occur as a result, and that concerns me enough to be really fearful of solving this in the abstract. I don't have an answer. I again want to say that I think it's a courageous bill to move forward and I think that the parties ought to have done this on their own at some time ago at some level, but that being said they didn't. They worked on other issues and they entered into a truce and we're breaking that truce here today and that is not beneficial for institutional integrity of deals. I've argued in a couple other contexts on the floor and I guess this is where I'm going to come down. Very, this really, that I think we have done that one more than one occasion in the last couple of years, of long compromises that existed and that that doesn't benefit stability of government. It is my concern that we're doing the same thing here

Though I favor the deal that’s being struck. For that reason, I am inclined like Representative Faircloth to vote no, with the hopes that the parties would get together and actually be able to work through this in a way that gets the policy resolved in a different manner. I thank you. [SPEAKER CHANGES] Representative Michaux, then Chairman Jordan and Representative Bryan. Representative Michaux. [SPEAKER CHANGES] Yeah Mr. Chairman, I don’t have a problem with the first part. I think it’s something that’s been in the making for a long time. It hadn’t been updated in I don’t know how long, and we need to attack this feet first. It’s the second part of the bill where I have my problem, and that is going to cause me, I mean how do you get out of this, because I just think the second part we don’t need that part in there. We do need the first part, even if there’s been still something among the parties. That’s my whole thing. [SPEAKER CHANGES] Chairman Jordan. [SPEAKER CHANGES] Thank you, Mr. Chairman. I think Representative Faircloth had a good point and I wanted to address that because if you look at the entire subsection 24, it says in case of the loss of or permanent injury to any important external or internal organ, or part of the body for which no compensation is payable under any other subdivision of this section, the industrial commission may award proper and equitable compensation not to exceed $20,000. So they have been working with that. There is a catch-all. You don’t have to have a definition or organ technically because it says or part of the body. And I did some rough calculations for the last time this came through, and at $42,000 if you look at a thumb, according to the current legislation, at the average weekly wage in North Carolina, that comes out to be about $43,000 for a thumb. And hearing in one ear is about $40,000. So really an organ would be in between hearing in one ear and a thumb, if we have to take this kind of gruesome inventory analysis to look at it, but that’s the way the rest of that bill is. So I think it’s perfectly legitimate that we apply this new updated amount because for 27 years, companies and insurance companies have gotten the benefit of this lesser amount for organs that have not been updated purely for inflation. I think it’s just a matter of justice and equity that we go ahead and use this amount and update it and then set it so that it automatically updates according to inflation like the rest of the statute. And then let’s let the industrial commission take a stab at some organ language and come back to us and we’ll see if that’s something that we think is appropriate. [SPEAKER CHANGES] Representative Bryant. [SPEAKER CHANGES] Thank you, Mr. Chair. I don’t want to repeat too much of Representative Glazier said, but maybe I have some similar concerns. And I think I agree that both policies seem to make sense to me generally as nothing has been done in so long on the organ side but, and I guess one follow up for the Chair, I’d like to see if there are stakeholders here who we might hear from with respect to some of the questions about the agreements that have been between the parties, but I think a piecemeal approach on the organ side may be problematic on where the parties have agreed and I don’t know again intended consequences of doing just one piece and not answering those other questions, but legally and for the parties, agreements will be, and then I don’t know what the costs related to, I don’t know if anybody’s done any analysis of what increased costs may be on the business community if we’re changing this legislation. So I don’t think I have a policy problem but I am concerned and I’d like to hear from some of the stakeholders. [SPEAKER CHANGES] The Chair couldn’t identify the stakeholders from here, but Representative Jordan, do you know? That would be fine. I don’t know, Representative Jordan is there a sign-up sheet? I had not seen it. Okay if there are people who want to speak on the topic before us, particularly the so-called stakeholders, please come to the microphone and we’ll give you about two minutes apiece. We need, we still have another bill so I want to keep moving. And then identify yourself please. [SPEAKER CHANGES] I’m Andy Allen, president and general council of the North Carolina Retail Merchants Association. I was before you the last time and raised some of the very same similar concerns about the definition. If you go the study route, in a sense you’ll be putting this in place next year without, or uncertain whether there will be a definition. With reference to the agreement Representative Glazier referenced, last Friday we three and a half hours in my office and worked out an agreement that

This AFLCIO, the North Carolina Advocates for Justice, The North Carolina Chamber, the North Carolina Home Builders, the North Carolina Defense Attorneys and the North Carolina Merchant's Association agreed to that would say that we would put any substantive law off or changes including this bill until next year and we would sit down and try to develop consensus legislation revolving around the definition of an organ and the value of an organ. The North Carolina Republican Attorneys Association was the only group, although the worked on it jointly with us, that declined to sign at that time and said they were still considering it. We thought that to be a good policy thing because if you look back to 1994 and onwards, even to the 2011 legislation, we have been able to develop consensus legislation. Now I will say that the most important thing to do as this is very intricate legislation and we'll bring you a deal like we brought in the past, it'll be good for everybody. It ended up being good for the plaintiffs, it ended up begin good for the business community and it ended up being good for the workers last time and I think we would be remiss if we lose that opportunity again. There's a number of other folks I know that are here to speak, but we would encourage you to move down the path that Representative Glazier and Representative Faircloth did and give us the time to work on this legislation in the interim with a commitment that just as we've done in the past we'll bring back to you I assume a consensus legislation going forward. [SPEAKER CHANGES] Others who want to speak? [SPEAKER CHANGES] Thank you, Mr. Chairman. My name is Gary Stalmead. I'm with the North Carolina Chamber, and I would like to echo what my colleague, Andy, just put forward here. A lot of those comments are the consensus of the North Carolina Chamber Members. We believe that the bill needs more time and we commit right here to work with the interested parties to make sure that we do work hard to try and reach a consensus agreement going forward. We don't think the time is now. Also, I'd like to clarify a piece too on this disaster liability because there's been a lot of discussion there. Chamber believes this disaster liability is an important piece and it should be looked at. That being said, the House chose through the Tort bill to take that piece out, had the discussion on that piece and however, while we believe it's important, we don't believe it belongs in this bill and those two issues are separate issues and they should be evaluated separately and should be voted on separately. They're different and distinct, and so we believe that the disaster liability, again, we supported it in the Senate. We support it, but we don't believe it belongs in this bill and we would ask you to give this issue more time and to look at those two issues separately, and so we ask you to do that for us and we ask you to do that so that we can get together with the interested parties. Thank you for your consideration. [SPEAKER CHANGES] Your commitment is noted. Next. [SPEAKER CHANGES] Thank you, Mr. Chair, and I'm Mike Carpenter, Executive Vice President and General Counsel to North Carolina Home Builders Association. Along with several others in this room, I've been involved with workers comp legislation since the early '90's, and at conclusion of the Worker's Comp Reform Bill in 1994 when Senate Bill 906 passed, we essentially reached an agreement with the plaintiffs for on behalf of the employment community where we would work together in the future and not ambush each other with legislation down here, and I am pleased to tell you in 20 years we've been able to honor that agreement, and virtually every piece of legislation of any substance that deals with worker's comp has been agreed to between the parties over these last 20 years. This bill upsets that agreement and the only party you've already heard, the organization that refused to sign the agreement is the only one who is breaching this agreement. I would urge you to caution as Representative Glazier and Representative Faircloth have already much more eloquently explained that I can why that's important, and I would point out that we have a number of organizations that you're not going to hear from, but in addition to the Chamber, the retail merchants, the home builders, the Defense Attorney's Association, which are the folks that represent employers, the Employer's Coalition of North Carolina, the North Carolina Manufacturer's Alliance, the North Carolina Forestry Association, the Property and Cash Insurance Association of America, the Carolina's HUC and NFIB have already signed on in opposition to this legislation and this is only a partial list. [SPEAKER CHANGES] Thank you. Representative Stam, we have? [SPEAKER CHANGES] Yes. OK. I have an amendment that the committee can decide if it wants to pull out that part. Of course the one stakeholder that's not here are the people who are going to be injured. You know. And they might lose a spleen or whatever. [SPEAKER CHANGES] OK. Go ahead. Let's, how many other speakers do we have, just two? OK. We don't need to hear from everybody.

Representative Bryant opened [LAUGH] a bit of a box here. If you’re all going to basically say the same, we get it. But come on forward. [SPEAKER CHANGES] My name is Janet Ward Plack. I’m here solely to speak on the purpose of section 3. I realize that that is not a part of the agreement that is discussed, but I would like to address that if it would be permissible. [SPEAKER CHANGES] Proceed. [SPEAKER CHANGES] Thank you. Specifically with respect to section 3, I submit to you that it is a violation of section 32 of the North Carolina constitution on special emoluments. It is written to give immunity to one corporation, Crown Cork and Seal, from North Carolina individuals who are diseased or dying from asbestos disease. That company was the number one producer of bottle caps. It bought the other company, Mondette, who was the number six producer in the world. It purchased 99.4% of the stock, and then forced the merger under New York law. In fact, the U.S. government found it an anti-trust violation for Crown to have purchased Mondette. As Representative Glazier mentioned, North Carolina has known about the hazards of asbestos since 1935. I respectfully submit to you that it is not appropriate to give immunity to one single corporation and to not allow the responsible parties to be held responsible. The way the math works in this bill, no one will ever be able to proceed against Crown again because the mathematical formula is already complete. I submit to you that this is a burden on the innocent and their health insurers, and not an appropriate action for this body. [SPEAKER CHANGES] Representative Daughtry. [SPEAKER CHANGES] For a motion. I move we adjourn. [SPEAKER CHANGES] I don’t believe that is a debatable motion. [LAUGH] [SPEAKER CHANGES] Mr. Chairman, didn’t I have a motion? [SPEAKER CHANGES] You did have a motion before us. At least you were referencing one. [SPEAKER CHANGES] Motion takes precedent. [SPEAKER CHANGES] Representative Daughtry, we do have another bill on the agenda, but I’ll proceed to a vote on the motion to adjourn. All in favor of adjourning, hit, all in favor of adjourn, the motion has been withdrawn. [SPEAKER CHANGES] Mr. Chairman? [SPEAKER CHANGES] Chairman Jordan. [SPEAKER CHANGES] I’d like to withdraw this bill, please. [SPEAKER CHANGES] The bill has been withdrawn. We will now proceed to the last bill on our agenda. Chairman Jordan, do you have a PCS for this one? I don’t believe so. [SPEAKER CHANGES] No sir. Thank you, Mr. Chairman. This is Senate Bill 794, disapprove industrial commission rules. And I believe this bill does meet a deal criteria that we have out there. [SPEAKER CHANGES] Does this disapprove various workers comp rules adopted by the industrial commission direct the industrial commission on how to replace the disapproved rules and make amendments to relay the statutes? If we could have members of each side stand up just to make the committee comfortable that this is a consensus bill, please. [SPEAKER CHANGES] We just got a lot of people, for those who can’t see the back of the room, standing up. Representative Glazier. [SPEAKER CHANGES] Thank you Mr. Chairman and I agree completely with Representative Jordan’s articulation on this. I do have an amendment that I think was agreed on earlier. And it is an, I think before the members, and simply moves to add in because we don’t know what’s going to happen with Tech Correct, and back and forth with the Senate, we’ve passed this unanimously. It’s to fix the child support, retroactive support obligations and to make sure that the conference of district judges is able to do these guidelines that are needed. It’s a request of all the district judges and the family law, the bar and everybody else, no opposition. And I simply want to include it in this bill as it’s sent back in hopes that it’ll be passed. I know of no opposition. [SPEAKER CHANGES] Chairman Jordan obviously can’t speak for Senator Brown and is still, [SPEAKER CHANGES] He has no opposition is my understanding. [SPEAKER CHANGES] But the provision has no opposition, evidently. Any discussion on the amendment? If not the vote is on the Glazier amendment. All in favor indicate by saying aye. Opposed? Further discussion on the bill. Representative Jordan for a motion. [SPEAKER CHANGES] I move for a favorable report on this bill. [SPEAKER CHANGES] As amended, rolled into a new PCS. You hear the motion. All in favor of the motion indicate by saying aye. Opposed. We stand adjourned.