JUDICIAL PROCESS COMMITTEE

The Judicial Process Committee was assigned three studies. House Concurrent Resolution No. 3011 directed the Legislative Council to study the North Dakota open records statutes and the appropriateness of the penalties for an unauthorized disclosure of certain records. Section 1 of Senate Bill No. 2379 directed a study of the doctrine of assumption of risk and the impact the reenactment of the doctrine would have on other state laws. Section 1 of House Bill No. 1186 directed a study of the leasing or renting of county court facilities by the state or other political subdivision. The Legislative Council delegated to the committee the responsibility to review uniform laws recommended to the Legislative Council by the Commission on Uniform State Laws under North Dakota Century Code (NDCC) Section 54-35-02. The Legislative Council also assigned to the committee the responsibility for statutory and constitutional revision.

Committee members were Representatives Merle Boucher (Chairman), Duane DeKrey, Pam Gulleson, Lawrence R. Klemin, and William E. Kretschmar and Senators Dennis Bercier, Michael A. Every, Stanley W. Lyson, Carolyn Nelson, and John T. Traynor.

The committee submitted this report to the Legislative Council at the biennial meeting of the Council in November 2004. The Council accepted the report for submission to the 59th Legislative Assembly.

OPEN RECORDS STUDY

The committee was assigned House Concurrent Resolution No. 3011, which directed a study of the North Dakota open records statutes and the appropriateness of the penalties for an unauthorized disclosure of certain records. The testimony received during the hearings on House Concurrent Resolution No. 3011 indicated there is a concern regarding the appropriateness of the penalties for the release of confidential information. Concerns were raised as to whether the penalty for the release of confidential information, a Class C felony, in all cases matches the crime.

Background

In 1957 the North Dakota Legislative Assembly enacted NDCC Section 44-04-18. This section provides, in part, "[e]xcept as otherwise specifically provided by law, all records of a public entity are public records, open and accessible for inspection during reasonable office hours."

In 1979 a constitutional measure was submitted to and approved by the people of North Dakota. The language of the amendment is codified as Article XI, Section 6, of the Constitution of North Dakota and closely tracks NDCC Section 44-04-18. The constitutional amendment reads as follows:

The purpose behind the open records statute was outlined by the North Dakota Supreme Court in Grand Forks Herald v. Lyons, 101 N.W.2d 543, 546 (N.D. 1960), as:

Agencies Subject to Section 44-04-18

North Dakota Century Code Section 44-04-18(1) provides that North Dakota's open records law applies to records of a "public entity." Section 44-04-17.1(12) defines "public entity" to include public or governmental bodies, boards, bureaus, commissions, or agencies of the state or of any political subdivision of the state and organizations or agencies supported in whole or in part by public funds or expending public funds.

There are also circumstances under which the records of a nongovernmental organization may be open to the public, including whether the organization was created or recognized by state law or by an action of a political subdivision to exercise public authority or perform a governmental function; if the organization is supported by public funds or is expending public funds; and if the organization performs a governmental function or possesses records regarding public business on behalf of a public entity.

Records Subject to Section 44-04-18

North Dakota Century Code Section 44-04-17.1 defines "record" as "recorded information of any kind, regardless of the physical form or characteristic by which the information is stored, recorded, or reproduced, which is in the possession or custody of a public entity or its agent and which has been received or prepared for use in connection with public business or contains information relating to public business." "Record" does not include unrecorded thought processes or mental impressions but does include preliminary drafts and working papers and does not include records in the possession of a court of this state. Section 44-04-17.1(11) provides that "public business" means "all matters that relate or may forseeably relate in any way to . . . [t]he performance of the public entity's governmental functions, including any matter over which the public entity has supervision, control, jurisdiction, or advisory power; or . . . [t]he public entity's use of public funds."

Exemptions From the Open Records Law

As discussed earlier, NDCC Section 44-04-18 provides "[e]xcept as otherwise specifically provided by law, all records of a public entity are public records, open and accessible for inspection during reasonable office hours." However, certain public records need not be disclosed if they fall within a specific exemption from the open records law. The North Dakota Supreme Court, in Hovet v. Hebron Public School District, 419 N.W.2d 189, 191 (N.D. 1988) held:

Classifications of Public Records

North Dakota law provides for three classifications of public records. The first class of documents consists of those documents that are subject to the open records law, and the disclosure of these documents is generally required.

North Dakota Century Code Section 44-04-17.1(5) provides for a second class of documents consisting of those documents that are not confidential but are also not subject to the open records law. The disclosure of these exempt documents by a public entity is discretionary. This section provides that an "exempt record" means "all or part of a record . . . that is neither required by law to be open to the public, nor is confidential, but may be open in the discretion of the public entity."

The third class includes those documents that are confidential, the disclosure of which is generally prohibited.

Confidential Records

North Dakota Century Code Section 44-04-17.1(3) provides that "confidential records" means "all or part of a record . . . that is either expressly declared confidential or is prohibited from being open to the public." A public entity generally has no discretion regarding the disclosure of a confidential record and a public release of a confidential record. Confidential records are characterized by a lack of discretion to disclose documents to the public, and the public servant who releases the confidential records generally can be punished.

The disclosure of confidential information is prohibited by NDCC Section 12.1-13-01, which provides in part that "[a] person is guilty of a class C felony if, in knowing violation of a statutory duty imposed on him as a public servant, he discloses any confidential information which he has acquired as a public servant."

Records do not need to be expressly declared confidential for their disclosure to be prohibited by NDCC Section 12.1-13-01. Section 12.1-13-01 defines "confidential information" as "information made available to the government under a governmental assurance of confidence as provided by statute." The Attorney General in an August 1, 1994, opinion stated that this definition includes not only those documents that a statute specifically states are confidential, but also those which a statute provides cannot be disclosed or for which the Legislative Assembly has provided a penalty for disclosure.

Conflicting Penalties for the Disclosure of Confidential Information

As discussed above, NDCC Section 12.1-13-01 provides a person who knowingly discloses confidential information is guilty of a Class C felony. There are, however, several sections throughout the Century Code which provide a specific penalty for the disclosure of confidential information. Three examples of these sections are:

• Section 4-18.1-14, which relates to the Milk Stabilization Board, provides that the disclosure of confidential information is a Class A misdemeanor,
• Section 50-19-10 provides that the records of maternity homes are confidential. Section 50-19-15 provides that a violation of Chapter 50-19 is a Class B misdemeanor, and
• Section 50-25.1-14, which relates to child abuse and neglect records, provides that any person who permits or encourages the unauthorized disclosure of confidential information under Chapter 50-25.1 is guilty of a Class B misdemeanor.

Health Insurance Portability and Accountability Act of 1996

The privacy provisions of the federal law, the Health Insurance Portability and Accountability Act (HIPAA) of 1996, Pub. L. 104-191, apply to health information created or maintained by health care providers who engage in certain electronic transactions, health plans, and health care clearinghouses. Congress called on the Department of Health and Human Services to issue patient privacy protections as part of HIPAA. The Department of Health and Human Services issued the regulation "Standards for Privacy of Individually Identifiable Health Information," which is applicable to entities covered by HIPAA. The regulation covers health plans, health care clearinghouses, and those health care providers who conduct certain financial and administrative transactions electronically. Most health insurers, pharmacies, doctors, and other health care providers were required to comply with these federal standards beginning April 14, 2003.

These federal privacy standards do not affect state laws that provide additional privacy protections for patients. The confidentiality protections are cumulative; the privacy rule sets a national "floor" of privacy standards. Any state law providing additional protections will continue to apply. When a state law requires a certain disclosure--such as reporting an infectious disease outbreak to the public health authorities--the federal privacy regulations would not preempt the state law.

Congress provided that for civil violations of the standards, the Office for Civil Rights may impose monetary penalties up to $100 per violation, up to $25,000 per year, for each requirement or prohibition violated. Criminal penalties apply for certain actions, such as knowingly obtaining protected health information in violation of the law. Criminal penalties range up to $50,000 and one year in prison for certain offenses; up to $100,000 and up to five years in prison if the offenses are committed under "false pretenses"; and up to $250,000 and up to 10 years in prison if the offenses are committed with the intent to sell, transfer, or use protected health information for commercial advantage, personal gain, or malicious harm.

In an October 4, 2002, letter opinion, the Attorney General responded to an inquiry about the confidentiality of information regarding a public employee's participation in uniform group health insurance coverage. According to the opinion, "even if state law did not make information on an employee's participation and the amount paid for that participation confidential, HIPAA and the rules adopted under HIPAA would make information concerning an employee's participation in the health, vision, dental, and EAP programs and the payment for that participation confidential under federal law beginning April 14, 2003." According to the opinion, 45 C.F.R., § 164.502, states that a "covered entity may not use or disclose protected health information" except in certain circumstances. In the opinion of the Attorney General, for purposes of this regulation, Public Employees Retirement System's health insurance plans are covered entities. Thus, according to the opinion, in light of the regulations adopted pursuant to HIPAA, information on an employee's participation and the amount paid for that participation is confidential.

The 58th Legislative Assembly (2003) enacted a number of bills intended to ensure compliance with HIPAA requirements.

Examples of Exempt or Confidential Records

There is a full range of types of records that are specifically excepted from the state's open records law. The specific exceptions include exempt records, which are authorized to be released at the discretion of the agency, and confidential records, which may not be released and for which the penalty for release is a Class C felony. Examples of these records include certainlaw enforcement records; attorney work product; trade secrets, proprietary, commercial, and financial information; economic development records; minutes and recordings of executive sessions; personal medical and health records; student records; reports of child abuse or neglect; disease control records; motor vehicle records; state agency risk management and loss control records; multistate investigations and litigation; lists of children; computer programs; financial account numbers; personal information of licensed professionals; consumer complaint information; inmates' records; and legislative records and information.

Testimony and Committee Considerations

The committee received extensive testimony and information from the Attorney General's office and other government agencies that deal with confidential records' issues on a regular basis. The committee's consideration centered on two issues--concerns about the appropriateness of penalties for the disclosure of confidential records and the policies of state agencies and the judicial branch regarding confidential information.

Concerns About the Appropriateness of Penalties for the Disclosure of Confidential Records

The committee received testimony that the purpose of the study is to review the penalties imposed for the release of confidential information. According to the testimony, there is a concern about the release of information that had previously been public information, such as whether legislators participate in the state health plan. The testimony indicated that the issue before the committee was not whether any records should be open or closed, as those determinations have been made by the Legislative Assembly, but rather whether the severity of the penalty for the release of information such as participation in the state health plan is appropriate for the offense. It was noted that although some information that has traditionally been open to the public and often has been provided, particularly during election season, it would now be a Class C felony for someone with that information, such as a member of the Legislative Council staff, to knowingly provide that information. According to the testimony, the problem is not whether anyone is being prosecuted for these potential felonies, such as disclosing someone's age or the fact an employee participates in the state's flexcomp program, but rather whether a Class C felony is the appropriate penalty for that offense.

The committee also received testimony from the Attorney General's office regarding the appropriateness of penalties for the disclosure of confidential information. According to the testimony, the Attorney General's office receives few complaints or concerns about the penalties for a "knowing" violation of the confidential records laws. A representative of the Attorney General's office said public servants are very conservative when it comes to releasing confidential information and the penalties currently in place act as a deterrent.

The testimony indicated that the Attorney General issued 22 opinions in 2003 which dealt with open records or open meetings. The testimony indicated that many of the calls received regarding open records or open meetings are handled informally. It was noted that often when it is explained to a caller that a certain record is an open record, the agency will release the record. According to the testimony, some callers want the explanation in writing while others want the violation recorded in order to create a record of repeat violations. The testimony indicated that the Attorney General's office provides training to various agencies and organizations regarding the state's open records laws. The Attorney General's office also provides other sources of open records and open meetings information such as brochures, manuals, and online information.

The committee also received testimony regarding the impact of HIPAA on the state's open records laws. According to the testimony, there are a number of state and federal laws that provide for civil and criminal penalties for the release of confidential information. The Act contains provisions that provide for defenses or limitations for imposing penalties. The Act provides that if a party does not know or after exercising reasonable diligence was unaware that the party's actions were in violation of the privacy rules, there are steps the party can take to be excused from paying the civil penalty. Under HIPAA, no penalty may be imposed if the failure to comply was not willful neglect. The Act allows for a correction of a violation if the mistake is corrected within 30 days. The Act also allows for extensions and allows for an agency to ask the Department of Health and Human Services for technical assistance to come into compliance with HIPAA.

The opinion was expressed that because the Class C felony for the release of confidential information acts as a deterrent, the general penalty should not be changed. It was recommended, however, that the Legislative Assembly may want to take the approach to debate the penalty provisions for new confidential provisions that may be proposed rather than revisit the penalty provisions already in place. The opinion was expressed that the reason there have not been more prosecutions for the release of confidential information is because the penalty has served as a deterrent and not because the penalty is too severe that no one is being prosecuted. It also was noted that the grading of penalties would be difficult. According to the testimony, private information may mean different things to different people. It was noted there have been more instances in which public entities have refused to release information that is open than there have been instances in which public entities have released confidential information. It was speculated that prosecutions for the release of confidential information may not be a priority for prosecutors.

The committee also received testimony regarding the penalties of other states for the release of certain information. The information compared the penalties of North Dakota with those of Minnesota, South Dakota, Nebraska, Iowa, and Wisconsin. The information indicated that the penalties in these states for the release of information relating to a state employee's or official's participation in the state's health insurance, flexcomp program, or retirement program ranged from no penalty to a simple misdemeanor. Several states provided for civil remedies in the form of an injunction or damages, but none of the neighboring states make disclosure of this kind of information a felony, which is the law in North Dakota.

Policies of State Agencies and the Judicial Branch Regarding Confidential Information

The committee received testimony from the Department of Human Services, Department of Transportation, and Game and Fish Department regarding each agency's protocol for handling and releasing confidential information. The committee also received testimony from the Supreme Court regarding the open records policies of the state's judicial branch.

According to the Department of Human Services, state and federal laws and regulations prohibit the department from releasing records unless certain conditions are met. State law makes confidential all department records regarding clients or applicants. Federal law and regulations further restrict the disclosure of substance abuse treatment records. Department of Human Services employees attend training sessions regarding the release of information and employees are advised of the penalties for the release of confidential information. It was noted the department's policy on the release of confidential information is very restrictive. According to the testimony, confidential client records may be released under certain circumstances, such as client consent, records used for a civil commitment proceeding, or by court order. North Dakota Century Code Section 50-06-15 makes it a Class A misdemeanor for the Department of Human Services to disclose confidential information.

A representative of the Department of Transportation presented testimony that the department starts with the premise that the department's records are open. Any release of information is based upon statute. According to the testimony, most information regarding driver's license and vehicle registration is open. Driver's license pictures, which are now digitized, are not open records. It was noted that except for when a driver's record is requested by a court or by law enforcement, the driver is notified of requests made for information. The testimony indicated that the department no longer sells mailing lists and that the department tends to err on the side of not releasing information.

The testimony of the Game and Fish Department indicated that state law requires the use of Social Security numbers on all game and fish licenses. The law was passed at the request of the Department of Human Services as part of that department's child support enforcement efforts. The law provides that individuals who are in arrears on child support payments are denied participation in hunting license lotteries. According to the testimony, the department is required to collect Social Security numbers from customers but has taken steps to minimize misuse of the numbers. It was noted that the department does not include the Social Security number in any request for open records information and does not print Social Security numbers on any hunter lists or on any license tags.

According to a representative of the Supreme Court, North Dakota Supreme Court Administrative Rule 41 provides for the open records policy for the state's courts. The policy operates on the presumption that judicial records are generally open to the public for examination, inspection, and copying. The rule provides for procedures for identifying certain records as exempt from disclosure. The rule also provides for a procedure for sealing records. A party may petition the court to have a record or a portion of a record sealed. It was noted that only a judge can seal a court record. The record may be sealed based upon a motion of a party, or the court may make the decision to seal a record on its own accord. According to the testimony, the Supreme Court is in the process of revising Rule 41 to make certain information in court records, such as Social Security numbers and credit card numbers, confidential.

Several committee members expressed concern that there are a number of sections in the North Dakota Century Code which provide for a penalty that is different from the general penalty in Section 12.1-13-01, a Class C felony. For example, Section 50-06-15 makes it a Class A misdemeanor for the Department of Human Services to release confidential information. The committee considered a bill draft that makes the penalty for the release of any confidential information a Class C felony for all instances throughout the North Dakota Century Code.

Recommendations

The committee recommends House Bill No. 1036 to make the penalty for the release of any confidential information a Class C felony consistent throughout the North Dakota Century Code by changing those sections of the Century Code which provide for a penalty that is different from the general penalty contained in Section 12.1-13-01.

ASSUMPTION OF RISK STUDY

The committee was assigned Section 1 of Senate Bill No. 2379, which directed a study of the doctrine of assumption of risk and the impact the reenactment of the doctrine would have on other state laws. Senate Bill No. 2379, as introduced, would have reintroduced the doctrine of assumption of risk into the state's doctrine of modified comparative fault. Testimony in opposition to the introduced bill indicated that the modified comparative fault standard under which the state currently operates is an equitable process. According to the testimony, the bill would result in a regression of 30 years of tort law. The testimony contended that the bill would operate to preclude recovery if a jury determines that the injured party is responsible even in a minuscule amount and that defendants would raise "assumption of risk" in every case as an attempt to completely bar recovery. By amendment the Senate replaced the substantive provisions of the bill with the provision directing this study.

Background

The doctrine of assumption of risk is a common-law theory that a plaintiff may not recover for an injury to which the plaintiff has consented. Under the doctrine, a plaintiff is barred from recovering under a theory of negligence if it is proven that, with appreciation and knowledge of an oblivious danger, the plaintiff purposely elects to abandon a position of relative safety and chooses to reposition that person in the place of obvious danger and by reason of that repositioning is injured. According to Black's Law Dictionary, the requirements for the defense of assumption of risk are that: (1) the plaintiff has knowledge of facts constituting a dangerous condition, (2) the plaintiff knows the condition is dangerous, (3) the plaintiff appreciates the nature or extent of the danger, and (4) the plaintiff voluntarily exposes oneself to the danger.

Assumption of risk is an affirmative defense that must be pleaded and proven by the defendant. If the defendant would otherwise be subject to liability to the plaintiff, the burden of proof of the plaintiff's assumption of risk is upon the defendant. Generally, the question whether a party has assumed a risk is a determination to be made by a jury.

The defense of assumption of risk as a total bar to recovery has been abandoned in a number of jurisdictions, including New Mexico, Kentucky, New Hampshire, Pennsylvania, and Texas. In a number of other jurisdictions, including North Dakota, Alaska, Arizona, Arkansas, Colorado, Connecticut, Idaho, Iowa, Kansas, Massachusetts, Minnesota, Missouri, Montana, New York, Oregon, Utah, and Washington, the doctrine of assumption of risk is used to reduce a plaintiff's recovery rather than serving as a total bar to recovery. Other states have eliminated assumption of risk as a defense in particular actions, such as employer-employee suits and automobile-guest cases.

North Dakota Law

History

In 1973 the Legislative Assembly adopted the doctrine of comparative negligence. As a result of this legislation, the North Dakota Supreme Court, in Wentz v. Deseth, 221 N.W.2d 101 (N.D. 1974), held that the affirmative defense of assumption of risk was no longer the law of North Dakota. The 1973 legislation, which was codified as NDCC Section 9-10-07, provided:

Comparative negligence. Contributory negligence shall not bar recovery in an action by any person or his legal representative to recover damages for negligence resulting in death or in injury to person or property, if such negligence was not as great as the negligence of the person against whom recovery is sought, but any damages allowed shall be diminished in proportion to the amount of negligence attributable to the person recovering. The court may, and when requested by either party shall, direct the jury to find separate special verdicts determining the amount of damages and the percentage of negligence attributable to each party; and the court shall then reduce the amount of such damages in proportion to the amount of negligence attributable to the person recovering. When there are two or more persons who are jointly liable, contributions to awards shall be in proportion to the percentage of negligence attributable to each; provided, however, that each shall remain jointly and severally liable for the whole award. Upon the request of any party, this section shall be read by the court to the jury and the attorneys representing the parties may comment to the jury regarding this section.

This section was suspended in 1987 and repealed in 1993.

Current Law

In 1987 the Legislative Assembly passed House Bill No. 1571, which significantly revised tort liability law in this state. The legislation, codified as NDCC Chapter 32-03.2, shifted the focus for determining tort liability from traditional doctrinal labels to the singular inclusive concept of "fault." Section 32-03.2-02 includes not only negligence but also malpractice, absolute liability, dram shop liability, failure to warn, reckless or willful conduct, assumption of risk, misuse of product, failure to avoid injury, and product liability within the definition of "fault" to be compared in an action for damages.

Under NDCC Section 32-03.2-02, the state has adopted modified comparative fault. Modified comparative fault means that contributory fault does not bar recovery in an action by any person to recover damages for death or injury to persons or property unless the fault was as great as the combined fault of all the persons who contributed to the injury. In other words, a claim is not barred unless a person is 51 percent at fault. The damages allowed are reduced by the proportion of contributing fault of the person recovering.

Under NDCC Section 32-03.2-02.1, notwithstanding modified comparative fault, in an action to recover damages for injury to property, the damages may not be reduced by contributing fault if three conditions are met. The party must be seeking damages as a result of a two-party motor vehicle accident, the direct physical property damages sought are not more than $5,000 and the indirect damages do not exceed $1,000, and the percentage of fault of the person against whom recovery is sought is over 50 percent.

North Dakota law also contains several instances in which the assumption of risk defense is specifically prohibited. For example, in the area of workers' compensation law, NDCC Section 65-09-02 provides, in part:

An employee whose employer is in violation of section 65-04-33, who has been injured in the course of employment, or the employee's dependents or legal representatives in case death has ensued, may file an application with the organization for an award of compensation under this title and in addition may maintain a civil action against the employer for damages resulting from the injury o r death. In the action, the employer may not assert the common-law defenses of:

1. The fellow servant rule.

2. Assumption of risk.

3. Contributory negligence.

In the area of railroad corporation liability, NDCC Section 49-16-04, provides, in part, that "[i]n any action brought against any railroad corporation . . . to recover damages for injuries to, or death of, any of its employees, such employee shall not be held to have assumed the risk of the employee's employment in any case where the violation by such railroad corporation of any state or federal statute enacted for the safety of employees contributed to the injury or death of such employee." In addition, Section 49-16-08 provides that "[a]ny employee of a railroad corporation who, while in the performance of the employee's duty and while engaged in any commerce subject to the regulative power of this title, may be injured or killed by any locomotive, car, structure, or obstruction used or retained contrary to the provisions of this title, shall not be deemed to have assumed the risk . . . ."

Testimony and Committee Considerations

The committee received testimony and reviewed information from the Insurance Department, State Bar Association of North Dakota, North Dakota Trial Lawyers' Association, attorneys, representatives of the insurance industry, and judiciary regarding the assumption of risk doctrine.

The committee received testimony from the Insurance Department and the insurance industry regarding the assumption of risk doctrine which indicated that the reenactment of the doctrine would have little impact on the state's insurance laws and on the insurance industry in the state. It was noted that if the assumption of risk defense was a total bar to recovery, insurance companies may be paying fewer claims and this eventually would translate into lower rates. The testimony indicated that in states with the assumption of risk doctrine, juries often find a way to find that assumption of risk did not play a part in the injury in order to prevent a complete bar to recovery for the plaintiff. It was also noted that assumption of risk may be more applicable for limiting liability for certain activities, such as the use of anhydrous ammonia or the failure to wear a helmet while riding a motorcycle. Other states have applied the doctrine for certain types of cases, such as sporting events and hunting.

The testimony the committee received from attorneys indicated that they believe the current system of modified comparative fault is fair and equitable. The opinion was expressed that North Dakota juries have been effective at determining who is at fault. Under the state's current system, if a plaintiff is found to be more at fault than the party being sued, the plaintiff is barred from recovering. However, if the plaintiff is found to be less at fault than the party being sued, the plaintiff's damages are reduced by the plaintiff's percentage of fault. It was noted that under the assumption of risk doctrine, if there were a situation in which the plaintiff was 1 percent at fault and the defendant was found to be 99 percent at fault, the assumption of risk doctrine would prevent the plaintiff from collecting any damages. It was noted that the assumption of risk doctrine may affect no-fault insurance because no-fault providers may seek subrogation from the other insurance company or the defendant. The committee also received testimony from attorneys who believe that the doctrine operates harshly against the injured person even if the defendant is negligent because the doctrine relieves the defendant of all duty. It was noted that while there are varying degrees of fault, the assumption of risk doctrine does not take those degrees into account. Under the current system, assumption of risk is an element of fault that juries are permitted to consider.

The committee also received testimony from a member of the judiciary which indicated that juries are adept at determining whether a person is at fault and in determining the percentage of fault. It was noted that attorneys in the state do a good job of narrowing down the cases that go to trial and that few frivolous cases go to trial in North Dakota. It was reported that an informal survey of the state's district judges indicated that the current law that provides for modified comparative fault should not be changed.

Conclusion

It was the consensus of the committee that the state's modified comparative fault statute works well and does not need to be changed. It was also the consensus of the committee that the assumption of risk doctrine as a complete bar to recovery is not recommended and that the state should continue to use the modified comparative fault system.

COURT FACILITIES STUDY

Section 1 of House Bill No. 1186 directed a study of the leasing or renting of county court facilities by the state or other political subdivision. As introduced, House Bill No. 1186 would have provided for a $2 million appropriation to the Supreme Court for the purpose of providing funding for county office and court building projects. The Senate amended the bill by removing the appropriation and calling for this study. In the testimony received by the standing committee, it was noted that NDCC Section 27-01-01.1 requires each county to "provide the district court in that county with adequate chamber, court, and law library quarters, and lights and fuel and appropriate facilities for clerk of court services that are state funded pursuant to section 27-05.2-02." According to the testimony, however, there is not a clear delineation of responsibility between the state and counties for the provision and upkeep of these facilities. It was noted that the question of who should pay for major construction and remodeling of county facilities to meet the needs of the state judiciary needs to be revisited.

Background

District Courts

On September 7, 1976, the voters approved a new judicial article to the Constitution of North Dakota. Article VI, Section 1, provides:

The judicial power of the state is vested in a unified judicial system consisting of a supreme court, a district court, and such other courts as may be provided by law.

At the time the new article was approved, there were district courts, county courts of increased jurisdiction, county courts without increased jurisdiction, county justices, and municipal courts.

Article VI, Section 8, provides that the district court has original jurisdiction of all causes, except as otherwise provided by law, and such appellate jurisdiction as may be provided by law or by rule of the Supreme Court.

Article VI, Section 9, requires the state to be divided into judicial districts by order of the Supreme Court. In 1979 the Supreme Court divided the state into seven judicial districts. In each judicial district there is a presiding judge who supervises court services of the courts in the geographical area of the district. The duties of the presiding judge, as established by the Supreme Court, include convening regular meetings of the judges within the district to discuss issues of common concern, assigning cases among the judges of the district, and assigning judges within the district in cases of demand for a change of judge.

Article VI, Section 9, also provides that the electors of the district choose district judges for terms of office of six years.

Article VI, Section 10, requires district court judges to be citizens of the United States and residents of North Dakota, be learned in the law, and to possess any additional qualifications prescribed by law.

County Courts

In 1979 the Legislative Assembly passed Senate Concurrent Resolution No. 4089, which directed the Legislative Council to study the judicial system to determine if structural changes were necessary due to the adoption of the new judicial article. The 1979-80 interim Judiciary "A" Committee recommended, and the 1981 Legislative Assembly adopted, House Bill Nos. 1060 and 1061. The bills provided for one county court in each county instead of the multilevel system of county courts, county justice courts, and county courts of increased jurisdiction; provided county judges had to be law-trained and full time; and provided for the assumption by the state of many district court expenses. The expenses formerly paid by the county which were to be assumed by the state included juvenile court costs; salaries and operating expenses for court reporters, bailiffs, and judicial referees; mileage and compensation, and other related costs for jurors; and felony indigent defense costs. In exchange for the assumption of these county costs by the state, Section 37 of House Bill No. 1060, codified as NDCC Section 27-01-01.1, provided that "[e]ach county shall provide to the district court in that county with adequate chamber, court, and law library quarters, and lights and fuel."

1991 Court Unification Legislation

In 1991 the Legislative Assembly enacted House Bill No. 1517, which provided a transition process for establishing a single trial court of general jurisdiction. The unification of the court system was to be accomplished through the elimination of county courts and the creation of additional district court judgeships from county court judgeships. In 1991 there were 53 district and county court judges. Under unification the total number of district court judgeships was required to be reduced to 42 before January 1, 2001. The Supreme Court began eliminating judgeships, and by January 2, 1995, the primary implementation date for consolidation of trial courts, the number of judgeships was reduced to 47. At the end of 2000 the final judgeship was eliminated and the number of district judgeships was reduced to 42.

Section 206 of 1991 House Bill No. 1517 provided a statement of legislative intent regarding the allocation of court revenues and expenditures between the counties and the state. Section 206 provided, in part, that "[t]he counties will remain responsible for all county court services until January 1, 1995, and thereafter will remain responsible for all other substantial court expenditures, including costs associated with the provision of courthouse facilities and the office and staff of clerk of district court in each county . . . ."

Office of Clerk of District Court

Historically, the clerks of court had been elected county officials whose salaries were set by state law but were paid by the counties. The duties of the clerk were prescribed by state law, and the duties of the clerk were essentially performed for the district court.

In 1997 the Legislative Assembly expressed its intent to provide for the state funding of clerks of court by stating in Section 6 of 1997 Senate Bill No. 2002 that "the judicial branch budget for the 1999-2001 biennium and future bienniums include funding necessary to efficiently fund administration of the district courts."

In 1999 the Legislative Assembly enacted legislation to provide for the state funding of clerk of district court services. The legislation, codified as NDCC Chapter 27-05.2, provided for the transfer of the funding for clerk of district court services to the state effective April 1, 2001. The legislation provided that the options available to a county regarding state funding of clerk of district court services depended upon the number of full-time equivalent positions the Supreme Court determined to be necessary to provide adequate clerk of district court services.

Testimony and Committee Considerations

The committee received extensive testimony and information from the State Court Administrator's office and representatives of the counties regarding the court facilities needs of the counties and ways to address the maintenance and construction needs in the court facilities throughout the state. The committee's consideration centered on two issues--county court facilities issues and the status of the Court Facilities Improvement Advisory Committee and the court facilities improvement and maintenance fund.

County Court Facilities Issues

The committee received testimony that the court facilities needs of the counties are very different. According to the testimony, larger counties need more courtroom facilities, judges' chambers, and office space, whereas the smaller counties may need only office space and a chamber for a traveling judge. The state's changes in the delivery of judicial services has resulted in more judges being housed in the larger cities. According to the testimony, the concerns about adequate funding for court facilities came to a head in 1995 when legislation was passed which directed more of the fees to the state which previously had been allocated to the counties. The legislation resulted in a lost revenue stream for the counties and, consequently, there was less money available to the counties for the maintenance and remodeling of court facilities. It was noted that the Supreme Court does not include funds in its appropriation for the maintenance of district court facilities. It was reported that while the state does not guarantee funding for courtroom security, counties can submit proposals to the state. In most cases, it was noted, the state has agreed to provide 50 percent funding for security projects. It was also reported that there are not suitable court facilities in all 53 counties. The courthouse in Dunn County was built in Manning without a courtroom. Court proceedings for that county are held in a room in a basement in Killdeer which is not accessible to individuals with certain handicaps. According to the testimony, most of the court facilities issues are related to the issue of costs, including the costs of maintaining existing facilities, as well as the costs of new construction and major remodeling.

According to testimony received from a county representative, counties are obligated by state law to provide space for all state court functions. It was reported that of the 77,000 square feet of space in the Cass County Courthouse, nearly one-half is used for state court functions. The testimony also noted that in addition to providing the space, the county government pays the bills for heating and cooling, janitorial services, security services, water, parking, snow removal, telephone and computer wiring, and general maintenance. It was reported that Cass County has developed a proposal that would consolidate all the courts in Fargo and Cass County under a single roof at the Cass County Courthouse; however, $9 million is needed for the project. According to the testimony, the state's judicial services' needs in the county have grown tremendously in recent years; however, fees collected and retained by the county have either been cut or eliminated. It was the recommendation of the representative that a $9 to $10 per square foot lease agreement be established for any county providing space for state-operated functions. According to the testimony, the state and the counties should have a fair and equitable arrangement regarding court facilities. It was noted that with diminishing fees, some counties do not have enough money to pay for heat and lights in court facilities. It was also noted that if state funding is not made available for the Cass County project, the project will go forward, but the new facility would not house any state functions.

Other testimony indicated that the state uses a significant amount of space in the county court facilities. It was noted that it is very difficult to find any funding for even routine court facility maintenance in some counties. One option suggested was for the state to lease the court facilities from the counties. Another option offered was for the state to pay for the major reconstruction and remodeling with the counties providing for the maintenance. The importance of a continued court presence in every county was emphasized as being a priority.

The committee also discussed options that may be available to address the court facilities issues, including whether the chambers should be state-owned or whether the state should lease space from the counties.

Court Facilities Improvement Advisory Committee and the Court Facilities Improvement and Maintenance Fund

The committee received testimony regarding 2003 House Bill No. 1088. This legislation established the indigent defense administration fund and the court facilities improvement and maintenance fund. Under that legislation, the first $750,000 collected from the court administration fee is to be deposited in the indigent defense administration fund, the next $460,000 is to be deposited in the court facilities improvement and maintenance fund, and any amounts collected beyond those amounts are to be deposited and divided equally between the two funds.

The 2003 legislation also provided for the establishment of the Court Facilities Improvement Advisory Committee. The committee is made up of a county commissioner representative, the executive director of the State Bar Association of North Dakota, a member of the Legislative Assembly, and the State Court Administrator. The committee received testimony that the Court Facilities Improvement Advisory Committee had developed rules for the administration of the court facilities improvement and maintenance fund. It was reported that the first applications for court facilities improvement grants are due by December 31, 2004. Upon receiving the applications, the committee will begin awarding the grants. It was noted that a county receiving a grant is required to contribute 25 percent of the cost of the project and that the county will be required to report on the progress of its project. According to the testimony, there is not a maximum on the amount of the grants; however, the committee will attempt to meet the needs of as many applicants as possible. It was noted that the legislation requires at least 25 percent of the funds awarded during a biennium be awarded to counties with a population of fewer than 7,500.

The committee also received testimony regarding the status of the revenue collected for the court facilities improvement and maintenance fund and the indigent defense administration fund. It was reported that the amount of fees assessed and the collection rate of those fees had exceeded expectations. It was also noted that the judiciary has made the collection of this fee a priority. It was reported that the collection of the criminal defense fee has not had a dramatic effect on the collections of other fees.

As of the final meeting of the Judicial Process Committee on October 4, 2004, it was reported that the collections from the fee totaled $1,000,832. The estimate of total receipts through June 30, 2005, is $1,905,891. This estimate was based upon an estimate of $90,506 per month through the end of the biennium. It was estimated that in addition to the $750,000 that will be deposited in the indigent defense administration fund and the $460,000 that will be deposited in the court facilities improvement and maintenance fund, an additional $347,945 will be deposited in each fund this biennium. It was also reported that approximately 70 percent of the court administration fees that have been assessed have been collected.

Conclusion

As a result of the information and testimony received by the committee regarding the county court facilities, it was the consensus of the committee that the Legislative Assembly continue to monitor the assessment of the court administration fees under 2003 House Bill No. 1088, the revenue collection in the court facilities improvement and maintenance fund, and the awarding of grants by the Court Facilities Improvement Advisory Committee as a means for addressing the county court facilities needs.

UNIFORM LAWS REVIEW

The North Dakota Commission on Uniform State Laws consists of nine members. The primary function of the commission is to represent North Dakota in the National Conference of Commissioners on Uniform State Laws. The national conference consists of representatives of all states and its purpose is to promote uniformity in state law on all subjects on which uniformity is desirable and practicable and to serve state government by improving state laws for better interstate relationships. Under NDCC Sections 54-35-02 and 54-55-04, the state commission may submit its recommendations for enactment of uniform laws or proposed amendments to existing uniform laws to the Legislative Council for its review and recommendation during the interim between legislative sessions.

The state commission recommended nine uniform Acts to the Legislative Council for its review and recommendation. These Acts range from replacements of existing uniform Acts adopted in North Dakota to comprehensive legislation on subjects not covered by existing state law. The nine Acts were the Uniform Securities Act (2002); Revision of Uniform Commercial Code Article 2 - Sales; Revision of Uniform Commercial Code Article 2A - Leases; Revision of Uniform Commercial Code Article 3 - Negotiable Instruments; Revision of Uniform Commercial Code Article 4 - Bank Deposits and Collections; Revision of Uniform Commercial Code Article 7 - Documents of Title; Revised Estate Tax Apportionment Act (2003); Uniform Parentage Act (2000); and Uniform Trust Code (2000).

Uniform Securities Act (2002)

The Uniform Securities Act (2002) was recommended by the national conference in 2002. The purpose of the Act is to provide basic investor protection from securities fraud and to complement the federal Securities and Exchange Act in an effort to eliminate duplication of regulation. The Act has been enacted in Missouri and Oklahoma.

Testimony received on the Act indicated that the proposed Uniform Securities Act raises issues related to the federal Gramm Leach Bliley Act. In addition to privacy, the Act addresses exemptions to security broker registration for banks that are engaging in certain "traditional" or di minimis securities activities. It was noted that the proposed Uniform Securities Act also covers this subject, but it is narrower than federal law in that the Act permits 200 unsolicited trades to be made by a bank without a state broker registration while federal law allows 500 such trades and the Uniform Securities Act does not include a Gramm Leach Bliley Act-type exemption for private placements. According to the testimony, the difference between these two statutory schemes creates a complexity and possible confusion by banks about the securities activities in which they may engage without registering as a broker.

The committee also received testimony from a representative of the Securities Department regarding the proposed Uniform Securities Act (2002). The sale of securities in the state is currently regulated by the Securities Act of 1951, which is codified as NDCC Chapter 10-04. In regard to uniform securities law, there are currently two versions of the Uniform Securities Act in effect throughout the country. The Uniform Securities Act of 1956 has been adopted, in whole or in part, by 37 United States jurisdictions. The Revised Uniform Securities Act of 1985 has been adopted in only a handful of states. The 1951 Act that is currently in effect in North Dakota is very similar in substance to the Uniform Securities Act of 1956. The new Uniform Securities Act (2002) has been adopted in four states and has been introduced in nine other jurisdictions. According to the testimony, of the states that have adopted the new Act, most have made several significant changes to the Act before adoption. It was noted that a number of states--California, Florida, Massachusetts, North Carolina, New Jersey, New York, Pennsylvania, and Texas--have indicated they will not support the new Act. According to the testimony, it is the opinion of the state regulator in those jurisdictions that existing securities law is superior to the new Act. According to the testimony, the Securities Department has identified those provisions that would be considered significant substantive differences between the 1951 Act and the new Uniform Securities Act. It was noted that the new Act would also have a fiscal impact on the state. Certain alternatives made available in the implementation of the new Act would reduce the amount of filing fee revenue collected by the Securities Department. The Securities Department generates approximately $13 million in revenue per biennium. It was noted that although the potential lost revenue has not been calculated, it could be quite significant and fairly detailed work may be required in order to produce a revenue neutral bill. According to the testimony, the department would prefer to offer amendments that would amend the current securities law. However, if the new Act is introduced, the department will offer amendments. It was noted that there are a number of provisions in the new Act that are good and could be implemented. According to the testimony, those provisions could be added to current state law to update the state's securities law.

The committee makes no recommendation regarding the Uniform Securities Act (2002).

Revision of the Uniform Commercial Code Articles 2 and 2A - Sales and Leases

The revision of Uniform Commercial Code Article 2 - Sales was recommended by the national conference in 2002. North Dakota adopted Article 2 in 1965. Article 2 provides the fundamental rules of contract for the sale of personal property. With key exceptions, such as good faith and reasonableness, the rules of Article 2 are default rules that may be waived or modified by agreement. The rules provide for each stage of a contractual relationship from formation to performance. Included are provisions governing implied and express warranties, risk of loss, statute of frauds and extrinsic evidence, interpretation, auction sales, "gap-filling" terms that apply when parties fail to reach agreement, and breaches of contract and remedies for breaches of contract. According to testimony in explanation of the revised Article 2, the 2002 amendments to Article 2 represent a considerable improvement over existing law and prepare the law of sales for sales of goods in the electronic marketplace.

Revision of Uniform Commercial Code Article 2A - Leases was recommended by the national conference in 2002. Article 2A was originally recommended by the national conference in 1987 and amendments were recommended in 1990. North Dakota adopted Article 2A, with 1990 amendments, in 1991. One state, South Dakota, adopted the 1987 Act; 47 jurisdictions, including Minnesota and Montana, adopted it with 1990 amendments. The Act provides a legal framework for any transaction, regardless of form, that creates a lease.

The committee received no testimony in support of or in opposition to revised Articles 2 and 2A. The committee makes no recommendation regarding Articles 2 and 2A.

Revision of Uniform Commercial Code Articles 3 and 4 - Negotiable Instruments and Bank Deposits and Collections

The revisions of Uniform Commercial Code Articles 3 and 4 - Negotiable Instruments and Bank Deposits and Collections were recommended by the national conference in 2002. These articles are considered companion articles. Article 4 concerns bank deposits and collections, which involve checks, certificates of deposit, and other types of business instruments. North Dakota adopted Articles 3 and 4 in 1965 and revised Articles 3 and 4 in 1991. Revised Articles 3 and 4 have been adopted in 50 jurisdictions. The newly revised Article 3 updates provisions of the Uniform Commercial Code dealing with payment by checks and other paper instruments to provide essential rules for the new technologies and practices in payment systems. The newly revised Article 4 takes care of the immediate problems that have developed over the time that Article 4 has been in effect and updates the law pertaining to certain banking practices. Minnesota enacted the revision of Articles 3 and 4 in 2003.

The committee received testimony from a representative of the banking industry regarding Articles 3 and 4. According to the testimony, the banking industry in the state opposed the revisions when the revisions were before the 2001-02 interim Judiciary "A" Committee and would have vigorously opposed them had bills to adopt them been introduced in the 2003 legislative session. It was noted that in its opposition, the state's banking association has joined with more than 40 bankers associations from other states. According to the testimony, the unity and depth of banker opposition to a uniform proposal for a uniform law is virtually unique and its effect has been that only one state, Minnesota, has adopted a version of the proposed revisions and then only after substantial and substantive amendments. It was noted that while other states have rejected proposed revised Articles 3 and 4, those states have adopted one of its provisions to address the problem of unauthorized drafts against consumers' checking accounts. According to the testimony, the problem arises when a person discloses information about a checking account to a telemarketer or other unscrupulous person who then uses that information to originate an "item" that may be deposited with a financial institution and collected through the automated payment system that has developed for the fast processing of a check. Revised Article 4 deals with the problem by shifting the liability for an unauthorized draft to the depository institution from the paying bank, which has no practical way in which to stop payment on an unauthorized draft within the short timeframes that are prescribed by law for final payment of an item. According to the testimony, the drafters of revised Articles 3 and 4 took this solution from a California law that was passed in 1996. California was the first state to enact this type of law and North Dakota was the second. North Dakota enacted the law in 1997. According to the testimony, this liability shift is being made the "uniform" law of the land and North Dakota already has addressed this problem.

The committee received no testimony in support of the Revision of Uniform Commercial Code Articles 3 and 4. The committee makes no recommendation regarding Articles 3 and 4.

Revision of Uniform Commercial Code Article 7 - Documents of Title

The revision of Uniform Commercial Code Article 7 - Documents of Title was recommended by the national conference in 2003. The 2003 revision of Article 7 updates the original Article 7 to provide a framework for the further development of electronic documents of title and updates the article for modern times in light of state, federal, and international developments.

Testimony in explanation of revised Article 7 indicated that the revision makes way for electronic documents of title and updates or clarifies existing rules of law. References to tariffs and regulations in the original Article 7 which no longer exist with deregulation have been eliminated in the revision. It was noted that documents of title are fundamental to the transfer of goods in interstate commerce. The new Article 7 has been adopted in Alabama, Connecticut, Delaware, Hawaii, Idaho, Maryland, Minnesota, and Virginia.

The committee received no testimony in support of or in opposition to the Revision of Uniform Commercial Code Article 7. The committee makes no recommendation regarding the revised Article 7.

Revised Estate Tax Apportionment Act (2003)

The Revised Estate Tax Apportionment Act (2003) was recommended by the national conference in 2003. The revised Act provides procedures in apportioning the burden of estate taxes among beneficiaries. This is a revision of earlier acts from 1958, 1964, and 1982 and part of the Uniform Probate Code that provides for apportioning the burden of federal or state estate taxes between the respective interests of heirs or legatees of an estate, or beneficiaries of a revocable trust, when the fiduciary for an estate or trust is required to pay such taxes. Generally, the tax burden is allocated to the interests of estate or trust beneficiaries in proportion to their interests in the whole of the taxable estate. This update takes into account all changes in tax rules arising since the last time this Act was amended. The revised Act has been adopted in Idaho.

The committee received no testimony in support of or in opposition to the Revised Estate Tax Apportionment Act. The committee makes no recommendation regarding the revised Act.

Uniform Parentage Act (2000)

The Uniform Parentage Act (2000) was recommended by the national conference in 2000. The Act replaces the 1973 Uniform Parentage Act, the 1988 Uniform Status of Children of Assisted Conception Act, which was enacted in North Dakota in 1989, and the Uniform Putative and Unknown Fathers Act. The North Dakota commission recommended the Act without the paternity registry and surrogate agreement articles. The Act has been enacted in Delaware, Texas, Washington, and Wyoming and was introduced in California, Illinois, Maine, New Jersey, and Utah in 2004.

The committee received testimony that indicated that a number of substantive and technical changes would be needed to make the revised Act work with other state laws. According to the testimony, the Act would be a significant improvement over the state's current paternity law, which was enacted in 1975. It was noted that the revised Act provides more guidance in many areas than does current law. One such area is when there are multiple presumed fathers and it is necessary to determine which man should be legally established as a child's father. According to the testimony, states and legislatures throughout the country are struggling with the important policy issue of whether the rights and responsibilities of being a parent belong to the biological parent or to a child's "psychological" parent. According to the testimony, the revised Act does not settle this issue with a single arbitrary rule but establishes a framework for a court to make a decision, which is generally lacking in current law.

The testimony indicated that North Dakota has a very successful voluntary paternity acknowledgments program under NDCC Chapter 14-19, which is a separate chapter from the current paternity law. According to the testimony, in some respects the current voluntary paternity acknowledgments law is even better than the voluntary paternity acknowledgments provisions in the revised Act. The testimony indicated that if the revised Act is introduced, it is recommended that the revised Act be amended to incorporate the beneficial provisions in current law or that Article 3 of the Act be omitted in its entirety. It was noted that although the revised Act would be an improvement over current law, a number of changes would be necessary to ensure that the state does not take a step backward and lose the benefit of several provisions in current law.

The committee makes no recommendations with respect to the Uniform Parentage Act (2000).

Uniform Trust Code (2000)

The Uniform Trust Code (2000) was recommended by the national conference in 2000. Testimony in explanation of the code indicated that the code provides a comprehensive model for codifying the law on trusts. Most of the law governing the trust relationship is fundamentally common law. The code does not displace separate laws such as the Uniform Prudent Investor Act, the Uniform Principal and Income Act, the Uniform Custodial Trust Act, and parts of the Uniform Probate Code. The code is intended to provide a set of basic default rules that govern voluntary trusts. It is a default statute because, for the most part, the terms of a trust instrument will govern even if inconsistent with the statutory rules. The code has been enacted in Arizona, Kansas, Maine, Missouri, Nebraska, New Hampshire, New Mexico, Tennessee, Utah, Wyoming, and the District of Columbia.

Testimony in support of the Uniform Trust Code (2000) indicated support for adoption of the Uniform Trust Code subject to possible proposed amendments. According to the testimony, the new Act appears to do a lot to fill in gaps in the current law regarding trusts and is considerably more expansive than the state's current trust law. It was noted that North Dakota has fairly minimal requirements for trusts and that there is a limited amount of case law on the topic. According to the testimony, the new Act would give answers to those areas that were lacking.

The committee received no testimony in opposition to the Uniform Trust Code (2000). The committee makes no recommendation regarding this Act.

STATUTORY REVISION

Technical Corrections - Recommendation

The committee continued the practice of reviewing the Century Code to determine if there are inaccurate or obsolete name and statutory references or superfluous language. The committee recommends House Bill No. 1037 to make technical corrections throughout the Century Code. The following table lists the sections affected and describes the reasons for the change: