Contentious COVID business liability, worker protection bill advances in Senate in early morning vote

The Legislature on Sunday, Aug. 2, 2020 during the third day of the 32nd Special Session in Carson City.

Members of the Senate preliminarily approved a long-awaited proposal to protect businesses from liability in the event that a customer contracts COVID-19 after a four hour-long hearing Monday evening that stretched past midnight.

The bill, which is likely to be the last piece of legislation introduced during the special session, cleared the Senate Committee of the Whole early Tuesday morning, 18-3, with Republican Sens. Ira Hansen, Joe Hardy and Pete Goicoechea in opposition. The legislation, SB4, has dominated the behind-the-scenes conversations during the session and is the culmination of a deal between some of the state’s most powerful political interests, including casinos, business groups and the Culinary Union.

But the bill also attracted the ire of other powerful interests in the state, including trial attorneys and progressive groups, who generally bemoaned the bill’s liability protections; teacher unions, who wanted a set of worker protections in the bill afforded to hotel workers extended to educators; and hospitals, who felt they were unfairly excluded from the bill’s liability protections.

“My main concern is about all of the workers, and not just the Culinary,” said Sen. Marcia Washington. “What about the other essential workers and the school district and the hospitals, construction, etc.?”

In opening remarks, gubernatorial Chief of Staff Michelle White reiterated the dire economic situation facing the state amid decreased business demand among Nevada’s casino and tourism industry, saying the bill was a desire to strike a balance between protecting business from “those seeking to capitalize on our current situation” without granting total immunity from lawsuits related to spread of the disease.

“I want to be clear, the bill being presented tonight does not provide total immunity to all businesses, under all circumstances, far from it. These inevitable bad actors that have ignored and continue to ignore executive branch directives and published health and safety protocols will not be protected from liability for those failures,” White said. “Those bad actors will continue to face legal consequences.”

While there was general agreement among lawmakers on the general liability and worker protections, several senators raised concerns during a lengthy question and answer session about the decision to exclude hospitals and other health care facilities from the legislation. 

Brin Gibson, Gov. Steve Sisolak’s interim general counsel, said during the hearing that the legislation was the byproduct of conversations between “some of the most important members of Nevada’s economy” and suggested that the decision was theirs.

“They struck this language, and they decided that based on how the various weights and balances that are out there, that these elements should be included in here in this way, and what I would say is that based on that yield, this is where we ended up,” Gibson said. “There's potential that this deal falls apart if we start amending out certain provisions. They’re there for reasons that aren't— may not be obvious, some are messaging related, some are optical, some are substantive. There are various reasons why.”

But that answer didn’t satisfy all lawmakers. Hansen, one of the three “no” votes out of committee, suggested that health care facilities were being asked to be the “sacrificial lamb” so that “the other guys can get protection.”

“That is just unacceptable,” Hansen said. “We cannot have our entire medical community being subjected to lawsuits while we give exemptions.”

Cleaning standards and worker safety

The bill, which was released in full on Monday, covers three topics: creating an outline of enhanced cleaning policies for large casinos and hotels in Las Vegas and Reno; enhanced protections for workers at those casinos and hotels; and, most controversially, broad immunity from COVID-19 related litigation for businesses, government agencies including schools, and nonprofits, but not hospitals or health care facilities.

First, the legislation directs the director of the Department of Health and Human Services, Richard Whitley, to promulgate regulations on cleaning standards for casino resort or hotels, including regular cleaning of high-touch areas used by the public such as fixtures, door handles, countertops, keycards, elevator buttons and other objects.

The bill requires Whitley to adopt another set of regulations to limit transmission of COVID-19, including protocols on social distancing, access to hand cleaning, sinks and soap, hand sanitizer and personal protective equipment, such as gloves or masks, at no cost to the employee.

The bill mandates that local and state health officials regularly inspect resort hotels every two months and hotels with more than 200 rooms every three months for compliance with the health standards. It also authorizes them to administer fines of $500 for an initial violation and $1,000 for each subsequent violation.

It  also allocates $2 million to the Southern Nevada Health District and $500,000 to the Washoe County Health District to implement and enforce requirements in the bill.

The legislation also includes requirements that employees at casino hotels receive paid time off while awaiting COVID-19 test results if they are in close contact with a guest or other employee who tested positive for the virus. Any employee who tests positive will be allowed a minimum of 14 days off, including 10 paid days.

Those provisions were hard won by the politically powerful Culinary Union, which represents about 60,000 workers in Las Vegas and Reno. The union has been pushing for many of the same worker protections — including enhanced safety and cleaning standards, free COVID-19 testing and detailed processes for when a worker contracts the virus or is exposed to someone who has it — after Adolfo Fernandez, a Caesars Palace utility porter, died after contracting the virus in June.

In her testimony, Culinary Union Secretary-Treasurer Geoconda Arguello-Kline voiced the union’s support for the legislation.

“This Special Session is important for all workers and the hospitality industry,” she said in written testimony. “We hope today that we will ensure workers and their families are protected from the spread of COVID-19 in the workplace.”

Liability protections

But much of the attention on the bill has centered around the sections on liability protections for businesses, nonprofits and government agencies, with hospitals and other health care facilities excluded.

Essentially, the bill sets up a higher standard before a COVID-19-related personal injury or death lawsuit against a business or entity can be filed. It requires any claim to be pled with “particularly,” meaning the plaintiffs have to meet a higher standard of proof than normal before even filing the case.

The bill states that all entities covered under the bill — including businesses, certain nonprofits and government agencies — are immune from such litigation if they are in “substantial compliance with controlling health standards,” unless the plaintiffs can prove that the entity violated those standards with gross negligence, causing personal injury or death.

The legislation defines “controlling health standards” as any federal, state or local law or regulation, or any written order by a governmental body, that “prescribed the manner in which a business must operate at the time the person allegedly failed to comply.”

That includes existing mask-wearing mandates and limits on gatherings of more than 50 people, but would not encompass many of the technically nonbinding recommendations made by the governor’s office and health officials over the many months of the pandemic. 

That controlling health standard language was tightened from an original draft of the bill obtained by The Nevada Independent, which referred to any state, local or federal health policies, laws or ordinances that were “clearly and conspicuously related to COVID-19 and which were in effect at the time of the alleged exposure.”

But the other part of the liability equation is determining whether or not the business is in “substantial compliance” with those controlling health standards. 

That term (“substantial compliance”) is also defined in the bill — as “good faith efforts” to help control spread of COVID-19, including establishing policies to enforce and implement controlling health standards in a “reasonable matter.” It also excludes “isolated or unforeseen events of noncompliance,” meaning that one-off contracting of the virus would not meet that standard required to bring a lawsuit.

The legal liability sections of the bill are set to expire whenever the governor lifts his declaration of emergency related to the pandemic, or by July 2023.

Multiple business and casino companies testified in support of the bill, citing the liability protections in particular. Sasha Stephenson, a lobbyist with MGM Resorts, said the casino company believed the litigation protections were necessary to help with the state’s economic recovery. 

“Unfounded litigation has the potential to cripple Nevada's businesses, leading to more closures and greater economic difficulties,” she said. “The targeted liability protection itself will have the opposite effect. It will allow good actors to stay open as long as they remain vigilant in keeping employees and guests safe.”

But the bill met staunch opposition from left-leaning groups, teacher unions and the state’s trade association for trial attorneys. Both the Nevada State Education Association and Clark County Education Association opposed the bill, citing concerns that it would incentivize schools to cut corners and not take full safety measures thanks to the lifted threat of litigation.

“While it is encouraging that kids don’t get sick and die in the same numbers as adults from COVID-19, evidence is mounting that they can be significant vectors,” NSEA lobbyist Chris Daly said. “Now, as thousands of educators and families prepare to go back to school, we believe essential school supplies should mean pencils and paper or Chromebooks and wifi, not wills and trusts.”

Nevada Justice Association board member Matthew Sharp, a trial attorney, said that supporters had provided no “coherent explanation” for what “controlling health standards” would include, and that there had been few if any such COVID-19 related personal injury lawsuits filed in the state thus far. 

“This Legislature, convening literally at the dead of night, is considering giving essentially complete immunity to certain businesses,” he said. “This isn't what a special session is for. And what we are looking at is a solution looking for our problem.”

Hospital exclusions

The legislation also came under heavy fire during the hearing from hospitals and other health care facilities, which argued that they were being treated unequally by being excluded from the liability protections. Hospitals also argued that if they were not extended the liability protections, they would have to make significant changes to hospital operations, including restricting visitors, students and vendors.

Bill Welch, CEO of the Nevada Hospital Association, also said that the legislation would hinder the ability of hospitals to be able to discharge their patients to long-term care and hospice facilities, limiting bed space to treat COVID-19 patients.

“Throughout this pandemic, we have worked closely with Governor Sisolak and his office to fully support his goals to flatten the curve and protect hospital capacity. As written, this bill puts that capacity at risk, and undermines our efforts to protect Nevadans’ health,” Welch said. “Nevada hospitals are the frontline of this pandemic. Hospital capacity is critical for providers to treat this fast-spreading virus.”

Gibson, during the hearing, argued that hospitals are already afforded certain immunities and protections under an emergency directive exempting them from liability “except in cases of willful misconduct or gross negligence” because of their role in responding to the pandemic.

Later, he acknowledged that the decision to exclude health care facilities was a byproduct of conversations with stakeholders and suggested that the deal between casinos, the business community and the Culinary Union might fall apart if legislators were to propose an amendment.

Gibson then backtracked slightly, after he was pressed by Sen. Keith Pickard about who exactly was involved in drafting the legislation, with the governor’s counsel saying that he may have “oversimplified” his response. He suggested that health care facilities are already held to a higher standard because of the type of business they run.

“They're able to manage illness in a way that other businesses are not because they're experts in these spaces,” Gibson. “Our role was to try to not overburden the bill, but at the same time to extend it into every possible business that we could, with limitations.”

However, not all health care facilities will be treated equally under the bill. Legislative legal staff confirmed that University Medical Center, the county-run hospital in Clark County, would qualify for the liability protections since it is a government entity, and any county-run rural hospitals would be eligible as well.

Hospitals, health care facilities cry foul at exclusion from proposed COVID liability bill

The planned introduction of a wide-ranging bill granting certain businesses enhanced immunity from COVID-19 related death or illness lawsuits has drawn the ire of officials from hospitals and other health care facilities, who say it unfairly opens them up to the threat of lawsuits.

Although a bill has not yet been formally introduced in the special session, a draft copy of its language obtained by The Nevada Independent indicates that the enhanced liability protections envisioned in the bill would be granted to casino resorts, government agencies, nonprofits and other kinds of business while explicitly carving out health care facilities. The bill is expected to be introduced in the Senate on Monday.

That exemption — which includes hospitals, nursing homes, intermediate care facilities, hospice care, skilled nursing facilities and emergency medical care centers — has drawn a sharp rebuke from the Nevada Hospital Association and other health care providers, who say it would prohibit them from transferring patients between facilities or prohibit visitors from coming to visit patients.

“Nevada hospitals are the backbone of Nevada communities in the response to COVID-19 pandemic and should have the same protections as any other business as it relates to patient visitors, students, vendors and other guests,” Nevada Hospital Association spokeswoman Amy Shogren said in an email. “While we have only seen draft language at this point, we believe that by excluding certain health care providers, hospital capacity and ultimately access will be negatively impacted.”

A spokeswoman for Dignity Health, which runs three acute-care hospitals in Southern Nevada, said the liability protection scheme created in the bill would also work for hospitals and “deter those who will seek to exploit the pandemic for financial gain.”

“Hospitals are already held to the highest standards, following the stringent guidelines of the CDC, and if those rules are followed, there is no reason hospitals and their staff should be excluded from this protection,” Dignity lobbyist Katie Ryan said in a message. “Hospitals and our health care professionals have delivered when our state needed us most and we need the Legislature and governor’s office to do the same now.”

As the Legislature’s special session stretches into its fourth day and all other proposals outlined in Gov. Steve Sisolak’s proclamation have been drafted and are moving through the legislative process, the last remaining puzzle piece for lawmakers remains the business liability and worker protection legislation.

The bill and behind-the-scenes negotiations have drawn in some of the state’s most powerful players: business groups including the Nevada Resort Association and various chambers of commerce, who have pushed for the bill; opposition from trial lawyers and progressive groups; and a push by the politically powerful Culinary Union to enshrine protections for resort casino employees into law.

But trial attorneys have largely played down the threat of a rush to the courthouse to file COVID-19 related litigation, saying that in many cases it would be difficult to prove where a person contracted the virus. 

Matthew Sharp, a board member of trial attorney trade association Nevada Justice Association, said in an interview that the concerns listed by hospitals and other health care facilities were a “veiled threat.” He said that medical malpractice suits already require a higher burden of proof than what’s in the under-consideration liability protection bill, and that concerns over liability generally didn’t make sense as hospitals should be equipped to follow all necessary safety precautions.

“Hospitals already have massive protections under the law that no other business gets,” he said. “So, if we believe in public safety, then hospitals should be willing to be held accountable as it exists under existing law. And this idea that they won't do that unless they're given immunity is, frankly, outrageous.”

Data tracked by the law firm of Hunton Andrews Kurth shows that more than 3,900 lawsuits related to COVID-19 have been filed nationwide since the start of the year, but relatively few deal with personal injury or other employment law issues.

Per that tracker, nationwide there have been 74 lawsuits related to conditions of employment, such as lack of PPE, COVID-19 exposure at work or wrongful death. 

Sharp also said that he believed the bill would include tighter language on what’s called “controlling health standards,” which initially referred to businesses making a “good faith effort” to comply with state, federal and local health directives related to COVID-19.

Instead, he said the bill is expected to now only include mandatory health requirements issued by the state or federal government, which at this point only includes mask-wearing requirements and a prohibition on gatherings of more than 50 people.

“If you're in the middle of a snowstorm, and you're driving 75 miles an hour, you're not violating any mandatory requirements, but you should not be driving 75 because you should be reasonably prudent to protect yourself and others from harm,” he said. “That's the problem with limiting it to mandatory.” 

But many businesses have said that litigation protection enshrined in law will help them get back to operations without the threat of pending litigation. It’s a push that Senate Republicans in Congress have requested as part of another bailout deal, and, according to the National Law Review at least 12 other states have begun enacting similar “liability shields” related to the virus.

Other advocates of the bill have also publicly supported removing exclusion of hospitals and healthcare facilities. Mary Beth Sewald, the head of the Las Vegas Chamber of Commerce, said in a tweet on Sunday that she “can’t imagine the unintended consequences of excluding hospitals and healthcare facilities from limited liability protection.” 

The Vegas Chamber echoed her remarks in another tweet, writing on Sunday that without expanded liability for medical facilities, “patient transfers from hospitals to lower levels of care, such as rehabilitation, skilled nursing, long term care & home care services, may not be possible.”

On Sunday afternoon, the Clark County Education Association said in a press release that lawmakers should adopt legislation creating a “rebuttable presumption” that teachers who contract COVID-19 while working in-person at a school or place of employment shall be eligible for workers’ compensation.

The teacher’s union also requested that “additional remedies in tort” must be made available for school district employees who contract COVID-19 at a school site where the school did not implement reasonable safety and testing standards to prevent spread of the disease.

Interest groups push COVID liability, criminal justice, worker protections for second special session

As Nevada lawmakers publicly debate cutting $1.2 billion from the state’s budget, the business community, progressive activists and unions are behind the scenes pressing lawmakers to consider a host of proposals from criminal justice reform to liability protection during a second special session.

Although lobbyists and members of the public have been barred from the physical legislative building, a host of interest groups are making their demands known and pushing for their priorities to be included in the proclamation that will establish the parameters of what lawmakers can consider in their second special session. Gov. Steve Sisolak is expected to call the next session once lawmakers finish finalizing cuts to the state budget during the first special session, which started Wednesday.

In announcing the first special session, Sisolak said that he planned to issue a subsequent proclamation to “consider policy items that rise to the extraordinary occasion of a special session.”

Although Sisolak and top legislative Democrats have previously expressed interest in taking up topics related to police misconduct and criminal justice reform, a host of other potential special session topics have bubbled to the surface, including efforts by some of the state’s top businesses and casinos to include liability protection for businesses against COVID-19 related lawsuits. Other possible topics include election reform and worker protections.

Here’s a look at proposals that are being pushed for behind the scenes.

COVID liability protection

A consortium of powerful business groups — including the Nevada Resort Association, Vegas Chamber of Commerce, Nevada Builders and Retail Association of Nevada and others — launched the hashtag #ProtectNVJobs on Saturday to promote adding liability protections for businesses against COVID-19 related lawsuits. 

But the effort to bring the topic of COVID-19 related liability to the special session has been in the works since before Saturday.

Backers of the now-public effort — which is also mirrored on a federal law — say it’s necessary to protect against frivolous lawsuits aimed at businesses struggling to reopen their doors and attract customers amid the state’s new health and safety requirements during the reopening process.

“Businesses have been financially hit hard by this pandemic. We need to make it easier - not harder - for them to recover and preserve jobs,” Vegas Chamber president and CEO Mary Beth Sewald said in an email. “The Vegas Chamber is urging the Governor and legislators to pass this legislation as soon as possible as a major step forward in rebuilding our fragile economy,"

Legislators in both political parties have said they’re open to the concept. Democratic Assemblywoman Teresa Benitez-Thompson said on a call with members of the Reno-Sparks Chamber of Commerce prior to the legislative session that many lawmakers had a “comfortable level with ensuring that we have language in the law so that employers are protected,” while keeping in place gross negligence standards.

Republican Sen. Heidi Gansert, who sent out a campaign email prior to the start of the special session last week listing “COVID19 liability reform” as a pressing topic, said Monday that “the longer businesses are open without protection, the greater the threat.”

She added that she had heard radio advertisements for potential lawsuits against long-term care facilities related to their COVID-19 response, and wanted to avoid the issue by nipping it in the bud.

“If there's an opportunity, we're anticipating that the lawsuits will follow,” she said.

The Nevada Resort Association, the politically powerful trade group representing many large casino gaming properties, has also publicly backed the concept of liability protections related to the coronavirus. 

The group’s president, Virginia Valentine, sent a letter to Sisolak last Wednesday asking the governor to take up liability protections during the upcoming legislative special session, writing that the “risk of frivolous litigation that mounts each day threatens the Resort Industry’s continued operations.”

“We ask you to consider enacting a targeted and limited safe harbor from liability for companies that implement strict public health guidelines related to the transmission of COVID-19,” she wrote in the letter. “Nevada businesses cannot wait any longer for purported federal action.”

In a statement sent Monday, she said that the resort association was concerned with the “threat of opportunistic lawsuits that would derail our ability to bounce back from the economic crisis and further threaten Nevada jobs.”

“Given the importance of this issue and the need for immediate action, we’ve asked the Governor and legislative leaders to bring liability protections up for discussion during a special session,” she wrote in an email. “Without liability protections, large and small businesses face a daunting choice of closing or staying closed and risking bankruptcy or reopening and risking a business-crippling lawsuit – any of which will only further damage Nevada’s already fragile economy.”

But the Nevada Justice Association, a trade group composed of trial attorneys, sent a separate letter to Sisolak on Friday urging the governor to not “incentivize unsafe practices,” and to avoid rewarding “those businesses who engage in unsafe practices and penalize Nevada workers, consumers and tourists who contract COVID-19 because of those unsafe practices.”

The letter stated that the association wants to find common ground with the state’s business community on the issue, and included several proposals including:

  • A heightened fraud-level pleading standard, which would require lawsuits be pled with “particularity,” with the intent of allowing frivolous lawsuits to be more easily and summarily dismissed
  • Creating a “rebuttable presumption” standard, meaning that any business following the rules is presumed to have no liability, and thus immune from negligence lawsuits
  • Allowing workers who return to work and contract COVID-19 to have a rebuttable presumption that they obtained the virus from their workplace. The group said that would ensure contracting COVID-19 is covered under the state’s worker’s compensation law, and that it “will provide comfort in knowing they will be cared for were they to become sick upon returning to work.”

Attorney Matthew Sharp, who serves as a board member on the group, said the state’s current laws around negligence were adequate to cover any potential lawsuits related to the pandemic, and that the state had bigger issues to face during the current pandemic.

“You're searching for a problem that already has a solution,” he said. “That's why I don't think a special session is necessary; the law already provides the solution.”

Several left-leaning groups also panned the proposal, saying that legislators should focus on protections for workers and not cover for businesses that do not take proper precautionary and safety steps. Progressive Leadership Alliance of Nevada Executive Director Laura Martin said her organization was staunchly opposed to the proposal, instead saying legislators should take up topics such as police reform, vote-by-mail, ballot collection for tribes and evictions.

“Protections for unfounded liability already exist and it’s up to the courts to decide whether or not a lawsuit is warranted, not for-profit businesses,” she said in an email. “Nevadans are dying and the only thing these corporations care about are being shielded from lawsuits. What a shame.”

A spokeswoman for Sisolak did not return an email asking whether the governor planned to include that item on a special session proclamation. 

Adolfo Fernandez bill

Casino workers, however, are pushing their own bill headed into the second special session. 

The Culinary Union, which represents 60,000 workers in Las Vegas and Reno, has proposed legislation that would require enhanced cleaning procedures, mandatory social distancing, free testing for all workers before going back to work or after being exposed to someone with COVID-19, temperature checks for workers, detailed plans for how to respond when a worker contracts the virus or is exposed to someone who has it and additional safety training for all employees.

The union has nicknamed the legislation the Adolfo Fernandez Bill after the 51-year-old utility porter at Caesars Palace who passed away last month after contracting COVID-19. His daughter, Irma Fernandez, shared in a statement the concerns her father had about returning to work amid the ongoing coronavirus pandemic.

“My father would tell me every day ‘I’m gonna get sick - the company is not keeping us safe.’ He would constantly tell me how stressed out he was,” she said. “He would call me on his break all the time to tell me about what was going on and how he was feeling. He would say that he didn’t want to go back to work, but he had to because he needed to financially support his family.”

Nineteen Culinary Union workers and members of their family have died after contracting COVID-19, according to the union. In advance of the special session, Geoconda Argüello-Kline, the union’s secretary-treasurer, sent Gov. Steve Sisolak a draft of the bill and a letter urging him to place it on the agenda for consideration. 

“In these uncertain times, it is imperative that we protect Nevada’s workers, tourists, and economy,” Argüello-Kline said “Another economic shutdown could have disastrous effects on our economy which would make recovery even harder. We believe that the measures in the Adolfo Fernandez Bill would put Nevada on the path towards a full economic recovery.”

The finer details of the bill, however, are not yet clear. Neither the Culinary Union nor the governor’s office responded on Monday to The Nevada Independent’s request for the union’s draft language of the bill.

Election reform

Advocates working on expanded voting access want to see legislators adopt policies that vastly expand mail-in voting and send a postage-paid ballot to all active voters and potentially inactive registered voters, too.

While Secretary of State Barbara Cegavske ordered the mostly mail approach for the June primary, the setup of November’s election remains undetermined. Clark County Registrar Joe Gloria is open to repeating the mostly mail election, but advocates don’t want the policy enshrined only in emergency directives or at the discretion of individual clerks.

“Then it kind of gives everybody room for interpretation,” said Emily Zamora of Silver State Voices, a voter rights advocacy group.

Zamora said advocates are also interested in expanding the number of ballot drop-off sites for voters who are uncomfortable dropping their mail-in ballot in a mailbox. Voters had the option of dropping off their ballots at in-person early voting and Election Day sites, but Zamora said the drop-off box plan wouldn’t necessarily align with the early voting sites.

Another ask — her group is hoping for policies that would allow people to turn in ballots for people beyond just themselves and their immediate family. Rules against “ballot harvesting” prevent that, but Zamora said it adversely affects people who live in remote areas including Indian reservations, which have been in lockdown for some of the pandemic.

She said she’s received positive cues from multiple legislators that there’s an appetite to take up election reform during a special session.

“I think folks overall did walk away from the primary election really with the understanding that we can do better for the general,” she said.

Criminal justice reform

Republican Assemblyman Tom Roberts, a former Las Vegas Metropolitan Police Department assistant sheriff, said he hasn’t seen language of any proposals from Democratic leadership as of Monday, but said he believed draft language of a proposal existed and was being worked on.

Nonetheless, Roberts said that there were a litany of possible changes that could garner bipartisan buy-in, including:

  • Adding more community members to various law enforcement advisory boards in the state
  • Changes to the state’s Peace Officer Standards and Training agency to add citizen participation and review misconduct
  • Changes to use-of-force policies, including limits on vascular neck restraints and requiring training on “duty to intervene.”

Roberts said that the truncated nature of special sessions made it hard to delve into complex policy issues in a limited time. Additional pressure to not draw out a second special session comes from the lack of input from the public owing to limits on entering the physical legislative building, as well as the recent COVID-19 positive test of a legislator. 

“There might be some things that you might be able to know right away from feedback that you got from stakeholders on both sides of the issue, that you might be able to find some middle ground and make some changes now, and then come back for some more substantial discussion about some of the more complex issues,” he said on Monday. But, you know, I think there could be room for some, but really some of the really more complex things, we probably should or could wait.”

Holly Welborn, policy director at ACLU of Nevada, said the reforms her organization is seeking to get passed during the special session don’t even scratch the surface of criminal justice reform needed in Nevada. But she said it would be “more than a disappointment” if legislators did not pass something in the wake of nationwide Black Lives Matter protests.

“The community is demanding action, and if there isn’t action at a time when this group of legislators is convened, that is going to be a failure for the community,” she said.

One of the most discussed potential reforms is a repeal of provisions in SB242 — a bill sponsored by Democratic Senate Majority Leader Nicole Cannizzaro in the 2019 session that, among other things, bars comments police officers make during an internal investigation from discovery in any civil litigation stemming from misconduct. With officers seldom facing criminal charges when people die at the hands of police, removing the provision would make it easier to hold officers accountable civilly.

“They’re definitely open to discussing the problems with the bill,” she said about legislative leaders.

ACLU leaders are also calling for a ban on chokeholds, mandatory collection of data on police activity in Nevada by demographics, and legislation that would mandate independent, rather than internal, investigations into police misconduct.

While the ACLU has signed on in support of a call for repealing the death penalty, Welborn acknowledged that the request was a “heavier lift” and something like banning chokeholds or addressing SB242 is more “low-hanging fruit.”

Developers, trial lawyers face off over bill revising construction defect law changes made in 2015

A backhoe on a cleared lot

Usually, an in-depth discussion on the characteristics of expansive clay soil wouldn’t draw much attention outside of an engineering classroom or a construction site.

But on Tuesday, dozens of lobbyists and representatives from two of the most powerful industries in the state crowded committee rooms in Carson City and Las Vegas to hear that presentation amid an emotional hearing on a long-running point of contention: construction defect lawsuits.

The actual subject of the hearing was AB421, a bill heard by the Assembly Judiciary Committee that would reverse many of the substantive changes Republican lawmakers made in 2015 on lawsuits related to construction defect claims, a move derided by Democrats but lauded by Republicans including Gov. Brian Sandoval and developers as necessary to stem the growing tide of alleged “frivolous” lawsuits on residential construction defects.

Since the 2015 law was passed, the number of construction defect lawsuits has dwindled significantly — declining by nearly 90 percent from the 2014 peak, according to a study by Applied Analysis, with only 20 defect lawsuits filed statewide last year.

But newly won Democratic control of the governor’s office and both legislative chambers has both sides geared up again for a fight over the section of state law allowing homeowners to sue builders and contractors for shoddy or dangerous residential construction practices.

The hearing also brought into stark relief the bitter conflict between two of the state’s most powerful industries: trial attorneys and developers/real estate companies. Both were top campaign contributors during the 2018 election cycle; real estate companies and developers contributed more than $997,000 to legislators, while law firms and individual lawyers contributed $630,000 to lawmakers during the election cycle. The issue has spilled out of the Legislature; the Builder’s Association has run ads opposing the bill on social media, and Republican Sen. Ira Hansen — the sponsor of the 2015 bill — has placed ads on Facebook opposing the bill.

The measure doesn’t entirely replace the 2015 law, but reverses many of its primary provisions.

Notably, it would extend from six to 10 years the period after home construction in which a construction defect lawsuit can be brought and indefinitely if the defect is caused by fraudulent or willful misconduct. Prior to 2015, Nevada had a “complex” system for bringing construction defect cases, typically between six to 10 years after the home was built depending on whether defects were patent or latent, known to the contractor or caused by willful misconduct, with time added on if the defects were discovered in the last possible year a claim could be brought.

But the 2015 bill instituted the universal six-year time period in which to bring construction defect claims once the home is “substantially” completed. Although most defect claims relate to more obvious issues with a home — wrongly fitted doors or windows, issues with lights or plumbing — Tom Marsh, a civil and geotechnical engineer, gave lawmakers several examples of how the clay soil composition on which most homes in the state are built spelled the possibility of major foundational issues with home construction that wouldn’t be apparent until eight to 10 years after the home was built.

“It really takes time for these things to manifest,” he said.

The bill also amends the definition of a construction defect beyond something that “presents an unreasonable risk of injury to a person or property” to include any defect done in violation of local law or ordinances.  Attorney Ardea Canepa-Rotoli, a member of the Nevada Justice Association (the trial lawyers’ lobbying arm), told lawmakers that limitation meant a clearly dangerous defect or issue in a house would not be grounds for a civil construction defect lawsuit under the current law.

“Until or if that electrical code violation results in a fire, harming a person or property, it may not be considered to be a defect,” she said. “That’s just morally repugnant and just doesn't make sense."

The bill also removes certain pre-litigation requirements for homeowners, including a requirement that the homeowner be present when obtaining an expert opinion on the alleged defect, and a requirement for homeowners to first exhaust all warranties and limiting defect lawsuits to alleged defects denied by an insurer. It also removes prohibitions on homeowners associations to institute or to defend a defect lawsuit.

It also would remove limitations on recovery in lawsuits to only constructional defects proven by the claimant and allow for recovery of “reasonable” attorney’s fees. Canepa-Rotoli said many construction defect lawsuits were argued by attorneys working contingent fee contracts, as many homeowners cannot afford hourly rates for an attorney, so allowing recovery of those fees would allow more individuals to access the legal system.

Eva Segerblom, a trial attorney and member of the Nevada Justice Association, told lawmakers that the dwindling number of defect lawsuits was not because of higher construction standards but because the 2015 law made it nearly impossible to bring such a lawsuit.

“Unfortunately, this is not because all the homes in Nevada are being built without defects, but it is because the changes in the law have made it virtually impossible for homeowners to have a remedy,” she said. “The fact of the matter is that the current law puts all of the risk on the homeowner purchasing it.”

But a wide variety of lobbyists and representatives of the construction and real estate industry said that dwindling number was proof that pre-litigation dispute resolution processes were working, while helping keep down insurance and construction costs in a period of high demand for affordable housing.

Opponents pointed out that between 2000 and 2012, construction defect lawsuits in Nevada increased by more than 355 percent while home sales dropped by 86 percent, with a UNLV study finding homeowners in the state were 38 times more likely to be involved in such a lawsuit than the national average.

David Goldwater, a lobbyist for the homebuilding industry, said that the current construction defect system was set up to give homeowners as many opportunities as possible to quickly resolve issues with their home before going to court.

“I wish there was a bill you could vote for to force all builders to build the perfect house,” he told lawmakers. “I promise I’d work day and night to get that passed. The truth is, houses are not built perfectly, and when they are not, the home buyer needs fast and effective remedies. No one who buys a house wants a check from protracted litigation that lasts several years and drains them of time and resources.”

A study by Applied Analysis on behalf of the homebuilders found that the industry-wide cost to settle construction defect claims fell from an average of $32.1 million between 2010 and 2015 to just $3.8 million between 2016 and 2018. The study also estimated that costs fostered on all home sales as part of insurance and settlement costs related to construction defect lawsuits had fallen from an average of $5,000 to about $360, which advocates said allowed thousands of homeowners on the margins to access housing that they otherwise would be priced out of.

At the hearing, subcontractors, real estate agents and developers testified that approval of the bill would result in higher insurance rates and tougher barriers for housing development. Jesse Haw, a Reno-based contractor (and former state senator), told lawmakers that he and his brother’s company built their first residential subdivision in more than 14 years in 2016, which he credited to the 2015 changes in defect law. He warned that reversal of those changes would hurt smaller builders such as him the most.

“I’m here to tell you that private builders will be impacted the most,” Haw said. “My stock price doesn’t go down when I get sued; I simply go out of business.”

Updated at 9:50 a.m. to correct the name of the individual testifying on behalf of the bill.

Follow the Money: Law firms, lawyers gave $630,000 to Nevada lawmakers through 2018 campaign

Dozens of Nevada’s law firms or lawyers have long been major donors come election season.

In 2018, more than 240 lawyers, law firms or law-related PACs donated roughly $630,000 to 56 legislators, good for nearly 6 percent of all contributions to lawmakers during campaign cycle.

The figure — 38 percent smaller than the $1.03 million lawyers spent in the last cycle — represents a sharp decline for the 2018 midterms, which overall saw contributions increase by roughly $1 million compared to 2016.

With no presidential race, midterm elections generally see reduced interest from the electorate, equating to generally lower campaign fundraising totals across the board.

Nearly half of the money spent on legislators by lawyers and law firms came from Citizens for Justice, a political action committee representing the trial lawyer-comprised Nevada Justice Association. In total the group gave 54 legislators across both parties $305,000, with a median individual contribution of $2,500.

Outside the Citizens for Justice PAC, there were very few prototypical “large donors,” as many individual lawyers or law firms gave just one or two legislators anywhere from $200 to $5,000. Only three law firms — Las Vegas-based Eglet Prince ($68,000) and national firms Dickinson Wright ($16,500) and Holland & Hart ($13,750), each with branches in Las Vegas — gave more than $10,000, a stark contrast to industrial donors which often give on the order of hundreds of thousands of dollars.

Much of the total went to 41 legislative Democrats, who received almost $508,000 to the Republicans’ $123,000. Broken down by average contributions, Democrats received slightly more ($1,241) than their GOP counterparts ($1,104).

Although The Nevada Independent’s analysis covers a vast majority of campaign spending by law firms, it leaves out firms which lobby for corporate clients during the legislative session, including Lewis Roca Rothberger Christie and McDonald Carano. Contributions from these firms and their employees will be profiled in the coming weeks as our Follow the Money series continues.

Of the 63 legislators, seven received no contributions from lawyers or law firms. That group includes Assemblyman Chris Edwards, Assemblyman Gregory Hafen, Assemblywoman Robin Titus, Sen. Heidi Gansert, Sen. Scott Hammond and Sen. Pete Goicoechea, all Republicans, as well as Democratic Sen. David Parks.

The four senators not receiving contributions were not up for re-election in 2018.

Among all legislators, Democratic Sen. James Ohrenschall, who works as a public defender, received the most with $46,250. He was closely followed by Democratic Assemblyman Ozzie Fumo ($44,200), Democratic Assembly Speaker Jason Frierson ($33,350), Republican Sen. Keith Pickard ($33,200) and Democratic Assemblyman Steve Yeager ($28,950) — all lawyers.

Members of the 42-person Assembly took in a majority of total law firm donations, with $380,000 to the Senate’s $251,000. Assembly members also took in slightly more on average than their upper-chamber counterparts, $1,248 to $1,129 respectively.

As always, we’ve triple-checked the math. But if anything seems off, feel free to contact us at jacob@thenvindy.com.