Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 2798 entitled:

begs leave to report as follows:

The purpose of this measure is to exempt housing cooperatives, planned community associations, and condominium associations from civil liability arising out of tortious acts committed by intoxicated underage drinkers.

The Mililani Town Association and Community Associations Institute, Hawaii Chapter testified in support of the measure. The Consumer Lawyers of Hawaii opposed the measure.

Under the State's social host liability law, a person twenty-one years or older who owns, occupies, or controls premises on which alcohol is consumed by persons under age twenty-one, who knows of such consumption, and who reasonably could have prevented such consumption shall be liable for injuries or damages caused by the underage drinker. This measure proposes to exempt housing cooperatives, planned community associations, and condominium associations from this liability.

Your Committee finds that community associations generally adopt rules governing the use of their recreational facilities that include a total prohibition against the serving of alcohol or against minors consuming alcohol. However, community associations are unable to monitor the actions of all persons on their premises at all times, and exercise a much lesser degree of control over persons on their property than homeowners or business establishments. The exemption in this measure would help to limit a community association's liability exposure and protect assets held by the association for the benefit of all homeowners.

While your Committee acknowledges the concerns of community associations regarding their potential liability under the social host liability law, your Committee notes that the law requires a high standard of proof before a party can be held liable and that an association that lacks knowledge of unauthorized drinking on its premises is not subject to liability. Further, it is uncertain whether this measure would effectively preclude an injured party from obtaining relief against a community association because no alternative remedy lies under the common law.

Finally, your Committee notes that no testimony was received from the Mothers Against Drunk Driving (MADD), which supported and was instrumental in the enactment of the original law, and that the organization's input on this substantive amendment to the law would assist the legislature in its deliberations.

In light of the above concerns, your Committee concludes that this measure merits further review and discussion. In order to facilitate the measure's further consideration, your Committee has inserted therein a delayed effective date of July 1, 2030.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2798, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2798, S.D. 1, and be referred to the Committee on Judiciary and Hawaiian Affairs.