BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2494|
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THIRD READING
Bill No: AB 2494
Author: Cooley (D)
Amended: 8/19/14 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE : 7-0, 6/24/14
AYES: Jackson, Anderson, Corbett, Lara, Leno, Monning, Vidak
SENATE APPROPRIATIONS COMMITTEE : 5-0, 8/14/14
AYES: De León, Hill, Lara, Padilla, Steinberg
NO VOTE RECORDED: Walters, Gaines
ASSEMBLY FLOOR : 78-0, 5/28/14 - See last page for vote
SUBJECT : Courts: frivolous actions or proceedings
SOURCE : Civil Justice Association of California
DIGEST : This bill authorizes a trial court to, until January
1, 2018, award reasonable expenses incurred as a result of
bad-faith actions or tactics that are "frivolous" or solely
intended to cause unnecessary delay by deleting language that
currently limits that authorization to actions or tactics
arising from a complaint filed or proceeding initiated on or
before December 31, 1994. This bill requires parties who file
motions for an award of costs for bad-faith actions or tactics
to transmit to the California Research Bureau (CRB) a copy of
various documents associated with the motions. This bill also
requires the CRB to maintain a public record of all information
transmitted related to each motion for at least three years,
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and, on or before January 1, 2017, requires the CRB to submit a
report to the Legislature examining the impact and effect of the
changes made by this bill's provisions.
ANALYSIS :
Existing law:
1. Provides that, subject to specified limitations, a court may
impose sanctions and punitive damages on an attorney, law
firm, or party who presents a paper to the court: (1) that
is presented primarily for an improper purpose; (2) that
contains claims, defenses, or other legal contentions
unsupported by either existing law or a non-frivolous
extension of existing law; (3) that contains allegations or
factual contentions that do not have evidentiary support and
are not likely to have evidentiary support after a reasonable
opportunity for discovery; or (4) that contains denials of
factual contentions that are not supported by evidence or
reasonable information and belief. If, after notice and a
reasonable opportunity to respond, the court determines there
has been a violation of this section, the court may, subject
to specified conditions, impose an appropriate sanction upon
the attorneys, law firms, or parties that have violated this
section or are responsible for the violation. In determining
what sanctions, if any, should be ordered, the court shall
consider whether a party seeking sanctions has exercised due
diligence.
2. Provides that a sanction imposed for violation of the above
shall be limited to what is sufficient to deter repetition of
this conduct or comparable conduct by others similarly
situated. Subject to specified limitations, the sanction may
consist of, or include, directives of a nonmonetary nature,
an order to pay a penalty into court, or, if imposed on
motion and warranted for effective deterrence, an order
directing payment to the movant of some or all of the
reasonable attorney's fees and other expenses incurred as a
direct result of the violation.
3. Provides that a motion for sanctions brought by a party or a
party's attorney primarily for an improper purpose, such as
to harass or to cause unnecessary delay or needless increase
in the cost of litigation shall itself be subject to a motion
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for sanctions. It is the intent of the Legislature that
courts shall vigorously use its sanctions authority to deter
that improper conduct or comparable conduct by others
similarly situated.
4. Provides that the above provisions shall apply to a
complaint or petition filed on or after January 1, 1995, and
any other pleading, written notice of motion, or other
similar paper filed in that matter.
5. Authorizes every trial court to order a party, the party's
attorney, or both to pay any reasonable expenses, including
attorney's fees, incurred by another party as a result of
bad-faith actions or tactics that are frivolous or solely
intended to cause unnecessary delay. Existing law provides
for relevant definitions and defines "frivolous" to mean (1)
totally and completely without merit, or (2) for the sole
purpose of harassing an opposing party. Existing law
definition of "actions or tactics" is limited to the making
or opposing of motions or the filing and service of a
complaint or cross-complaint only if the actions or tactics
arise from a complaint filed, or a proceeding initiated, on
or before December 31, 1994.
6. Provides that expenses can only be imposed on notice
contained in a party's moving or responding papers; or the
court's own motion, after notice and opportunity to be heard.
An order imposing expenses must be in writing and shall
recite in detail the conduct or circumstances justifying the
order.
7. Provides, in addition to any award for conduct described
above, the court may assess punitive damages against the
plaintiff upon a determination by the court that the
plaintiff's action was an action maintained by a person
convicted of a felony against the person's victim, or the
victim's heirs, relatives, estate, or personal
representative, for injuries arising from the acts for which
the person was convicted of a felony, and that the plaintiff
is guilty of fraud, oppression, or malice in maintaining the
action. Existing law provides that the liability imposed by
this provision is in addition to any other liability imposed
by law for acts or omissions within the purview of this
section.
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This bill:
1. Authorizes a trial court to, until January 1, 2018, award
reasonable expenses incurred as a result of bad-faith actions
or tactics that are "frivolous" or solely intended to cause
unnecessary delay by deleting language that currently limits
that authorization to actions or tactics arising from a
complaint filed or proceeding initiated on or before December
31, 1994.
2. Requires parties who file motions for an award of cost for
bad-faith actions or tactics to transmit to the CRB a copy of
various documents associated with the motions.
3. Requires the CRB to maintain a public record of all
information transmitted related to each motion for at least
three years, as specified.
4. Requires the CRB, on or before January 1, 2017, to submit a
report to the Legislature examining the impact and effect of
the changes made by this bill's provisions.
Background
Federal Rule of Civil Procedure (FRCP), Rule 11, which applies
to federal court proceedings (except for disclosures and
discovery requests, responses, objections, and motions),
requires that every pleading, written motion, and other paper be
signed by at least one attorney of record in the attorney's
name-or by a party personally if the party is unrepresented, as
specified. The rule provides that by presenting to the court a
pleading, written motion, or other paper-whether by signing,
filing, submitting, or later advocating it-an attorney or
unrepresented party certifies that to the best of the person's
knowledge, information, and belief, formed after an inquiry
reasonable under the circumstances: (1) it is not being
presented for any improper purpose, such as to harass, cause
unnecessary delay, or needlessly increase the cost of
litigation; (2) the claims, defenses, and other legal
contentions are warranted by existing law or by a nonfrivolous
argument for extending, modifying, or reversing existing law or
for establishing new law; (3) the factual contentions have
evidentiary support or, if specifically so identified, will
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likely have evidentiary support after a reasonable opportunity
for further investigation or discovery; and (4) the denials of
factual contentions are warranted on the evidence or, if
specifically so identified, are reasonably based on belief or a
lack of information. (FRCP Rule 11(b).) If, after notice and a
reasonable opportunity to respond, the court determines that
this rule has been violated, the court may impose an appropriate
sanction on any attorney, law firm, or party that violated the
rule or is responsible for the violation, as specified.
As reflected in the Advisory Committee notes to the 1993
amendments to Rule 11, "the purpose of Rule 11 sanctions is to
deter rather than to compensate" - hence the requirement that
any imposed monetary sanction should ordinarily be paid into
court as a penalty. "However, under unusual circumstances,
particularly for (b)(1) violations, deterrence may be
ineffective unless the sanction not only requires the person
violating the rule to make a monetary payment, but also directs
that some or all of this payment be made to those injured by the
violation. Accordingly, the rule authorizes the court, if
requested in a motion and if so warranted, to award attorney's
fees to another party."
In 1994, California adopted the requirements set forth in FRCP
Rule 11 and applied those requirements to cases filed on or
after January 1, 1995. For cases filed on or before December
31, 1994, the prior statute (Code of Civil Procedure Section
128.5) continued to apply and permitted a trial court, after
notice and hearing, to order a party to pay reasonable expenses,
including attorney's fees incurred by another party as a result
of bad-faith actions or tactics that are frivolous or solely
intended to cause unnecessary delay. "Frivolous," for these
purposes, is defined to mean totally and completely without
merit, or for the sole purpose of harassing an opposing party.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Unknown, potentially significant costs (General Fund) to the
CRB to collect and maintain the documents as public records
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for at least three years. Costs would be dependent on the
volume of documents sent via facsimile or electronic mail and
level of usage of this process.
One-time costs of about $25,000 to $30,000 (General Fund) for
the CRB to prepare and submit the legislative report.
SUPPORT : (Verified 8/14/14)
Civil Justice Association California (source)
American Chemistry Council
Associated Builders and Contractors of California
Association of California Insurance Companies
California Apartment Association
California Association of Health Facilities
California Building Industry Association
California Business Properties Association
California Chamber of Commerce
California Farm Bureau Federation
California Grocers Association
California Hotel and Lodging Association
California Retailers Association
California Manufacturers and Technology Association
Citizens Against Lawsuit Abuse
National Federation of Independent Business
The Doctors Company
San Diego County Apartment Association
Sempra Utilities
U.S. Chamber Institute for Legal Reform
ARGUMENTS IN SUPPORT : The sponsor of this bill, the Civil
Justice Association of California, adds, "Our legal system
requires attorneys to zealously advocate on behalf of their
clients. This bill continues to encourage both sides to
zealously advocate, while reinstating a deterrent to
reprehensible tactics in litigation. Awards would only be made
if the behavior was not only meritless, but also made in
bad-faith (Dolan v. Buena Engineers, Inc., 24 Cal.App.4th 1500
(1994)). This is a very high standard and courts are mindful
that sanctions should be used sparingly in the clearest of cases
to deter the most egregious of conduct (In re Marriage of
Flaherty, 31 Cal.3d 637 (1982)). While AB 2494 will not
eliminate all bad conduct, it will certainly dissuade some of
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the worst conduct. Any reduction of such activity will reduce
the burdens to all who use and need California's judicial
system."
ASSEMBLY FLOOR : 78-0, 5/28/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell,
Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Holden,
Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Mansoor, Medina, Melendez, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, John A.
Pérez, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Frazier, Vacancy
AL:d 8/18/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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