BILL ANALYSIS Ó AB 2494 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 2494 (Cooley) As Amended August 19, 2014 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |78-0 |(May 28, 2014) |SENATE: |35-0 |(August 25, | | | | | | |2014) | ----------------------------------------------------------------- Original Committee Reference: JUD. SUMMARY : Provides an additional tool for sanctions of bad faith actions and tactics. Specifically, this bill : 1)Provides that a trial court may order a party, the party's attorney, or both to pay the 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, as defined. 2)Provides that expenses pursuant to this bill shall not be imposed except on notice contained in a party's moving or responding papers or, on the court's own motion, after notice and opportunity to be heard. An order imposing expenses shall be in writing and shall recite in detail the conduct or circumstances justifying the order. 3)Provides that in addition to any award pursuant to this bill for conduct described in of Code of Civil Procedure (CCP) Section 128.5(a), the court may assess punitive damages against the plaintiff on 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. 4)Provides that any sanction imposed pursuant to this bill shall be imposed consistently with the standards, conditions and procedures set forth in subdivisions (c), (d), and (h) of CCP Section 128.7. 5)Provides that the liability imposed by this bill is in AB 2494 Page 2 addition to any other liability imposed by law for acts or omissions within the purview of this bill. 6)Specifies that the foregoing shall not apply to disclosures and discovery requests, responses, objections, and motions. 7)Provides that a party who files a motion pursuant to CCP Section 128.5 shall, promptly upon filing, transmit to the California Research Bureau of the California State Library (CRB), by email, a copy of the endorsed, filed caption page of the motion or opposition, a copy of any related notice of appeal or petition for a writ, and a conformed copy of any order issued pursuant to this section, including any order granting or denying the motion, as well as a notice of any corresponding motion under CCP Section 128.7. 8)Provides that this bill shall remain in effect only until January 1, 2018, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2018, deletes or extends that date. 9)Provides that on or before January 1, 2017, the CRB shall submit a report to the Legislature examining the impact and effect of this act, as specified and shall maintain a public record of information transmitted pursuant to it for at least three years, or until this act is repealed, whichever occurs first and may store the information on microfilm or other appropriate electronic media. The Senate amendments add the CRB notification requirement, shift the required report to the Legislature from the Judicial Council to the CRB, shorten the date for the report, and delete the condition that the bill be effective upon receipt of private funding. FISCAL EFFECT : According to the Senate Appropriations Committee: 1)Unknown, potentially significant costs (General Fund) to the CRB to collect and maintain the documents as public records 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. AB 2494 Page 3 2)One-time costs of about $25,000 to $30,000 (General Fund) for the CRB to prepare and submit the legislative report. COMMENTS : The author explains the reason for the bill as follows: Existing law until 1995 provided that litigants subject to bad-faith and unmeritorious tactics could seek sanctions in the form of attorney's fees (CCP 128.5). Many thought the bar to use this provision was too high because the statute had been interpreted to require both an objective standard that the act was without merit and a subjective bad-faith motive, which was difficult to prove. Thus, in 1995 CCP 128.7 was enacted. This also brought California into alignment with federal law (FRCP's [Federal Rule of Civil Procedure] Rule 11) and imposed a lower threshold for sanctions against an attorney by only requiring the attorney's conduct be objectively unreasonable. Unfortunately, it stopped the applicability of CCP 128.5 as applied to bad-faith tactics outside the scope of filing frivolous pleadings. Unfortunately, bad-faith disobedience and tactics by either side are needlessly employed in litigation. It can result in clogging our courts and wasting precious judicial resources. Courts routinely give litigants the benefit of the doubt, but they have lost an important tool used to ensure bad faith actions that can materially harm the other party or the fairness of a trial are discouraged. Under existing law a court can compel obedience with a court order, but financially the most a court can do if a party violates one is find them in contempt with penalty of up to $1500. Moreover, if a case ends in a mistrial or in the release of protected documents it is difficult to undo the waste of judicial resources or harm done to the litigant who was not at fault. Similarly, supporters note that the effect of the bill would be to allow for sanctions for violation of a court order. There is no opposition on file. This measure makes clear that it is intended to be read in AB 2494 Page 4 harmony with the salutary cognate provisions of CCP Section 128.7. Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334 FN: 0005452