BILL ANALYSIS Ó
AB 844
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Date of Hearing: May 4, 2015
ASSEMBLY COMMITTEE ON BANKING AND FINANCE
Matthew Dababneh, Chair
AB 844
(Bloom) - As Introduced February 26, 2015
SUBJECT: Search warrants: foreign corporations and foreign
limited liability companies
SUMMARY: Authorizes a foreign corporation and a foreign limited
liability company (LLC) to consent to service of process for a
search warrant by email or submission to a designated Internet
Web portal.
EXISTING STATE LAW:
1)Requires any domestic or foreign corporation, before it may be
designated as the agent for the purpose of service of process
of any entity, to file a certificate executed in the name of
the corporation by an officer thereof stating all of the
following:
a) The complete street address of its office or offices in
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this state, wherein any entity designating it as such agent
may be served with process;
b) The name of each person employed by it at each such
office to whom it authorizes the delivery of a copy of any
such process; and,
c) Its consent that delivery thereof to any such person at
the office where the person is employed shall constitute
delivery of any such copy to it, as such agent.
(Corporations Code, Section 1505)
2)Provides that delivery by hand of a copy of any process
against the corporation: to any natural person designated by
it as agent or, if a corporate agent has been designated, to
any person named in the latest certificate of the corporate
agent filed with the Secretary of State (SOS) at the office of
such corporate agent shall constitute valid service on the
corporation. (Corporations Code, Section 1701)
3)Prohibits a foreign corporation from transacting intrastate
business without having first obtained from the SOS a
certificate of qualification. To obtain that certificate it
shall file, on a form prescribed by the SOS, a statement and
designation signed by a corporate officer or, in the case of a
foreign association that has no officers, signed by a trustee
stating:
a) Its name and the state or place of its incorporation or
organization;
b) The street address of its principal executive office;
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c) The street address of its principal office within this
state, if any;
d) The mailing address of its principal executive office,
if different from the addresses specified above;
e) The name of an agent upon whom process directed to the
corporation may be served within this state, as specified;
f) Its irrevocable consent to service of process directed
to it upon the agent designated and to service of process
on the SOS if the agent so designated or the agent's
successor is no longer authorized to act or cannot be found
at the address given; and,
g) If it is a corporation which will be subject to the
Insurance Code as an insurer, it shall so state that fact.
(Corporations Code, Section 2105, subdivision (a))
4)Specifies that consent extends to service of process directed
to the foreign corporation's agent in California for a search
warrant issued pursuant to Section 1524.2 of the Penal Code,
or for any other validly issued and properly served search
warrant, for records or documents that are in the possession
of the foreign corporation and are located inside or outside
of this state. This subparagraph shall apply to a foreign
corporation that is a party or a nonparty to the matter for
which the search warrant is sought. For purposes of this
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subparagraph, "properly served" means delivered by hand, or in
a manner reasonably allowing for proof of delivery if
delivered by United States mail, overnight delivery service,
or facsimile to a person or entity listed, as specified.
(Corporations Code, Section 2105, subdivision (a)(6)(B))
5)States that delivery by hand of a copy of any process against
a foreign corporation (a) to any officer of the corporation or
its general manager in this state, or if the corporation is a
bank to a cashier or an assistant cashier, (b) to any natural
person designated by it as agent for the service of process,
or (c), if the corporation has designated a corporate agent,
to any person named in the latest certificate of the corporate
agent filed with the SOS shall constitute valid service on the
corporation. (Corporations Code, Section 2110)
6)Provides that a foreign LLC may apply for a certificate of
registration to transact business in this state by delivering
an application to the SOS for filing on a form prescribed by
the SOS. The application shall state all of the following:
a) The name of the foreign LLC, or an alternate name, as
specified;
b) The state or other jurisdiction under whose law the
foreign LLC is organized and the date of its organization
in that state or other jurisdiction, and a statement that
the foreign LLC is authorized to exercise its powers and
privileges in that state or other jurisdiction;
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c) The street address of the foreign LLCs principal office
and of its principal business office in this state, if any;
d) The name and street address of the foreign LLCs initial
agent for service of process in this state who meets the
qualifications specified. If a corporate agent is
designated, only the name of the agent shall be set forth;
e) A statement that the SOS is appointed the agent of the
foreign LLC for service of process if the agent has
resigned and has not been replaced or if the agent cannot
be found or served with the exercise of reasonable
diligence; and,
f) The mailing address of the foreign LLC if different than
the street address of the principal office, or principal
business office in this state. (Corporations Code, Section
17708.02, subdivision (a))
7)Requires, when properly served with a search warrant issued by
the California court, a foreign corporation subject to this
section to provide to the applicant, all records sought
pursuant to that warrant within five business days of receipt,
including those records maintained or located outside this
state. (Penal Code, Section 1524.2, subdivision (b)(1))
8)Defines a "search warrant" as an order in writing in the name
of the People, signed by a magistrate, directed to a peace
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officer, commanding him or her to search for a person or
persons, a thing or things, or personal property, and in the
case of a thing or things or personal property, bring the same
before the magistrate. (Penal Code, Section 1523)
9)States that a California corporation that provides electronic
communication services or remote computing services to the
general public, when served with a warrant issued by another
state to produce records that would reveal the identity of the
customers using those services, data stored by, or on behalf
of, the customer, the customer's usage of those services, the
recipient or destination of communications sent to or from
those customers, or the content of those communications, shall
produce those records as if that warrant had been issued by a
California court. (Penal Code, Section 1524.2, subdivision
(c))
10)Provides that the terms "electronic communication services"
and "remote computing services" shall be construed in
accordance with applicable federal law. (Penal Code, Section
1524.2, subdivision (a)(1))
11)Defines "properly served" as a search warrant has been
delivered by hand, or in a manner reasonably allowing for
proof of delivery if delivered by United States mail,
overnight delivery service, or facsimile to a person or entity
listed. (Penal Code, Section 1524.2, subdivision (a)(6))
12)States that a provider of wire or electronic communication
services or a remote computing service, upon the request of a
peace officer, shall take all necessary steps to preserve
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records and other evidence in its possession pending the
issuance of a search warrant or a request in writing and an
affidavit declaring an intent to file a warrant to the
provider. Records shall be retained for a period of 90 days
which shall be extended for an additional 90-day upon a
renewed request by the peace officer. (Penal Code, Section
1524.3, subdivision (d))
EXISTING FEDERAL LAW: The Stored Communications Act (the Act)
regulates access to electronic communications from providers of
electronic communications services. Under the Act a person is
prohibited from (1) intentionally accessing without
authorization a facility through which an electronic
communication service is provided; or (2) intentionally
exceeding an authorization to access that facility; and thereby
obtaining, altering or preventing the authorized access to a
wire or electronic communication while in electronic storage in
such a system. The Act requires governmental entities to obtain
a warrant prior to requiring a provider of electronic
communication service or remote computing service to disclose a
record or other information pertaining to a subscriber to or
customer of such service. (18 U.S.C. § 2701 et seq.)
FISCAL EFFECT: None.
COMMENTS:
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Need for the bill:
According to the author, "California's statutes definition of
"properly served" is out of date. The following forms of
service are permitted for a properly served search warrant"
"delivered by hand, or in a manner reasonably allowing for proof
of delivery if delivered by United States mail, overnight
delivery service, or facsimile." It is becoming increasingly
common for Internet Service Providers and others to insist on
electronic service of documents, either by email or via web
portal established for this purpose. The proposed legislation
would update the definition of "properly served" to comport with
today's technological innovations and modern business
practices."
Background:
Existing law prohibits foreign corporations and foreign LLCs
from transacting intrastate business without obtaining a
certificate of qualification from the SOS. Both a domestic and
foreign corporation must designate an agent for the purpose of
service of process when the foreign corporation or foreign LLC
files a certificate in the office of the SOS to transact
business in California. (Corp. Code, §§ 1505 and 2105.) An
agent for service of process is an individual who resides in the
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state, or a corporation, designated to accept court documents if
the business entity is sued. Designating a person or an entity
to receive service of process ensures that the corporation has
formal notice of a law suit and any related court documents. The
designated agent for service of process is also the entity upon
whom a search warrant would be served for records or documents
that are in the possession of the foreign corporation or foreign
LLC.
In order to be "properly served," the applicable statutes
require the court documents to be "delivered by hand, or in a
manner reasonably allowing for proof of delivery if delivered by
United States mail, overnight delivery service, or facsimile to
a person or entity listed, as specified." (Pen. Code, § 1524.2,
subd. (a)(6); Corp. Code, § 2105, subd. (a)(6)(B).)
This bill adds other means of notice as specified by the foreign
corporation or the foreign LLC, including email or submission
via an Internet web portal designated by the corporation for the
purpose of service of process.
Previous Legislation:
SB 467 (Leno), of the 2013-2014 Legislative Session, would have
required a search warrant when a governmental agency is seeking
the contents of a wire or electronic communication that is
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stored, held or maintained by a provider, as specified. AB 467
was vetoed.
SB 1980 (McPherson), Chapter 864, Statutes of 2002, created
state procedures, similar to those in federal law, for a
governmental entity to gather specified records, not including
the contents of stored communications, from a provider of
electronic communication service or a remote computing service
by search warrant.
SB 662 (Figueroa), Chapter 896, Statutes of 1999, established a
procedure for obtaining and serving a search warrant on a
foreign corporation that provides electronic communication
services or remote computing service to the general public and
is registered to do business in California.
Double-referral:
This measure passed out the Assembly Public Safety Committee on
consent.
REGISTERED SUPPORT / OPPOSITION:
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Support
Los Angeles County District Attorney's Office (Sponsor)
California Bankers Association
California District Attorneys Association (CDAA)
California State Sheriffs' Association (CSSA)
Opposition
None on file.
Analysis Prepared by:Kathleen O'Malley / B. & F. / (916)
319-3081
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