BILL ANALYSIS Ó
SENATE COMMITTEE ON PUBLIC SAFETY
Senator Loni Hancock, Chair
2015 - 2016 Regular
Bill No: AB 844 Hearing Date: June 9, 2015
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|Author: |Bloom |
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|Version: |February 26, 2015 |
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|Urgency: |No |Fiscal: |No |
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|Consultant:|MK |
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Subject: Search Warrants: Foreign Corporations and Foreign
Limited Liability Companies
HISTORY
Source: Los Angeles District Attorney's Office
Prior Legislation:SB 1980 (McPherson) Ch. 864, Statutes of 2002
SB 662 (Figueroa) Ch. 896, Statutes of 1999
Support: California Bankers Association; California District
Attorneys Association; California State Sheriffs'
Association
Opposition:None known
Assembly Floor Vote: 77 - 0
PURPOSE
The purpose of this bill is to authorize a foreign corporation
and foreign limited liability company to consent to service of
process for a search warrant by email or submission to a
designated Internet Web portal.
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Existing law 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, § 1524.2, subd. (b)(1).)
Existing law defines a "search warrant" as an order in writing
in the name of the People, signed by a magistrate, directed to a
peace 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, § 1523.)
Existing law 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, § 1524.2, subd. (c).)
Existing law provides that the terms "electronic communication
services" and "remote computing services" shall be construed in
accordance with applicable federal law. (Penal Code, § 1524.2,
subd. (a)(1).)
Existing law 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, § 1524.2, subd. (a)(6).)
Existing law 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
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preserve 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, § 1524.3, subd. (d).)
Existing law 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:
The complete street address of its office or offices in
this state, wherein any entity designating it as such agent
may be served with process;
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
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, § 1505.)
Existing law provides that delivery by hand of a copy of any
process against the corporation (a) to any natural person
designated by it as agent or (b), 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 at the office
of such corporate agent shall constitute valid service on the
corporation. (Corporations Code, § 1701.)
Existing law prohibits a foreign corporation from transacting
intrastate business without having first obtained from the
Secretary of State a certificate of qualification. To obtain
that certificate it shall file, on a form prescribed by the
Secretary of State, 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:
Its name and the state or place of its incorporation or
organization;
The street address of its principal executive office;
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The street address of its principal office within this
state, if any;
The mailing address of its principal executive office,
if different from the addresses specified above;
The name of an agent upon whom process directed to the
corporation may be served within this state, as specified;
Its irrevocable consent to service of process directed
to it upon the agent designated and to service of process
on the Secretary of State 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
If it is a corporation which will be subject to the
Insurance Code as an insurer, it shall so state that fact.
(Corp. Code, § 2105, subd. (a).)
Existing law 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 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, § 2105, subd. (a)(6)(B).)
Existing law 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 Secretary of State shall
constitute valid service on the corporation. (Corporations Code,
§ 2110.)
Existing law provides that a foreign limited liability company
may apply for a certificate of registration to transact business
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in this state by delivering an application to the Secretary of
State for filing on a form prescribed by the Secretary of State.
The application shall state all of the following:
The name of the foreign limited liability company, or an
alternate name, as specified;
The state or other jurisdiction under whose law the
foreign limited liability company is organized and the date
of its organization in that state or other jurisdiction,
and a statement that the foreign limited liability company
is authorized to exercise its powers and privileges in that
state or other jurisdiction;
The street address of the foreign limited liability
company's principal office and of its principal business
office in this state, if any;
The name and street address of the foreign limited
liability company's 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;
A statement that the Secretary of State is appointed the
agent of the foreign limited liability company 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
The mailing address of the foreign limited liability
company if different than the street address of the
principal office, or principal business office in this
state. (Corp. Code, § 17708.02, subd. (a).)
Existing federal law, the Stored Communications 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
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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.)
This bill would allow a foreign corporation or foreign limited
liability company to consent to service of process for a search
warrant by email or submission to a designated Internet Web
portal.
RECEIVERSHIP/OVERCROWDING CRISIS AGGRAVATION
For the past eight years, this Committee has scrutinized
legislation referred to its jurisdiction for any potential
impact on prison overcrowding. Mindful of the United States
Supreme Court ruling and federal court orders relating to the
state's ability to provide a constitutional level of health care
to its inmate population and the related issue of prison
overcrowding, this Committee has applied its "ROCA" policy as a
content-neutral, provisional measure necessary to ensure that
the Legislature does not erode progress in reducing prison
overcrowding.
On February 10, 2014, the federal court ordered California to
reduce its in-state adult institution population to 137.5% of
design capacity by February 28, 2016, as follows:
143% of design bed capacity by June 30, 2014;
141.5% of design bed capacity by February 28, 2015; and
137.5% of design bed capacity by February 28, 2016.
In February of this year the administration reported that as "of
February 11, 2015, 112,993 inmates were housed in the State's 34
adult institutions, which amounts to 136.6% of design bed
capacity, and 8,828 inmates were housed in out-of-state
facilities. This current population is now below the
court-ordered reduction to 137.5% of design bed capacity."(
Defendants' February 2015 Status Report In Response To February
10, 2014 Order, 2:90-cv-00520 KJM DAD PC, 3-Judge Court, Coleman
v. Brown, Plata v. Brown (fn. omitted).
While significant gains have been made in reducing the prison
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population, the state now must stabilize these advances and
demonstrate to the federal court that California has in place
the "durable solution" to prison overcrowding "consistently
demanded" by the court. (Opinion Re: Order Granting in Part and
Denying in Part Defendants' Request For Extension of December
31, 2013 Deadline, NO. 2:90-cv-0520 LKK DAD (PC), 3-Judge Court,
Coleman v. Brown, Plata v. Brown (2-10-14). The Committee's
consideration of bills that may impact the prison population
therefore will be informed by the following questions:
Whether a proposal erodes a measure which has contributed
to reducing the prison population;
Whether a proposal addresses a major area of public safety
or criminal activity for which there is no other
reasonable, appropriate remedy;
Whether a proposal addresses a crime which is directly
dangerous to the physical safety of others for which there
is no other reasonably appropriate sanction;
Whether a proposal corrects a constitutional problem or
legislative drafting error; and
Whether a proposal proposes penalties which are
proportionate, and cannot be achieved through any other
reasonably appropriate remedy.
COMMENTS
1. Need for This Bill
According to the author:
AB 844 would amend the definition of "properly
served" in PC§1524.2(a)(6) to reflect the common and
increasingly prevalent practice of communications
and computing service companies to insist on
electronic service of process. Such policies may
request that service be by email, or via a web
portal provided by the company.
2. Service of Process
Existing law requires both a domestic and foreign corporation to
designate an agent for the purpose of service of process when
the corporation files a certificate in the office of the
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Secretary of State to transact business in California.
(Corporations Code, §§ 1505 and 2105.) An agent for service of
process is an individual who resides in the 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. 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 limited liability company, including
email or submission via an Internet web portal designated by the
corporation for the purpose of service of process.
3. Support
According to the sponsor, the Los Angeles County District
Attorney's Office:
Evidence such as text messages, email, mobile app
data, IP logs, photos and documents stored in the
cloud, and countless other kinds of electronically
stored information have become vital sources of
evidence for criminal prosecutions. This evidence is
in the hands of third party companies that are often
located outside of California. Fortunately, there are
state and federal laws that work in tandem to give us
authority not only to obtain this evidence but also to
admit in it court expediently. Unfortunately,
however, the enabling state statute has not kept up
with new methods for service of process. The
California law does not explicitly recognize
electronic service of process other than by facsimile.
Federal law governs the collection of electronic
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communications<1> from providers of electronic
communications services (ECS) and remote computing
services (RCS). The Stored Communications Act governs
the collection of such evidence when it is in storage
(i.e., in situations other than a wiretap)<2>. The
SCA requires covered entities to honor government
requests to preserve and turn over information about
subscribers and their transactions and stored
communications.<3> The SCA requires that a covered
entity honor a properly issued search warrant from any
state court of "general criminal jurisdiction"
"authorized by the law of that State to issue search
warrants".<4>
California has a complementary statute governing the
collection of such evidence from remote computing and
electronic communications services. Cal. Pen. Code §
1524.2 requires that California corporations and
foreign corporations qualified to business in our
state honor search warrants for information about
subscribers and their transactions and stored
communications, wherever those records are stored.<5>
For good measure, Cal. Corp. Code § 2105 specifically
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<1> ECPA broadened the definition of "electronic
communications" to include just about any electronically stored
information, with a few exceptions. 18 U.S. Code § 2510(12)
"electronic communication" means any transfer of signs, signals,
writing, images, sounds, data, or intelligence of any nature
transmitted in whole or in part by a wire, radio,
electromagnetic, photoelectronic or photooptical system that
affects interstate or foreign commerce, but does not include
[voice, tone-only pagers, tracking devices, electronic funds
transfers].
<2> 18 U.S. Code § 2703
<3> 18 U.S. Code § 2703(a), 18 U.S. Code § 2703(d)
<4> 18 U.S. Code § 2711(3)(B)
<5> Cal. Pen. Code § 1524.2. Cal. Corp. Code § 102. Cal. Corp.
Code § 2105.
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requires foreign corporations to consent to service
pursuant to PC§1524.2.
A problem is that the statute's definition of
"properly served" is out-of-date. The following forms
of service are permitted: "delivered by hand, or in a
manner reasonably allowing for proof of delivery if
delivered by United States mail, overnight delivery
service, or facsimile?"<6> It is becoming
increasingly common for ISP's and others to insist on
electronic service, either by email or via a web
portal established for this purpose.<7>
The proposed legislation would update the
definition of "properly served" to comport with
today's technological innovations and modern business
practices.
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<6> PC§1524.2(a)(6)
<7> Facebook and Ebay/PayPal are two companies that have
established web portals for the exclusive use of law
enforcement. Yahoo!, T-Mobile, Pinger, and CapitalOne are
examples of the new norm, which is service by email.