BILL ANALYSIS Ó
AB 1197
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Date of Hearing: April 14, 2015
ASSEMBLY COMMITTEE ON JUDICIARY
Mark Stone, Chair
AB 1197
(Bonilla) - As Amended April 6, 2015
As Proposed to be Amended
SUBJECT: Depositions: notice disclosure requirements
KEY ISSUE: Should deposition notices be required to include
disclosures of certain contractual relationships between parties
involved in the deposition?
SYNOPSIS
Existing law requires that certain information be provided to
all parties and some non-parties who will be involved in a
deposition. The required information encompasses the logistics
of the deposition, namely when it is scheduled, where it will be
held, who is to be deposed, any items that are supposed to be
produced at the deposition, and the means in which deposition
testimony will be taken by the court reporter (i.e. by
transcription, video, or another electronic means). The law
sets out the timeframe and manner in which the parties must
receive the deposition notice. This bill seeks to address an
unsavory practice in contractual relationships between defense
attorneys and court reporting companies. Insurance companies
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have moved into the legal arena by establishing long-term
contractual relationships with court reporting companies.
Insurance companies require their attorneys to utilize only the
contracted court reporting company for depositions, while the
court reporting company provides special services and discounted
rates to the insurer. The problem is that these special
services and discounted rates are being supplied to one party
for free, and are either costing the opposing party
significantly higher fees, or are not being offered to the other
party at all. Also, the services that are provided constitute
litigation support services, such as informational databases,
deposition databases, deposition summaries, digital data-all
services that are very expensive for the opposing party to
obtain in the marketplace. As a result, the defense obtains
basically free litigation support services, placing the opposing
party at a huge disadvantage. This bill seeks to level the
playing field by requiring the disclosure of these types of
contractual relationships in the deposition notice. This
disclosure will allow the party receiving the notice to object
in advance of the deposition to the use of specific court
reporters and reporting companies. There is no known opposition
to this bill.
SUMMARY: Requires that certain contractual relationships
between the parties to a deposition be disclosed to all parties
in the deposition notice. Specifically, this bill:
1)Requires a statement disclosing the existence of a contract,
if any, between the deposition officer or entity providing the
services of the deposition officer and the noticing party, or
a third party who is financing all or part of the action
requiring that party to use the officer or entity for any
service beyond the noticed deposition, be included.
2)Requires a statement disclosing that the party noticing the
deposition, has directed his or her attorney to use a
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particular officer or entity to provide services for the
deposition, if applicable.
3)Requires that if a party discloses a contractual relationship
or directive pursuant to this section, any other party may
object in writing at least three calendar days before the
deposition date to the use of that officer or entity.
4)Requires that a party shall personally serve an objection made
pursuant to this section in accordance with Code of Civil
Procedure Section 1011.
EXISTING LAW: A party desiring to take the oral deposition of
any person must give notice in writing. The notice must contain
all of the following:
1)The address where the deposition will be taken.
2)The date of the deposition, and the time it will commence.
3)The name of each deponent, and the address and telephone
number, if known, of any deponent who is not a party to the
action.
4)Specific information regarding any materials, including
materials that are electronically stored, that the deponent is
to bring or produce at the deposition.
5)Any intention that the party noticing the deposition has to
record the testimony by audio or video technology, in addition
to recording the testimony by a stenographic method, including
through instant visual display.
6)Any intention to reserve the right to use at trial a video
recording of deposition testimony of a treating or consulting
physician, or other expert witness testimony.
7)The form in which any electronically stored information is to
be produced, if a particular form is desired. (Code of Civil
Procedure Section 2025.200(a)(1)-(7).),
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FISCAL EFFECT: As currently in print this bill is keyed
non-fiscal.
COMMENTS: Under existing law, a deposition must be noticed to
all parties and relevant non-parties, prior to the actual
deposition. Requiring notice in advance allows all parties to
attend the deposition and to prepare for the deposition hearing.
AB 1197 uses the existing process of noticing a deposition to
facilitate disclosure to all parties of any existing contractual
relationships that may have an impact on the pending litigation.
It places the burden on the party noticing the deposition to
include several disclosures, when applicable. The required
disclosures include: 1) a statement of the existence of a
contract, if any between the party noticing the deposition and
or a third party who is financing any part of the action and
either: the deposition officer (court reporter) or the entity
providing the services of the deposition officer for any service
beyond the noticed deposition; and 2) a statement that the
noticing party directed his or her attorney to use a particular
officer or entity to provide services for the deposition, if
applicable. If a contractual relationship or directive is
disclosed, any party may object in writing to the use of that
officer or entity at least three calendar days prior to the
deposition date. The objection must be personally served in
accordance with existing law.
According to the author:
Unlike all other impartial judicial officers, court
reporters in depositions are independent contractors who
must ensure the integrity and accuracy of the record while
working in a private commercial setting. They are hired by
one of the parties in the deposition in what is frequently
hotly contested litigation.
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Often companies that provide deposition reporting services
enter into exclusive contracts with clients that are
regularly involved in litigation, in essence becoming the
"in house" reporting firm. Due to these exclusive
contracts, the court reporter and/or the company's
impartiality can be called into question.
Also as a result of these contractual relationships,
companies that provide deposition services often offer
cut-rate pricing for deposition services to maintain their
customer base. However, in order to make up for this
pricing scheme, these same companies drastically increase
the price per page when non-clients request copies of the
deposition. Non-clients have no choice but to pay these
inflated prices in order to obtain the copies.
AB 1197 will shed light upon these exclusive contracts by
requiring a statement disclosing the exclusive contract in
the notice of deposition and allowing any party to object
to the use of that deposition officer. Therefore all
parties to a deposition are aware of the potential issue
with deposition officer impartiality and price-gouging that
may result from the exclusive contract.
Background on the court reporters and their respective duties.
The court reporting industry has been one of the best industries
for women, because it has created "a long cherished, upwardly
mobile career path for women to enter [a] well-paying
professional world" where little less than 95 percent of the
licensees are women. Also known as deposition officers, there
are generally two types of licensed professional court reporters
that provide an invaluable service to the legal community.
"Official" court reporters are those who are full-time employees
that work in courtrooms reporting and transcribing official
proceedings. The other types of court reporters are known as
"freelancers" and are typically hired by attorneys to report
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depositions and other out-of-court proceedings. The duties that
they perform are heavily relied upon by both the courts and
legal parties. They have become such an important part of the
legal process that they have been referred to in California case
law as "ministerial officers of the court." With a clearly
defined role in legal matters, court reporters have no power to
judge the job that they perform, and their primary
responsibility is to impartially perform their duties. Court
reporters, who are considered officers of the court, take an
oath to remain impartial, which is intended to ensure that they
carry out a fair and credible administration of justice.
(Serrano v. Stefan Merli Plastering Co. (2008) 52 Cal.4th 1018,
1021.)
Exclusive contracts are creating a damaging effect on
litigation. In recent years the field of court reporting has
expanded into a larger, more corporate-driven business industry.
A disturbing trend has developed, threatening what was once a
unique economic opportunity for women. According to an article
published on the Consumer Watchdog web site, an increasing
number of large companies, such as those in the business of
insurance and construction, have entered the court reporting
arena. These larger companies are effectively running the
smaller, women-owned court reporting companies out of the
industry by establishing long-term contractual agreements with
court reporting agencies. After forming these contractual
alliances, these larger companies then require their counsels to
use specific agencies for all or most of the depositions noticed
on behalf of the corporation. In return for the guaranteed
business to these dedicated court reporting agencies, the large
company receives reduced fee and special services from the court
reporting agencies. Two of these special services, which among
others that have been targeted as being problematic, are
deposition databases and free deposition summaries. (Eric
Berkman, Court Reporters Make Special Deals with Insurers,
Consumer Watchdog, 10/18/1999.)
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The impact of reduced fees and free special services in exchange
for volume business. Reduced fees are exactly what they sound
like, requiring one party in a lawsuit to pay more for the same
deposition services offered to the other side for less because
of an existing contractual relationship. Deposition databases
are proprietary databases that may contain thousands of records,
including expert witnesses, expert witnesses' prior testimonies,
various transcripts, depositions, records of parties' and
experts' disciplinary actions, and other information that can be
compiled and customized into any number of desired reports that
are pertinent to the specifics of individual cases. These
databases are readily available for purchase, but they can be
very expensive. In the case of these contractual relationships,
one side of the legal action is getting this information for
free in exchange for guaranteed business. These databases are
considered problematic. Because of the very nature of their
composition and the data that they can readily produce, they
give a huge advantage to the party with access to the data.
They create a huge disadvantage to the non-receiving party
because that party lacks a tremendous resource which their
opponent has at their fingertips.
Deposition summaries are summaries of the deposition testimony
transcript and they simplify the work normally involved in
reviewing a deposition transcript because a party who receives
the summary does not have to sift through the entire deposition
transcript in order to gather the most relevant facts. In
larger cases with huge volumes of testimony, the opposing party
is again at a huge disadvantage when they lack such a valuable
tool to which the other side has. In many instances, the
opposing party is never given the opportunity to purchase these
litigation tools.
Other complaints regarding these special services are that
attorneys representing these large companies receive their
copies of deposition transcripts much faster than the opposing
party. This allows extra time for that attorney to look over
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the deposition transcript before a hearing, or to include
portions of the deposition transcript into their legal briefs.
Even in situations where the opposing party has the opportunity
to get a copy of the transcript in an expedited manner, the
costs can be prohibitive. In the legal world, these litigation
support services are viewed as unfair because they grant huge
advantages to one party and huge disadvantages to another.
Plaintiffs' lawyers are calling foul, arguing that these
"contract or agreements" amount to basically free litigation
support at their expense.
By requiring a disclosure of these existing contractual
relationships prior to the deposition hearing, opposing parties
have the opportunity to object and elect to have another agency
transcribe the deposition.
Reliability of court reporters, deposition transcripts and the
appearance of partiality. The complaints go even further
regarding these contractual relationships, with many wondering
whether the actual court reporters can remain neutral when they
are involved in these types of contractual relationships. If
one side is providing continued, and in some cases, exclusive
use of the same reporting service, is that side getting more
than just great services? Is it possible that they may be
getting a better deposition in the content, or in the manner in
which the transcript is being transcribed? Court reporters have
always been considered neutral and impartial court officers in
legal matters. However, more frequently the question is being
raised by plaintiffs' attorneys nationwide, whether the court
reporter and/or the transcript that is being produced by court
reporting companies in these relationships may still be granted
the assumption of being reliable? Persons and entities that
were at one time considered the "only impartial person in the
room" are now being viewed with suspicion and rising valid
concerns regarding the "appearance of partiality."
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By requiring that these relationships be disclosed to parties
who may be affected by them, AB 1197 allows the opposing party
the chance to perform any necessary due diligence in order to
determine if an objection is needed in order to ensure a fair
discovery process.
Some states have banned or restricted preferential agreements
between parties and court reporters. Due to the widespread use
of these exclusive contracts and the subsequent problems these
relationship present to the legal profession, many states have
stepped in to regulate these practices. Currently, 17 states
have prohibited or limited these relationships. This is a sign
that the concerns raised by legal professionals are being taken
into consideration in other states and show that this is a
widespread problem for attorneys and consumers.
This bill is a positive effort to protect consumers who
ultimately pay a cost for the existence of these practices.
There is a good chance that a statutory ban or restriction on
these contractual relationship agreements may eventually become
necessary. However, this bill takes a modest and reasonable
step in regulating these contractual relationships by requiring
disclosure of contractual relationships between parties involved
in the deposition, and allowing any party to object in
situations where this type of relationship may cause an unfair
disadvantage to the opposing party's case.
Author's Clarifying Amendment. In order to clarify the identity
of the parties and relationships between the parties that are at
issue for disclosure in the deposition notice, the author has
agreed to the following clarifying amendments:
On page 2, at line 20, delete lines 20-28 and insert the
following:
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(8) (A) A statement disclosing the existence of a contract, if
any, between the noticing party or a third party who is
financing all or part of the action and either:
(i) the deposition officer; or
(ii) the entity providing the services of the deposition
officer,
for any service beyond the noticed deposition.
(B) A statement disclosing that the party noticing the
deposition, or a third party who is financing all or part of
the action, directed his or her attorney to use a particular
officer or entity to provide services for the deposition, if
applicable.
ARGUMENTS IN SUPPORT: According to the sponsor, the Deposition
Reporters Association of California, Inc., "AB 1197 is a simple
approach consistent with current law and practice. The bill's
approach to disclosure and opportunity to object is consistent
with how questions of impartiality of judicial officers are
generally handled. [The] bill addresses important issues
regarding unfairness and cost-shifting in this important
profession and it does so in an easy-to-implement manner
consistent with current practice."
REGISTERED SUPPORT / OPPOSITION:
Support
Deposition Reporters Association of California, Inc. (sponsor)
California Official Court Reporters Association (COCRA)
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Consumer Watchdog
Opposition
None on file
Analysis Prepared by:Khadijah Hargett / JUD. / (916) 319-2334