BILL ANALYSIS                                                                                                                                                                                                    



                                                                    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