BILL ANALYSIS Ó AB 1197 Page 1 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 AB 1197 Page 2 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 AB 1197 Page 3 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).), AB 1197 Page 4 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. AB 1197 Page 5 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 AB 1197 Page 6 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.) AB 1197 Page 7 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 AB 1197 Page 8 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." AB 1197 Page 9 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: AB 1197 Page 10 (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) AB 1197 Page 11 Consumer Watchdog Opposition None on file Analysis Prepared by:Khadijah Hargett / JUD. / (916) 319-2334