BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2015-2016 Regular Session
AB 1197 (Bonilla)
Version: June 23, 2015
Hearing Date: July 7, 2015
Fiscal: No
Urgency: No
RD
SUBJECT
Deposition notices
DESCRIPTION
This bill would require that a deposing party include in its
deposition notice to the person it seeks to depose:
a statement disclosing the existence of a contract, if any,
for any service beyond the noticed deposition, between the
noticing party or a third party who is financing all or part
of the action and either the deposition officer or the entity
providing the services of the deposition officer; and
a statement disclosing that the party noticing the deposition,
or a third party 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.
BACKGROUND
Court reporters, also known as "shorthand reporters," not only
transcribe courtroom proceedings, but also serve as judicial
officers overseeing a deposition. (See Civ. Code Sec.
2025.320.) Because they serve to provide true and accurate
records of trial proceedings (such as witness testimony, or
court orders), as well as depositions conducted by parties in
the pursuit or defense of their cases, the impartiality of these
officers of the court must be maintained, irrespective of
whether they are providing these services inside, or outside, of
the courtroom. Of particular importance for this bill, is the
issue of impartiality of deposition reporters. In this regard,
California law prohibits a deposition officer from being
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financially interested in the action and or serving as a
deposition officer if he or she is a relative or employee of any
attorney of the parties, or of any of the parties. California
law further requires that, if the deposition officer or the
entity providing the services of the deposition officer offers
or provides any services and products to any party or to any
party's attorney or third party who is financing all or part of
the action, the deposition officer or entity also must offer the
same to all parties or their attorneys attending the deposition,
at the same time. Violations of these laws by any person can
result in a civil penalty of up to $5,000. (Id.)
More generally, California regulations also require that every
person under the jurisdiction of the Court Reporters Board who
holds a license or certificate, or business that renders
professional services, namely shorthand reporting services,
within the meaning of the Moscone-Knox Professional Corporation
Act, complies with certain professional standards of practice.
These include, for example: (1) not entering into, arranging,
or participating in a relationship that compromises the
impartiality of the certified shorthand reporter, including, but
not limited to, a relationship in which compensation for
reporting services is based upon the outcome of the proceeding;
and (2) neither directly nor indirectly giving or receiving any
gift, incentive, reward, or anything of value to or from any
person or entity associated with a proceeding being reported,
other than the receipt of compensation for reporting services,
except where the items that do not exceed $100 (in the aggregate
for any combination of items given and/or received) per calendar
year or where the certified shorthand reporter reasonably
expects to be reimbursed from the Transcript Reimbursement Fund
for services provided free of charge or otherwise provided the
services for an "indigent person" as specified. (16 C.C.R. Sec.
2475(b)(6)-(8).)
This bill seeks to now require additional disclosures in a
deposing party's notice of deposition to a person it seeks to
depose, based upon concerns relating to ongoing financial
relationships, beyond a particular deposition, between the
deposing party and the person or entity providing deposition
reporting services in that particular deposition. Currently, a
deposing party must disclose certain information relating to the
deposition to the person that it seeks to depose in a notice of
deposition. This information, for example, includes the time
and place of the deposition, as well as what, if any, materials
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the deponent needs to bring or produce at the deposition. If
the party fails to make the required disclosures, the person
being deposed may object to the sufficiency of that notice
pursuant to the procedures provided in the Code of Civil
Procedure, which requires that the objecting party promptly
serve any written objections on the party seeking to take the
deposition and any other attorney or party on whom the
deposition notice was served, specifying the error or
irregularity, at least three calendar days prior to the date for
which the deposition is scheduled, as specified.
Under these provisions, any party, person, or attorney who
unsuccessfully makes or opposes a motion to quash a deposition
notice faces the imposition of specified monetary sanctions,
unless the court finds that the individual subject to the
sanction acted with substantial justification or that other
circumstances make the imposition of the sanction unjust. (See
Code Civ. Proc. Secs. 2025.220, 2025.410.)
This bill would require a deposing party to also provide in its
deposition notice to the deponent: (1) a statement disclosing
the existence of a contract for any service beyond the noticed
deposition, between the noticing party or a third party who is
financing all or part of the action and either the deposition
officer or the entity providing the services of the deposition
officer; and (2) a statement disclosing that the party noticing
the deposition, or a third party 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.
CHANGES TO EXISTING LAW
Existing law generally requires that a deposition be conducted
under the supervision of an officer who is authorized to
administer an oath and is subject to all of the following
requirements, among others:
the officer must not be financially interested in the action
and shall not be a relative or employee of any attorney of the
parties, or of any of the parties;
services and products offered or provided by the deposition
officer or the entity providing the services of the deposition
officer to any party or to any party's attorney or third party
who is financing all or part of the action must be offered to
all parties or their attorneys attending the deposition, at
the same time; and
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the deposition officer or the entity providing the services of
the deposition officer must not do either of the following:
(1) provide to any party or any party's attorney or third
party who is financing all or part of the action any service
or product consisting of the deposition officer's notations or
comments regarding the demeanor of any witness, attorney, or
party present at the deposition; or (2) collect any personal
identifying information about the witness as a service or
product to be provided to any party or third party who is
financing all or part of the action. (Code Civ. Proc. Sec.
2025.320.)
Existing law further provides that any objection to the
qualifications of the deposition officer is waived unless made
before the deposition begins or as soon thereafter as the ground
for that objection becomes known or could be discovered by
reasonable diligence. (Code Civ. Proc. Sec. 2025.320(e).)
Existing law provides that violation of the above provisions by
any person may result in a civil penalty of up to $5,000 imposed
by a court of competent jurisdiction. (Code Civ. Proc. Sec.
2025.320(f).)
Existing law requires that a party desiring to take the oral
deposition of any person give notice in writing to that person,
stating certain information, such as:
the address where the deposition will be taken;
the date of the deposition, selected pursuant to specified
law, and the time it will commence;
the name of each deponent, and the address and telephone
number, if known, of any deponent who is not a party to the
action or, if the name of the deponent is not known, a general
description sufficient to identify the person or particular
class to which the person belongs;
the specification with reasonable particularity of any
materials or category of materials, including any
electronically stored information, to be produced by the
deponent; and
any intention by the party noticing the deposition to record
the testimony by audio or video technology, in addition to
recording the testimony by the stenographic method as required
under existing law, and any intention to record the testimony
by stenographic method through the instant visual display of
the testimony. (Code Civ. Proc. Sec. 2025.220(a).)
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Existing law provides that any party served with a deposition
notice that does not comply with specified deposition notice
requirements waives any error or irregularity unless that party
promptly serves a written objection specifying that error or
irregularity at least three calendar days prior to the date for
which the deposition is scheduled, on the party seeking to take
the deposition and any other attorney or party on whom the
deposition notice was served. Existing law provides that if an
objection is made three calendar days before the deposition
date, the objecting party must make personal service of that
objection, pursuant to specified law, on the party who gave
notice of the deposition. (Code Civ. Proc. Sec. 2025.410(a),
(b).)
Existing law further provides that any deposition taken after
the service of a written objection shall not be used against the
objecting party under specified law, if the party did not attend
the deposition and if the court determines that the objection
was a valid one. (Code Civ. Proc. Sec. 2025.410(b).)
Existing law provides, in addition to serving this written
objection, a party must also move for an order staying the
taking of the deposition and quashing the deposition notice.
This motion must be accompanied by a meet and confer
declaration, under specified law, and the taking of the
deposition is stayed pending the determination of this motion.
(Code Civ. Proc. Sec. 2025.410(c).)
Existing law requires the court to impose a monetary sanction,
under specified law, against any party, person, or attorney who
unsuccessfully makes or opposes a motion to quash a deposition
notice, unless it finds that the one subject to the sanction
acted with substantial justification or that other circumstances
make the imposition of the sanction unjust. (Code Civ. Proc.
Sec. 2025.410(d).)
This bill would require that the following also be included in
the deposition notice:
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 of the following for any
service beyond the noticed deposition:
o the deposition officer; or
o the entity providing the services of the deposition
officer.
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A statement disclosing that the party noticing the deposition,
or a third party 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.
COMMENT
1. Stated need for the bill
According to the author:
There are numerous potential problems that arise under the
existence of ongoing contracts for deposition services.
First, is the potential for (or the perception of) court
reporter impartiality that occurs when ongoing contracts
effectively make the court reporting firm the "in-house"
provider of services for certain companies. Second, ongoing
contracts increase the possibility of cost shifting onto the
cost of deposition copies. Long-term contracts are often
associated with cheap rates for service. Unfortunately, one
tactic used to recoup the money lost under the contracts is to
increase the cost of copies of the deposition notice, a
practice known as cost shifting. Opposing counsel has no
choice but to use the contracted firm to order copies while at
the same time unaware of the ongoing contract which could lead
to cost shifting. AB 1197 would correct this issue by making
all parties aware of the contract and thus more sensitive to
price discrepancies over time.
[Specifically,] AB 1197 requires a disclosure statement to be
included on the deposition notice that increases the awareness
of all parties to a deposition of the existence of ongoing
contracts for services. AB 1197 requires the disclosure of
ongoing contracts (both oral and written) to be included in
the notice of deposition that exist between the noticing party
or a third party financing the deposition and either of the
following: 1) the deposition officer or 2) the entity
providing the services of the deposition officer. However, in
certain cases lawyers may be unaware of the existence of an
ongoing contract. Still, these lawyers would be directed by
the noticing party or a third party financing the deposition
to use a particular deposition officer or entity to provide
deposition services. In these cases, a disclosure statement
must also be included in the deposition notice that the lawyer
was directed to use a particular officer or entity providing
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deposition services.
In support of the bill, Consumer Watchdog writes that "[t]he
integrity of the judicial system depends on the public's
perception that the process is fair. Court reporters are
supposed to be impartial officers of the court, but some non
licensee-owned court reporting corporations are entering into
ongoing, one-sided financial relationships with parties to
litigation who have no ethical obligations. These corporations
are also often aiding one side in litigation by providing
litigation support services in the very same proceeding in which
they are supposedly providing impartial court reporting
services. Worse, the other parties to the litigation are often
charged more for transcript copies to make up the difference for
the discount that the contracting party is given on transcript
costs. [ . . . ] AB 1197 will simply require that the attorney
preparing the notice of deposition include in the notice one
additional line disclosing: (1) whether there exists a contract
between his or her party-client and the reporting firm being
hired to transcribe the deposition; or (2) if that is unknown,
whether the lawyer's party-client has instructed the lawyer to
use a particular reporting firm. Upon disclosure, the bill
affords the other parties the opportunity to inquire and/or to
object, invoking current law's rules and process for objections
to depositions."
2. Bill seeks to enhance awareness of ongoing relationships
between depositing attorneys and deposition officers
This bill seeks to address concerns relating to the impartiality
of a deposition officer who has an ongoing contractual
relationship with a particular attorney or law firm by requiring
that the deposing party disclose any such relationship to the
other party it seeks to depose. Under existing law, a deposing
party must already make certain disclosures in a notice to the
person it seeks to depose, such as the time and location of the
deposition. This bill would now require that the deposing party
also disclose in its deposition notice if it (the deposing party
noticing the deposition), or a third party who is financing all
or part of the action, has a contract with either the deposition
officer or the entity providing the services of the deposition
officer, for any service beyond the noticed deposition; as well
as whether the depositing party noticing the deposition or a
third party financing all or part of the action has directed his
or her attorney to use a particular deposition officer or entity
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to provide services for the deposition, if applicable. In the
absence of a contractual relationship or a direction to use a
particular deposition reporter, no additional disclosure would
be required.
As a matter of public policy, the importance of the
transcription function performed by court reporters (also known
as shorthand reporters), including deposition reporters, in
relation to the administration of justice, cannot be overstated.
Under California law, the report of the official reporter, or
the official reporter pro tempore, of any court, duly appointed
and sworn, when transcribed and certified as being a correct
transcript of the testimony and proceedings in the case, serves
as prima facie evidence of the testimony and proceedings. (Code
Civ. Proc. Sec. 273(a).) Moreover, transcripts serve to not
only provide the record for appeal, but are also vital for the
administration of justice in many other respects. For example,
they serve to impeach a witness (by demonstrating prior
inconsistent statements under oath, such as statements made in a
deposition); are necessary to prosecute a person for perjury who
is alleged to have lied while providing testimony under oath;
and help ensure that court orders accurately reflect what the
judge actually ruled in court with respect to any range of
important issues such as visitation rights, or division of
property. Given the crucial role that these ministerial
officers of the court to the American justice system,
impartiality of these individuals is arguably critical to the
willingness of parties and the courts to accept their
transcripts as true and accurate records of proceedings.
At the heart of this bill appears to be a concern regarding the
commercialization of the court reporting industry, whereby a
corporation providing deposition reporting services through a
licensed California court reporter, then proceeds to provide
kickbacks or gifts to law firms or employees of law firms, as an
incentive to use their company, or provides other additional
services to aid the party in litigation, such as the preparation
of exhibits while simultaneously arranging for a deposition
reporter to take the transcription in the underlying matter.
The concern is that these ongoing contractual relationships can
create a perception of bias, if not actual bias, on the part of
the deposition reporter who is supposed to be an impartial
ministerial officer of the court.
The sponsor of this bill, the Deposition Reporters Association
of California (DRA), asserts that this bill is needed for
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several reasons. First, DRA argues that non licensee-owned
corporate providers of the services of judicial officers (i.e.
deposition reporters) are circumventing law firms and lawyers'
ethical duties and entering into exclusive and secret contracts
with actual parties to litigation, shifting costs to those who
have no choice but to pay. DRA writes that "[n]on
licensee-owned corporate providers of the services of a judicial
officer are aggressively soliciting through commissioned sales
people exclusive contracts with companies that are frequently
involved in litigation, in essence seeking to become the 'in
house' reporting firm for parties in litigation. This practice
has long been recognized as troubling and has, anecdotally, been
expanding." DRA further explains that the problem is not just
about the risk posed by such "ongoing financial entanglements"
to the impartiality of deposition reporters, but also the
unfairness posed to other parties when non licensee-owned
reporting firms shift their costs from their clients to the
other parties in litigation. These firms, DRA writes, "offer
cut-rate deals to their clients for the original transcript plus
one copy [ . . . ], but then they make up for their loss leader
pricing by increasing the charges on the copies ordered by the
other parties, both co-defendants and plaintiff." The other
party has no choice but to pay their prices, because only that
reporting firm has those copies.
Relatedly, DRA argues, when non licensee-owned corporate
provider salespeople are offering kickbacks and gifts to
secretaries and paralegals, this distorts the market for court
reporting services away from rewarding quality and price.
Lastly, DRA raises concerns with how non licensee-owned
corporate providers of court reporting services offer to provide
the services of an impartial judicial officer while
simultaneously selling services that aid the party in the same
litigation. The proponents of this bill seek not to prohibit
these activities, but rather, to disclose the nature of these
relationships to the party being deposed, so as to raise
awareness among parties and lawyers about this issue, and
potentially to help uncover scenarios where an ongoing
relationship may actually rise to the level of financial
interest that is otherwise prohibited under the law. DRA argues
that providing disclosures as to the existence of these
relationships is consistent with how questions of impartiality
of judicial officers are generally handled, citing examples such
as the California Code of Judicial Ethics for judges, which
requires that a judge "disclose information that is reasonably
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relevant to the question of disqualification," under specified
law, "even if the judge believes there is no actual basis for
disqualification;" as well as the Code of Civil Procedure, which
requires the disclosure of campaign contributions made to the
judge by parties or counsel in a matter that is before the
court.
In support, the Court Reporters Board of California writes, "the
passage of this bill would shine a bright light on contracts
that may exist behind the scenes, helping to keep bias out of
the deposition room. Given the stakes, consumers of court
reporting services deserve to know the details of contracting
parties to make better, informed decisions on case management.
This bill does not restrain trade; it does, however, help guard
against actual bias and the appearance thereof." Staff notes
that any remedies, such as the ability to object as to the
sufficiency of the notice, or object to the use of a particular
deposition officer due to concerns of the officer's financial
interests would be based upon existing law.
2. Opposition
A coalition of deposition services firms (Esquire Deposition
Services, LLC; Magna Legal Services; U.S. Legal Support, Inc.;
and Veritext Corp.) writes in opposition to the bill,
questioning both the need for the legislation and the practical
issues the coalition believes are raised by the legislation.
Specifically, coalition notes that their companies "retain the
most qualified licensed court reporters to transcribe
depositions, and there has been no credible suggestion that any
partiality has resulted in inaccurate transcripts. To the
contrary, court reporters enjoy a sterling reputation for
impartiality and accuracy, truly one of the most admired
participants in the litigation environment[.]" The opposition
writes that the practical questions raised by the bill:
includ[e] the ability of the party noticing the deposition
(almost always a lawyer involved in the case) to disclose the
existence of a contract about which he or she has no
information; the extent to which "contracts" might be formed
through informal verbal communications where a court reporter
agrees to handle several near-term depositions; a further
question about whether the disclosure is required when the
reporter agrees to handle future depositions, or when the
deposition services firm is performing other functions in the
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instant case; and a question whether the bill confers some
right to further disclosure about the nature and details of
contractual relationships.
The author has agreed to the following amendment to address the
concern regarding the ability of the party noticing the
deposition to disclose the existence of a contraction that he or
she has no information regarding.
Author's amendment :
On page 3, line 14, after "any" insert "is known to the
noticing party"
Support : California Official Court Reporters Association;
Consumer Attorneys of California; Consumer Watchdog; Court
Reporters Board of California
Opposition : Esquire Deposition Services, LLC; Magna Legal
Services; U.S. Legal Support, Inc.; Veritext Corp.
HISTORY
Source : Deposition Reporters Association of California
Related Pending Legislation : None Known
Prior Legislation : AB 1158 (Soto, 1999), similar to this bill,
sought to discourage the use of long-term arrangements between
parties and deposition reporting firms or networks which provide
services on a preferential basis, due to concerns that such
arrangements cause harm to the other party as well as to the
appearance of impartiality of deposition reporters. That bill,
as introduced, originally sought to ban these contracts
altogether, but ultimately was amended to instead require the
party noticing the deposition to make certain disclosures in the
deposition notice if that party or his or her attorney has an
established relationship with the reporter, having used the
services of the deposition officer or the deposition officer's
employer one or more times within the preceding 12 months. AB
1158, however, unlike this bill, would have provided for
additional remedies for violations of these requirements, such
as the imposition of civil penalties.
Prior Vote :
AB 1197 (Bonilla)
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Assembly Floor (Ayes 78, Noes 0)
Assembly Judiciary Committee (Ayes 10, Noes 0)
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