BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1197| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 1197 Author: Bonilla (D) Amended: 7/15/15 in Senate Vote: 21 SENATE JUDICIARY COMMITTEE: 5-0, 7/7/15 AYES: Jackson, Hertzberg, Leno, Monning, Wieckowski NO VOTE RECORDED: Moorlach, Anderson ASSEMBLY FLOOR: 78-0, 4/23/15 - See last page for vote SUBJECT: Deposition notices SOURCE: Deposition Reporters Association of California DIGEST: This bill requires that a deposing party include in its deposition notice to the person it seeks to depose: (1) a statement disclosing the existence of a contract, if any is known to the noticing party, 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. ANALYSIS: Existing law: AB 1197 Page 2 1)Requires, generally, 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 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. 1)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. 2)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. 3)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 AB 1197 Page 3 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. 1)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. 2)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. 3)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 AB 1197 Page 4 pending the determination of this motion. 4)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. This bill requires that the following also be included in the deposition notice: 1)A statement disclosing the existence of a contract, if any is known to the noticing party, 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: (a) the deposition officer; or (b) the entity providing the services of the deposition officer. 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. 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 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 AB 1197 Page 5 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 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 AB 1197 Page 6 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 requires a deposing party to also provide in its deposition notice to the deponent: (1) a statement disclosing the existence of a contract, if any is known to the noticing party, 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. Comments As stated by 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 AB 1197 Page 7 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 deposition services. FISCAL EFFECT: Appropriation: No Fiscal Com.:NoLocal: No SUPPORT: (Verified7/15/15) Deposition Reporters Association of California (source) California Official Court Reporters Association Consumer Attorneys of California Consumer Watchdog Court Reporters Board of California OPPOSITION: (Verified7/15/15) Esquire Deposition Services, LLC Magna Legal Services U.S. Legal Support, Inc. Veritext Corp AB 1197 Page 8 ARGUMENTS IN SUPPORT: 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." Also 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." ARGUMENTS IN 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 this 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 AB 1197 Page 9 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[.]" ASSEMBLY FLOOR: 78-0, 4/23/15 AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NO VOTE RECORDED: Campos, Salas Prepared by:Ronak Daylami / JUD. / (916) 651-4113 7/15/15 16:39:01 **** END ****