BILL ANALYSIS Ó
AB 1682
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Date of Hearing: March 8, 2016
ASSEMBLY COMMITTEE ON JUDICIARY
Mark Stone, Chair
AB 1682
(Mark Stone) - As Amended February 29, 2016
SUBJECT: CONFIDENTIAL SETTLEMENT AGREEMENTS: SEXUAL OFFENSES
KEY ISSUE: SHOULD STATE LAW PROHIBIT THE SECRET SETTLEMENT OF
ALL CHILDHOOD SEXUAL ABUSE AND EXPLOITATION CASES, including
those which could be charged as misdemeanors, IN ORDER TO ensurE
that ALL persons who sexually abuse or exploit minors are
ACCOUNTABLE TO THE PUBLIC AND LAW ENFORCEMENT, including those
with the financial means to settle civil actions?
SYNOPSIS
Existing law prohibits the secret settlement of certain civil
actions in which the public has a strong interest. For example,
it is the policy of the State of California that confidential
settlement agreements are disfavored in any civil action based
on a violation of the Elder Abuse and Dependent Adult Civil
Protection Act (EADACPA). (Code of Civil Procedure, hereafter
"CCP," Section 2017.310.) Also, CCP Section 1002 prohibits the
confidential settlement of a civil action where the factual
basis for the action is "an act that may be prosecuted as a
felony sex offense." There is arguably a significant loophole,
however, in the latter provision. Although minors cannot
legally enter into contracts or settlements and cannot be held
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to the terms and conditions of agreements to settle civil
actions unless those agreements are signed by their parents,
guardians, or guardians ad litem and approved by a court,
current law allows the secret settlement of a civil action based
upon childhood sexual abuse or exploitation as long as the
underlying act can be characterized as an offense other than a
felony. This is problematic because many sexual abuse and
exploitation offenses that victimize minors are not felonies, or
can easily be characterized as less serious offenses. This
problem is exacerbated by the fact that many of the offenses are
never referred to law enforcement and therefore never reviewed
by prosecutors to determine whether felony charges are
appropriate.
AB 1682 closes this apparent loophole and protects the safety of
children and the public at large. It clarifies that the secret
settlement of civil actions involving the sexual abuse or
exploitation of minors, whether felonies or misdemeanors, is
against public policy. If this bill becomes law, all
confidentiality provisions within settlement agreements made in
such cases after this bill goes into effect would be void as a
matter of law. This bill also provides that attorneys who
advocate for, or condition the settlement of civil actions
involving sexual abuse and exploitation of children upon, the
confidentiality of the settlement are subject to discipline by
the State Bar and requires the Bar to investigate such
attorneys. Supporters point out that secret settlements likely
prevent victims from reporting their abuse to law enforcement.
Years later, after they become adults, victims of childhood
sexual abuse may wish to pursue criminal prosecution but may
find that it is too late for criminal prosecution because the
statute of limitations on charging the underlying acts as crimes
has expired. This bill is sponsored by the California Coalition
Against Sexual Assault and is supported by Consumer Attorneys of
California, numerous law enforcement agencies and associations,
and numerous organizations that provide services to survivors of
sexual assault. It has no known opposition.
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SUMMARY: Prohibits the secret settlement of childhood sexual
abuse and exploitation cases, as well as felony sex abuse cases,
as a matter of public policy. Specifically, this bill:
1)Expands the type of civil actions which cannot be the subject
of secret settlements to include not only acts that may be
prosecuted as felony sex offenses, but also the following:
a) An act of childhood sexual abuse, as defined in Penal
Code Section 340.1.
b) An act of sexual exploitation of a minor, as defined in
Section 11165.1 of the Penal Code, or conduct prohibited
with respect to a minor pursuant to Sections 311.1, 311.5,
or 311.6 of the Penal Code.
2)Corrects a cross-referencing error to the definition of
"personal identifying information" in existing law which
should refer to Section 530.55, rather than 530.5 of the Penal
Code (hereafter "PC").
EXISTING LAW:
1)Allows a court, upon petition, to appoint a guardian ad litem
to represent the interests of a minor when a civil action is
filed and the plaintiff is a minor. (CCP Section 337 (a).)
2)Prohibits the confidential settlement agreement of any civil
action the factual foundation for which establishes a cause of
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action for civil damages for an act that may be prosecuted as
a felony sex offense. (CCP Section 1002 (a).)
3)Provides that 1), above, does not preclude an agreement
preventing the defendant or any person acting on his or her
behalf from disclosing any medical information or personal
identifying information regarding the victim of the felony sex
offense or of any information revealing the nature of the
relationship between the victim and the defendant and does not
limit the right of a crime victim to disclose this
information. (CCP Section 1002 (b).)
4)Provides that 1), above, does not apply to or affect the
ability of the parties to enter into a settlement agreement or
stipulated agreement that requires the nondisclosure of the
amount of any money paid in a settlement of a claim. (CCP
Section 1002 (c).)
5)Provides that notwithstanding any other provision of law, it
is the policy of the State of California that confidential
settlement agreements are disfavored in any civil action the
factual foundation for which establishes a cause of action for
a violation of the Elder Abuse and Dependent Adult Civil
Protection Act (EADACPA). (CCP Section 2017.310 (a).)
6)Defines as "childhood sexual abuse" any act committed against
a plaintiff that occurred when the plaintiff was under the age
of 18 years which is proscribed by certain sections of the
Penal Code, including a number of sexual abuse offenses that
can be charged as misdemeanors, such as the following:
a) Sodomy with a person under 18 years of age (PC Section
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286 (b)(1));
b) Oral copulation with a person under 18 years of age (PC
Section 288a (b)(1));
c) Sexual penetration of a person who is under 18 years of
age by another person who is under 18 years of age (PC
Section 289 (h));
d) Annoying or molesting any child under 18 years of age
(PC Section 647.6; CCP Section 340.1 (e).)
7)Defines "Sexual exploitation" as any of the following:
a) Depicting a minor engaged in obscene acts in violation
of PC Section 311.2 [preparing, selling, or distributing
obscene matter] or subdivision (a) of PC Section 311.4
[employment of minor to perform obscene acts]. (PC Section
11165.1 (c)(1).)
b) Promoting, aiding, assisting, employing, using,
persuading, inducing, or coercing a person who knowingly
promotes, aids, or assists, employs, uses, persuades,
induces, or coerces a child, or a person responsible for a
child's welfare, who knowingly permits or encourages a
child to engage in, or assist others to engage in,
prostitution or a live performance involving obscene sexual
conduct. (PC Section 11165.1 (c)(2).)
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c) Depicting a child in, or knowingly developing,
duplicating, printing, downloading streaming, accessing
through any electronic or digital media, or exchanging, a
film, photograph, videotape, video recording, negative, or
slide in which a child is engaged in an act of obscene
sexual conduct. (PC Section 11165.1 (c)(3).)
8)Makes it a felony or a misdemeanor for a person to knowingly
do either of the following:
a) Send or cause to be sent into this state for sale or
distribution of any obscene matter, knowing that the matter
depicts a person under the age of 18 years personally
engaging in sexual conduct with intent to distribute or to
exhibit to, or to exchange with others. (PC Section 311.1
(a).)
b) Possess, prepare, publish, produce, develop, duplicate,
or print any representation of information, data, or image
of obscene matter that depicts a person under the age of 18
years personally engaging in or personally simulating
sexual conduct, knowing that the person is a minor and with
the intent to distribute or to exhibit to, or to exchange
with, others. (PC Section 311.1 (a).)
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9)Makes it a misdemeanor to do either of the following:
a) Write, create, or solicit the publication or
distribution of advertising or other promotional material,
or promote the sale, distribution, or exhibition of matter
represented or held out to be obscene. (PC Section 311.5.)
b) Knowingly engage or participate in, manage, produce,
sponsor, present or exhibit obscene live conduct to or
before an assembly or audience consisting of at least one
person or spectator in any public place or in any place
exposed to public view, or in any place open to the public
or to a segment thereof. (PC Section 311.6.)
10)Defines "personal identifying information." (PC Section
530.55 (b).)
11)Defines "felony" as a crime that is punishable with death, by
imprisonment in the state prison, or imprisonment in a county
jail and provides that every other crime or public offense is
a misdemeanor, except those offenses that are classified as
infractions. (PC Section 17 (a).)
12)Provides that except in cases where a different punishment is
prescribed by any law of this state, every offense declared to
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be a misdemeanor is punishable by imprisonment in the county
jail not exceeding six months, or by fine not exceeding one
thousand dollars ($1,000), or by both. (PC Section 19.)
FISCAL EFFECT: As currently in print this bill is keyed fiscal.
COMMENTS: Minors are unable to make binding contracts and
therefore can be released from any contractual obligations they
make before they become adults. Civil Code section 35 provides,
in relevant part, that "the contract of a minor may be
disaffirmed by the minor himself, either before his majority or
within a reasonable time afterwards." The purpose of Civil Code
section 35 is "to protect the minor from his own improvidence.
It is often said, he who affirmatively deals with a minor, does
so at his peril." (Hohe v. San Diego Unified School Dist. (1990)
224 "Cal.App.3d 1559, 1565.) For example, in Tracy v. Gaudin
(1930) 104 Cal.App. 158, a minor fraudulently obtained a new car
from the plaintiff's dealership by forging his guardian's name
on a withdrawal slip. The minor later died and the dealer
attempted to collect the cost of the vehicle from the minor's
estate. The court found that even though the minor received and
retained the benefits of his contract, the minor's estate was
not required to restore the consideration or its equivalent to
the dealer because the contract was not binding upon the minor.
(Id, at 160-61.)
While a contract signed by a minor without the signature of a
parent, guardian, or guardian ad litem is "voidable" by the
minor (i.e. not enforceable against the minor) it is
nevertheless potentially enforceable against the other party to
the contract. This harsh consequence is premised upon the
strong public policy against adults contracting with minors.
"[T]he former cannot complain if, as a consequence of their
violation of this rule of conduct, they are injured by the
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exercise of the right with which the law has purposely invested
the latter, nor charge that the infant in exercising the right
is guilty of fraud." (Flittner v. Equitable Life Assurance Soc.
(1916) 30 Cal.App. 209, 212.)
In order to protect the rights of minors involved in legal
disputes and civil actions, California law provides minors with
a number of specific procedural and substantive protections. As
a general rule, minors who are parties to civil actions must
appear in court proceedings through guardians, conservators, or
guardians ad litem. (CCP Section 372 (a)(1).) In order to
settle a disputed claim by a minor (prior to a complaint being
filed), a parent or guardian must, acting on behalf of a minor,
release a claim or execute a covenant not to sue. (Probate Code
Section 3500.)
Furthermore, even if a parent, guardian, guardian ad litem, or
conservator signs an agreement to settle a dispute claim or a
pending civil action on behalf of a minor, the agreement is not
binding upon the parties until it is reviewed and approved by
the court. "As early as the courts of chancery, a guardian ad
litem lacked the power to bind a minor litigant to a settlement
agreement absent an independent investigation by the court."
(Scruton v. Korean Air Lines Co. (1995) 39 Cal.App.4th 1596,
1605.) "[E]very step in the proceeding [of a minor's lawsuit]
occurs under the aegis of the court" [Citation omitted] . . .
Thus, "[i]t is the court's order approving the settlement that
vests the guardian ad litem with the legal power to enforce the
agreement. [Citation omitted]." (Ibid.) Judicial Council form
MC-350 is the petition for approving a settlement of either a
disputed claim (Probate Code Section 3500), or a pending action
(CCP 372) involving a minor and is called a "Petition to
Compromise a Minor's Claim." The form must be signed by the
"petitioner" (the parent, guardian, guardian ad litem, or
conservator of the minor) and approved by the court. The court
may appoint a guardian ad litem to represent the interests of
the minor "in any case when it is deemed by the court . . .
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expedient to appoint a guardian ad litem to represent the minor"
(CCP Section 372), even when a minor has a parent or guardian to
act as his or her representative in a disputed claim or a
lawsuit, and is likely to do so when the interests of the parent
or guardian and the minor diverge or conflict.
Enforceability of properly executed contracts, including
confidentiality agreements, against minors. Assuming that a
minor's right to settle a claim or a civil action is properly
executed by a parent, guardian, guardian ad litem, or
conservator and approved by the court, as described above, the
agreement is binding upon the minor. A binding settlement of a
minor's claim or action could presumably include a
confidentiality provision. Unless prohibited by law, as
discussed below (i.e. because the underlying offense is an act
that may be prosecuted as a violation of EADACPA or a felony ex
offense), the confidentiality provision would also be binding
upon the minor. In fact, many high profile settlements of civil
actions based upon childhood sexual abuse have reportedly
included confidentiality provisions. In a number of those
cases, however, victims have later reported their abuse to law
enforcement or the media. The Committee is unaware of a case in
which a victim has been sued for breach of a confidentiality
provision within a settlement agreement made when the victim was
a minor, but such an action is certainly possible.
History of secret settlements being used to settle civil
actions, including cases of childhood sexual abuse. As a
general rule, settlement agreements are useful tools in civil
litigation. They have been called the grease that keeps the
wheels of the civil justice system moving. Settlements
encourage timely resolution of claims and help the parties avoid
the expense of trial. Confidentiality provisions within
settlement agreements help parties avoid the trauma and
embarrassment of participating in a public trial.
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However, a strong public policy argument can be made that secret
settlements are inappropriate in some cases, specifically
matters of concern to the public because they involve
particularly vulnerable victims, highly dangerous behavior, or
especially egregious conduct.
Some legal experts say that the usual rationales and
incentives cited in support of secret settlements do not
fit priest abuse cases well. The victims were generally
children, who ought to receive special protection; the
abusers were often repeat offenders, who should have been
stopped; and criminal prosecution of the priests was made
all but impossible given the central importance of the
victim's testimony in rape and other sexual abuse cases.
Prof. Stephen Gillers, who teaches legal ethics at New York
University Law School, says that the arguments made against
secret settlements in cases involving widespread harm,
called mass torts by lawyers, apply with equal strength in
this new setting. "Certain kinds of harm are so serious,"
he says, "whether it's criminal conduct by priests or
exploding kitchen appliances, that we should not let
plaintiffs agree to confidentiality." (Liptak, Adam. A
Case that Grew in Shadows, The New York Times, March 24,
2002.)
Nevertheless, confidentiality provisions are commonly included
in civil settlements. According to a number of sources, such
provisions were standard in dozens, if not hundreds, of
settlements of sexual abuse claims against priests around the
country, including in California. According to
Bishopaccountability.org, a group that tracks civil actions and
settlement of clergy sex abuse cases, there have been
"settlements involving 5,679 persons who allege sexual abuse by
Catholic clergy. These survivors are only one-third of the
15,235 allegations that the bishops say they have received
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through 2009, and they are only 5% of the 100,000 U.S. victims .
. . estimated in a 1993 study. Important as these settlements
are, they represent a minority of known cases, and a tiny
fraction of all the abuse perpetrated by Catholic clergy."
( http://www.bishop-accountability.org/settlements/ ) According
to one California law firm that specializes in clergy sexual
abuse cases, more than 800 complaints have been filed in
California against the Catholic Church since 2003 and the Church
has settled a small percentage of those cases for a combined
total of more than $450 million.
( http://www.childmolestationvictims.com/california-catholic-clerg
y-sexual-abuse-information/ ) Despite headlines focusing on
abusive priests in the Catholic Church, secret settlements
involving childhood sexual abuse are by no means limited to the
Catholic Church. Other recent examples where secret settlements
have occurred include community youth service organizations;
foster parents; administrators of homes for the mentally
disabled; professional athletes; youth swim coaches; a college
football coach; and pop stars.
Existing law prohibits the secret settlement of certain civil
actions in which the public has a strong interest. Because of
strong public policy concerns, existing law makes confidential
settlements either disfavored or prohibited in certain cases.
For example, it is the policy of the State of California that
confidential settlement agreements are disfavored in any civil
action based upon a violation of EADACPA. (CCP Section 2017.310
(a).) Likewise, CCP Section 1002 prohibits the confidential
settlement of a civil action based on "an act that may be
prosecuted as a felony sex offense."
According to the author, this latter provision leaves a
dangerous loophole in the law. Specifically, the author
observes that many sexual abuse and exploitation offenses that
victimize minors are not felonies, or can easily be
characterized as non-felonies. This problem is exacerbated by
the fact that many of the offenses that establish a factual
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basis for these civil actions are never referred to law
enforcement and never reviewed by prosecutors to determine
whether felony charges are appropriate. Such settlements also
perpetuate a two-tiered criminal justice system in which only
those without financial means to pay for the silence of their
victims are prosecuted in the criminal courts. According to the
author, all cases of childhood sexual abuse should be publically
handled by the courts.
According to the sponsor, CALCASA, secret settlements endanger
other children and other potential victims of sexual assault or
exploitation by shielding sexual predators from public scrutiny
and law enforcement review. According to the National Center
for Victims of Crime, 28% of all U.S. youth aged 14 to 17 years
are sexually abused over the course of their lifetime. By
shielding cases of sexual abuse and exploitation from the public
and law enforcement, secret settlements unfairly allow sexual
offenders, with the financial means, to pay for the silence of
their victims, to escape criminal prosecution and potentially
abuse other children.
While confidentiality agreements may help to facilitate
settlements of individual claims, they also put the public at
risk by hiding sexual predators from law enforcement and the
public at large. In the case of clergy sex abuse cases,
confidentiality provisions largely prevented the prosecution of
pedophile priests as statutes of limitations for filing criminal
charges expired. They allowed the continuing abuse of children
as priests were moved from parish to parish within the U.S., and
sometimes to churches outside of the country.
The public arguably has such a strong interest in the
prosecution of individuals who commit acts of childhood sexual
abuse and exploitation that the ordinarily useful tool of
confidentiality provisions in settlement agreements should not
be allowed in civil actions based upon those acts. Like
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offenses that can be charged as felony sex offenses or
violations of EADACPA, secret settlements of these claims could
endanger the public, including other potential victims, and
allow perpetrators to escape criminal prosecution just because
they have the financial means to pay the cost of settlements.
Is it appropriate for the Legislature to require the State Bar
to investigate and take appropriate action against attorneys who
violate the provisions of this bill? This bill provides that an
attorney who demands an unlawful confidentiality provision
within a settlement agreement as a condition of settlement or
who advises a client to sign an agreement with such a
confidentiality provision is subject to professional discipline
by the State Bar. Specifically, it provides that an attorney
who violates the law by demanding a confidentiality provision as
a condition of settlement, or advising a client to sign such an
agreement "shall be subject to professional discipline and the
State Bar of California shall investigate and take appropriate
action in any such case brought to its attention."
It could be argued that this language somehow interferes with
the authority of the Judicial Branch which has oversight
responsibility for the disciplinary function of the State Bar.
However, many other statutes that restrict conduct by attorneys
also specify that violation of the statute "shall be subject to
discipline by the State Bar." Also, the additional language in
this bill that requires investigation is not unique. In fact,
it is virtually identical to CCP Section 365, which requires the
State Bar to investigate and take appropriate action in a case
where an attorney fails to follow the steps set forth in CCP 364
to provide notice of an action based upon the health care
provider's professional negligence. CCP Section 365 provides
that an attorney's failure to comply with CCP Section 364 "shall
be grounds for professional discipline and the State Bar of
California shall investigate and take appropriate action in any
such cases brought to its attention." Ultimately, even under
this language, it is the State Bar's decision whether or not to
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take action and what action is appropriate. The only mandate on
the Bar is to "investigate" which, given the public policy in
favor of this prohibition, seems like the minimum that the Bar
should do. Given the following findings by the State Auditor
last year, a legislative mandate for the Bar to investigate
these cases may be appropriate.
[T]he State Bar has not consistently fulfilled its mission
to protect the public from errant attorneys and lacks
accountability related to its expenditures. The State Bar
has struggled historically to promptly resolve all the
complaints it receives, potentially delaying the timely
discipline of attorneys who engage in misconduct.
SIMILAR PAST LEGISLATION: AB 634 (Steinberg, Chapter 242,
Statutes of 2003) enacted law disfavoring confidential
settlement agreements in actions for a violation of EDACPA.
AB 2875 (Pavley, Chapter 151, Statutes of 2006) prohibited the
confidential settlement of a civil action the factual basis for
which is a cause of action for "an act that may be prosecuted as
a felony sex offense."
AB 1628 (Beall, 2012) prohibited the confidential settlement of
a civil action the factual basis for which is a cause of action
for "an act of childhood sexual abuse, as defined in Section
340.1" (but allowed secret settlement of sexual abuse cases
involving adults). It also eliminated the prohibition on
extended the statute of limitations in child sexual abuse cases
from 26 to 35 years and established additional requirements for
mandated reporters. The bill was held on Suspense in Assembly
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Appropriations.
REGISTERED SUPPORT / OPPOSITION:
Support
California Coalition Against Sexual Assault (sponsor)
Association for Los Angeles Deputy Sheriffs
Bay Area Women Against Rape
California Association of Code Enforcement Officers
California College and University Police Chiefs Association
California Narcotic Officers Association
Center Against Sexual Assault of Southwest Riverside County
Center for Community Solutions
Coalition for Family Harmony
Consumer Attorneys of California
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Kene Me-Wu Family Healing Center
Los Angeles County Professional Peace Officers Association
Los Angeles Police Protective League
Monterey County Rape Crisis Center
North County Rape Crisis and Child Protection Center
One SAFE Place
Project Sister Family Services
Riverside Sheriffs Association
Women's Center - Youth & Family Services
Opposition
None on file
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Analysis Prepared by:Alison Merrilees / JUD. / (916) 319-2334