BILL ANALYSIS Ó
AB 2244
Page 1
Date of Hearing: April 12, 2016
ASSEMBLY COMMITTEE ON JUDICIARY
Mark Stone, Chair
AB 2244
(Gatto) - As Amended April 5, 2016
As Proposed to be Amended
SUBJECT: COURT FEES: ELECTRONIC FILING
KEY ISSUE: IN ORDER TO REDUCE COSTS FOR LITIGANTS AND TO
PROMOTE ACCESS TO JUSTICE FOR INDIGENT PARTIES, SHOULD
ELECTRONIC FILING VENDORS BE PROHIBITED FROM CHARGING A PAYMENT
TRANSACTION COST THAT EXCEEDS THE ACTUAL COST, AND BE REQUIRED
TO PROVIDE A VARIETY OF PAYMENT METHODS, INCLUDING METHODS THAT
DO NOT CHARGE A TRANSACTION COST?
SYNOPSIS
During the 2013-14 fiscal year, there were nearly 7.5 million
cases filed in our trial courts statewide. Given the high
volume of filings, a party's ability to file and serve documents
electronically significantly improves the court's capacity to
process filings. The now-defunct statewide Court Case
Management System (CCMS) would have made it easier for courts to
accept electronic filings. As a result of CCMS's termination,
trial courts have looked toward private vendors to provide
electronic filing services.
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It seems safe to say that electronic filing has dramatically
improved over the years and this technological improvement has
helped improve access to courts. But of course, the electronic
filing system isn't perfect. Indeed, courts need to ensure that
any electronic filing system protects low-income and indigent
litigants and reduces costs for all parties by promoting
competition among vendors.
Consistent with these goals, this bill reduces costs for
litigants and promotes access to justice for indigent litigants.
First, this bill prohibits electronic filing vendors from
charging a credit card convenience fee that exceeds the cost
incurred by vendors in providing that transaction, consistent
with existing law. Second, this bill prohibits electronic
filing vendors from charging indigent litigants a payment
processing fee and clarifies existing law so that indigent
litigants may more easily file electronically without being
charged. Third, this bill requires the court or the electronic
filing manager to provide a menu of alternative forms of
payment, including payments methods that do not charge
transaction fees. Lastly, this bill allows parties to recover
electronic service fees as allowable recoverable costs in courts
that require mandatory electronic filing. This author-sponsored
bill is supported by the Coalition for Improving Court Access, a
coalition of electronic filing service providers and others who
support the growth of electronic filing in California courts,
and has no opposition on file.
SUMMARY: Prohibits electronic filing vendors from charging a
payment method convenience fee that exceeds the cost incurred to
provide the processing. Specifically, this bill:
1)Provides that an agent of the court may impose a fee for the
use of a credit card or debit card or electronic funds
transfer, not to exceed the costs incurred by the agent in
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providing for that payment method. Provides that fees, if
any, charged by the court, an electronic filing manager, or an
electronic filing service provider to process a payment shall
not exceed the actual costs incurred for processing.
2)Requires the court, an electronic filing manager, or an
electronic filing service provider to waive processing payment
fees if the court deems waiver appropriate, including in
instances where a party has received a fee waiver.
3)Requires a court or an entity contracted with a court to
provide a system for acceptance of electronically transmitted
documents to provide a menu of payment options that may
include credit or debit cards, electronic funds transfers,
electronic networks for financial transactions, and payment
methods that do not charge a transaction cost.
4)Allows a prevailing party to recover electronic filing service
provider fees as costs.
5)Allows a prevailing party to recover electronic filing service
provider hosting fees as cost until January 1, 2022.
EXISTING LAW:
1)Authorizes courts to allow parties to electronically file
court documents in accordance to rules established by the
Judicial Council, and as provided by state law. (Code of
Civil Procedure Section 1010.6(b). Unless stated otherwise,
all further statutory references are to the Code of Civil
Procedure.)
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2)Authorizes courts to require parties to electronically file
documents in a class action, a consolidated action, or a group
of actions, a coordinated action, or an action that is deemed
complex under Judicial Council rules, provided that the trial
court's order does not cause undue hardship or significance
prejudice to any party to the action. (Section 1010.6 (c).)
3)Authorized the Orange County Superior Court, by local rule and
until July 1, 2014, to establish a pilot project to require
parties to electronically file and serve documents in
specified civil actions subject to specified conditions,
including:
a) The court shall have the ability to maintain the
official court record in electronic format for all cases
where electronic filing is required.
b) The court and the parties shall have access either to
more than one electronic filing service provider capable of
electronically filing documents with the court, or to
electronic filing access directly through the court.
c) Any fees charged by the court shall be for no more than
the actual cost of the electronic filing and service of the
documents, and shall be waived when deemed appropriate by
the court, including, but not limited to, for any party who
has received a fee waiver. Any fees charged by an
electronic filing service provider shall be reasonable and
shall be waived when deemed appropriate by the court,
including, but not limited to, for any party who has
received a fee waiver. (Section 1010.6 (d).)
1)Authorizes trial courts to require parties to electronically
file and serve documents, provided that the trial court
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follows the rules adopted by the Judicial Council for
mandatory electronic filing, and meets the conditions
specified under the Orange County Superior Court pilot, as
provided above in #3. (Section 1010.6 (g).)
2)Provides that rules adopted by the Judicial Council relating
to mandatory electronic filing and service of documents in
trial courts shall include statewide policies on vendor
contracts, privacy, access to public records, unrepresented
parties, parties with fee waivers, hardships, reasonable
exceptions to electronic filing, and the integrity of
electronic service. (Section 1010.6 (f).)
3)Sets forth the rules adopted by the Judicial Council regarding
electronic filing and serving of court documents. (Cal. Rules
of Court, Rules 2.250-2.261.)
4)Pursuant to the Federal Rules of Civil Procedure, a court may,
by local rule, allow papers to be filed, signed, or verified
by electronic means as provided. A local rule may require
electronic filing only if reasonable exceptions are allowed.
The clerk must not refuse to file a paper solely because it is
not in the form prescribed by a local rule or practice. (Fed.
Rules Civ. Proc., rule 5(d), 28 U.S.C.)
5)Requires the court to permit a party or an attorney to file an
application for a fee waiver as part of the electronic filing
process. (Section 1010.6 (b)(6).)
6)Authorizes a court and other specified public agencies to
accept credit card, debit card, or electronic fund transfers
for the payment of specified government services and fees.
Provides that when a court or other specified public agencies
authorizes one of the payment methods, the public agency may
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impose a fee for the use of a debit card, or electronic fund
transfer not to exceed the costs incurred by the public agency
in providing for payment. If a court is imposing the fee, the
fee shall be approved by the Judicial Council. (Government
Code Section 6159.)
7)Provides that a prevailing party is entitled as a matter of
right to recover costs in any action or proceeding, as
provided. (Section 1032.)
8)Provides specified items that are allowable recoverable costs
and others that are not allowable recoverable costs. (Section
1033.5)
9)Provides that any award of costs shall be subject to the
following:
a) Costs are allowable if incurred, whether or not paid.
b) Allowable costs shall be reasonably necessary to the
conduct of the litigation rather than merely convenient or
beneficial to its preparation.
c) Allowable costs shall be reasonable in amount.
d) Items not specifically mentioned and items assessed upon
application may be allowed or denied in the court's
discretion. (Ibid.)
FISCAL EFFECT: As currently in print this bill is keyed fiscal.
COMMENTS: California's court system is one of the largest in
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the world, with more than 2,000 judicial officers and
approximately 19,000 judicial branch employees statewide who
assist in the court's management of cases every year. (2015
Courts Statistics Report: Statewide Caseload Trends, Judicial
Council of California (2015).) During the 2013-14 fiscal year,
there were 7.5 million cases filed statewide in the superior
courts. (Ibid.)
Given the high volume of filings in California's courts each
year, a party's ability to file and serve documents
electronically significantly improves the court's capacity to
process filings. Ideally, parties could file their legal
documents electronically directly to the court through a
statewide case management system at no additional cost (aside
from the court filing fee). But given the reality of the courts
not having such a system, trial courts are doing the best they
can to facilitate electronic filing with county systems that
rely upon fees for service.
The Failure of a Statewide Court Case Management System (Which
Would Have Allowed Parties to File Electronically) Has Forced
Trial Courts to Look Elsewhere for Technological Improvements.
The Judicial Council's Court Case Management System (CCMS), an
ambitious court technology project to provide all 58 superior
courts with a long-needed uniform, linked case management system
would have, among other things, made it easier for parties to
file their legal documents electronically with the courts.
In February 2011, the California State Auditor issued a report
roundly criticizing the Judicial Council's lack of proper
management and oversight of the project. In its report, the
Auditor concluded that, among other criticisms of the project,
the Judicial Council did not ensure adequate independent
oversight of CCMS, as would be expected of a project of similar
size and complexity. Concern about the computer project
continued, resulting in internal and independent reviews,
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legislative hearings, and proposed legislation. In March of
2012, the Legislature concluded the project must be halted and
denied any further funding to CCMS. Later that month, the
Judicial Council terminated the project. The termination of
CCMS, after the expenditure of more than half a billion dollars,
not only depleted the courts' increasingly scarce resources, but
also left many trial courts with failing case management
systems. As a result, counties have turned to various private
vendors to provide technology systems to their courts.
Generally, these private technology systems allow for the
electronic filing of documents.
In support of the bill, the author writes that electronic filing
represents the future in California courts and benefits the
courts, litigants, lawyers and the public generally:
Since the demise of the Judicial Council's proposed California
Case Management System (CCMS) in the heights of the Great
Recession, California courts have moved to upgrade their
information technology systems with local contracts with
various vendors. These contracts typically provide for case
management systems, electronic filing of documents, and more.
Usually the third party vendor acts as an "electronic filing
managers" (EFMs) in creating the portals through which
"electronic filing service providers" (EFSPs) actually file
documents on behalf of law firms and other users of court
services.
Increasingly, courts are moving to require the filing of
documents electronically. In some counties, certain case
types must be filed electronically, and often complex civil
cases require e-filing. In some counties, EFSPs must pay
court filing fees and e-filing transaction costs with credit
cards, and pay convenience fees to electronic filing managers
for the use of credit cards.
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While electronic filing represents a major benefit to the
courts and public, how the systems are implemented can raise
policy questions of fair access to the judicial system. In
addition, present law contains a number of ambiguities which
should be resolved as these systems are being implemented. AB
2244 is intended to address some of these ambiguities.
Background on Electronic Filing. Many state courts throughout
the country have electronic filing capabilities. Some of these
courts allow electronic filing, while others mandate it.
Likewise, federal rules allow federal courts to accept documents
via electronic filing, if they so choose and allow federal
courts to require electronic filing "only if reasonable
exceptions are allowed." (Fed. Rules Civ.Proc., rule 5(d), 28
U.S.C.) Generally, under the federal approach, only attorneys
are mandated to participate in electronic filling. However, the
federal courts have a rule that prohibits a court clerk from
refusing to accept paper filings - even if a local court rule
mandates electronic filing. (Ibid.)
How Does Electronic Filing Work? According to a recent staff
report from the Judicial Council, an electronic filing system
requires both an electronic filing service provider (EFSP) and
an electronic filing manager (EFM). Generally, the litigant
files the legal document with the EFSP which translates the
information, and sends it to the EFM, which delivers and
communicates that information to the court's case management
system. (The Critical Role of the State Judiciary in Increasing
Access for Self-Represented Litigants: Self-Help Access 360,
Judicial Council, July 2015.)
If Electronic Filing Is Not Managed Correctly, It May Create
Barriers to Justice for Self-Represented and Low-Income
Litigants. In that same report, concerns about electronic
filing and access to justice were raised:
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Early experiences with e-filing, both in California and in
other states, suggest that many private vendor EFSPs are not
focused on serving the market segment of self-represented
litigants, many of whom are indigent and qualify for fee
waivers. The access community believes that the exclusion of
self-represented litigants from electronic filing "has the
potential to enlarge the access to justice gap in the long
run." Electronic filing is an area in which a slight tip of
the balance means that the technology tool is no longer used
to achieve greater access; rather, it becomes a barrier. The
California judicial branch has the opportunity to "place a
finger on the scale" in favor of low-income and
self-represented litigants by developing the capacity to serve
as the EFSP and EFM for all self-represented litigants in the
state.
In other states, the judicial branch serves as either a sole
EFSP or sole EFM for all forms of electronic filing on behalf of
all courts throughout the state. In California, the Judicial
Council can ensure that electronic filing is available to all
court users by serving as a one-stop EFSP and EFM for
self-represented litigants. This function is the culmination of
the work currently being undertaken to apply user-centered
design concepts to the information currently available on the
statewide self-help website and is the final link in providing
full and equal access to the courts for self-represented
litigants. (The Critical Role of the State Judiciary in
Increasing Access for Self-Represented Litigants: Self-Help
Access 360, supra.)
Electronic Filing is Not New to California. California
initially authorized electronic filing in 1999 under SB 367
(Dunn, Chap. 514, Stats. 1999). In 2012, the Legislature
authorized a pilot program to allow the Orange County Superior
Court to require parties to file their legal documents
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electronically under AB 2073 (Silva, Chap. 320, Stats. 2012).
Among other things, the AB 2073 pilot required the following:
(1) the court to have the ability to maintain the official court
record in electronic format for all cases where electronic
filing is required; (2) the court and the parties to have access
either to more than one EFSP capable of electronically filing
documents, or to electronically file directly through the court;
and (3) the court to have a procedure for the filing of
non-electronic documents in order to prevent undue hardship or
significant prejudice to any party in an action.
Assuming that other trial courts would eventually want mandatory
electronic filing, AB 2073 required the Judicial Council to
adopt rules for trial courts. Those rules required a
consideration of statewide policies on vendor contracts,
privacy, access to public records, unrepresented parties,
parties with fee waivers, hardships, reasonable exceptions to
electronic filing, and the integrity of electronic service.
Trial courts that choose mandatory electronic filing must also
follow the conditions required under the Orange County Superior
Court pilot.
In 2014, the Judicial Council reported that the Orange County
pilot "was a success":
Mandatory electronic filing resulted in significant cost
savings for the court and was generally less expensive for
represented and self-represented litigants. Electronic filing
also offered ease of use and convenience for litigants. And
when issues arose, the court responded to address those
issues. Similarly, changes to the California Rules of Court
ameliorated any latent access issues by exempting SRLs
[self-represented litigants] from the mandatory electronic
filing requirement. (Report on the Superior Court of Orange
County's Mandatory E-Filing Pilot Project, Judicial Council of
California, September 30, 2014.)
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To date, 13 trial courts have adopted some form of mandatory
electronic filing system. Although mandatory electronic filing
may be an attractive option for trial courts because of the
significant efficiencies to courts, electronic filing has not
been perfect. Indeed, as more and more courts implement
electronic filing systems, this Committee discovers new issues,
such as how the current process has affected indigent litigants;
competition among vendors; and the high cost of electronic
filing. To some extent at least, this bill addresses several of
those issues.
Consistent with Existing Law, this Bill Prevents Electronic
Filing Vendors from Charging a Payment Method Convenience Fee
that Exceeds the Cost to Vendors of that Payment Transaction.
Government entities may accept credit cards, debit cards, or
electronic funds transfers for the payment of certain government
services, including court filings. Although current law allows
a government entity, including a court, to impose a convenience
fee for those transactions, the government entity may not charge
a convenience fee that exceeds its costs for providing that
payment method.
When it comes to electronic filing, vendors who apply a
convenience fee for the use of credit cards, debit cards, or
electronic funds transfer are not bound by the same rules
described above. For example, this Committee has learned that
some vendors charge a credit card transaction fee at a
percentage of a filing service fee (for example, a 2.5 percent
credit card fee for $1,435 complex civil filing fee, which
amounts to an additional $35.86 charge).
Consistent with current law, this bill sensibly provides that an
electronic filing service provider, who remits funds in order to
complete an electronic filing transaction, acts as an agent of
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the court, and may not charge a convenience fee that exceeds the
provider's cost to provide that service. In order to further
protect litigants and provide greater clarity about convenience
costs associated with processing payment methods, this bill also
requires that when a trial court adopts rules for mandatory
electronic filing, the fees (if any) that are charged by the
court, an electronic filing manager, or an electronic filing
service provider to process a payment shall not exceed the
actual costs incurred by the court, manager, or provider.
This Bill Makes Electronic Filing More Accessible to Indigent
Litigants and Litigants with Fee Waivers, Consistent with
California's Goals of Promoting Access to Justice. As
previously mentioned, trial courts that mandate electronic
filing must adopt the conditions required by the Orange County
Superior Court pilot and the applicable Rules of Court issued by
the Judicial Council. Under Rules of Court 2.253, a party who
has a fee waiver is exempt from all electronic filing fees.
To ensure that litigants with fee waivers have true access to
electronic filing without fees, this bill does two important
things. First, it prohibits those litigants from being required
to pay transaction processing fees. Second, it clarifies
existing law to require an electronic filing service provider to
electronically file a fee-waiver-litigant's documents if that is
the litigant's preferred method.
In order to protect litigants who may not have access to credit
or debit cards, this bill also sensibly requires electronic
filing managers to accept alternative forms of payment beyond
credit cards for the payment of filing fees and e-filing
transaction costs. Specifically, this bill requires the court
(or the electronic filing manager) to offer a menu of payment
options, including but not limited to, credit cards or debit
cards, electronic fund transfers, Automated Clearing House, and
payment methods that do not charge a transaction cost, such as
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an electronic check.
Given That Some Courts Mandate Electronic Filing, this Bill
Would Allow Costs Associated With Electronic Filing to Be
Recoverable Litigation Costs. Throughout litigation, parties
pay for costs associated with the legal proceeding, such as
filing fees, expert-witness fees, and attorney's fees. In
addition to any judgment award, current law allows the
prevailing party to recover specific litigation costs from the
unsuccessful party. Current law specifically provides which
items are allowable or not allowable as recoverable costs. For
example, transcripts of court proceedings ordered by the court
are allowable, while costs for the investigation of jurors
during voir dire are not allowable. Additionally, costs must be
reasonable in amount and reasonably necessary to the conduct of
the litigation; if certain costs are not mentioned in statute, a
court may use its discretion to allow or deny a cost.
Given that some courts have mandated electronic filing, this
bill reasonably adds electronic filing service provider fees to
the list of allowable recoverable costs when a court requires or
orders a party to file and serve documents electronically with
the court. This bill also limits those costs to costs that are
actually incurred.
Recovering Hosting Costs. This Committee has learned that,
sometimes, courts will order parties to have their documents
"hosted" by an electronic filing service provider. This often
occurs in complex cases when certain documents are never lodged
with the court, and courts lack the infrastructure to hold these
out-of-court documents.
Although this bill still allows parties to recover these hosting
costs, the bill, as proposed to be amended, includes a five-year
sunset. On a certain level, it seems that certain depository
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responsibilities belong to the court, and not third party
vendors. Additionally, this Committee has learned that some
courts may soon acquire the technology to become the depository
in complex cases.
In order for this Committee to assess whether trial courts
should acquire hosting technology, or whether it is more
appropriate for electronic filing service providers to host
documents, the author proposes to make the following amendments:
On page 8, line 39, after file, insert "and".
On page 8, line 39, delete the first comma and ", and host"
On page 8, line 40, after the period, insert "(15)
Electronic filing service provider hosting fees. If a court
requires or orders a party to have documents hosted by an
electronic filing service provider, the recoverable costs are
those actually incurred to host documents through an
electronic filing service provider. This paragraph shall
remain in effect only until January 1, 2022, and as of that
date is repealed, unless a later enacted statute deletes or
extends that date."
On page 9, line 1, delete (15) and insert (16)
On page 14, line 1, delete "or" and insert "and"
Although this Bill Does Not Specifically Address the Issues of
Vendor Competition, this Bill Highlights the Need for the
Legislature's Oversight in the Courts' Progress in Mandating
Electronic Filing. When AB 2073 moved through the Legislature,
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this Committee raised several concerns about how trial courts
would implement mandatory e-filing. First and foremost, this
Committee signaled that indigent litigants should not be
required to file electronically. (Indeed, this bill takes
significant steps to help achieve that goal.) Second, this
Committee signaled that "[l]itigants should not be forced to use
only one vendor, but should have the ability to either directly
file with the court or have a choice of multiple vendors to
use." (Assembly Judiciary Committee analysis of AB 2073; April
24, 2012.) Indeed, in order to promote access to justice, there
should be robust competition to keep electronic filing costs
low, and to prevent a de facto increase in California's civil
filing fees.
As this bill was being analyzed, this Committee learned that the
Judicial Council is considering a recommendation to encourage
courts to have multiple electronic filing managers. While this
policy is consistent with this Committee's goals of promoting
robust competition among vendors, the Legislature should
continue to actively monitor how our courts' are implementing
electronic filing.
REGISTERED SUPPORT / OPPOSITION:
Support
Coalition for Improving Court Access
Opposition
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None on file
Analysis Prepared by:Eric Dang / JUD. / (916) 319-2334