BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 2244 (Gatto) - Court fees: electronic filing ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: June 13, 2016 |Policy Vote: JUD. 7 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 1, 2016 |Consultant: Jolie Onodera | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 2244 would prescribe specified limits on the fees charged by the courts, an electronic filing manager, or an electronic filing service provider associated with the electronic filing of court documents, as specified. Fiscal Impact: Fee restrictions : Potentially significant costs to electronic filing service providers (EFSPs) and electronic filing managers (EFMs) for processing costs that are unrecoverable due to fee exemptions/waivers. To the extent a court serves as the EFSP and/or EFM for low-income and self-represented litigants, many of whom are indigent and qualify for fee waivers, these processing costs would be absorbed by the court's operating budget (General Fund*). Alternatively, to the extent courts enter into vendor contracts for EFSP/EFM services, these unrecoverable costs could be built into the costs of the contracts (General Fund*). AB 2244 (Gatto) Page 1 of ? EFSP verification process : Potential future increase in workload (General Fund*) to the Judicial Council to conduct the verification process described in this measure which would include interviewing EFSP employees, as well as accessing, inspecting, and copying relevant records of fees/costs for auditing purposes. To the extent this process is already in place and operating, any impact to the Judicial Council would be absorbable. *Trial Court Trust Fund Background: Existing law authorizes a court and other specified public entities to accept credit card, debit card, or electronic fund transfers for the payment of certain government services and fees, including the payment of a filing fee or other court fee. A court desiring to authorize the use of a credit card, debit card, or electronic funds transfer must first obtain the approval of the Judicial Council. Existing law provides that, notwithstanding specified law, a court may impose a fee for the use of a credit or debit card or electronic funds transfer, not to exceed the costs incurred by the agency in providing for payment by credit or debit card or electronic funds transfer. Any such fee imposed by a court must be approved by the Judicial Council. (Government Code § 6159(b), (c), (h).) Existing law provides that a trial court may adopt local rules permitting electronic filing of documents, subject to Rules of Court adopted as specified and subject to specified conditions. (Code of Civil Procedure (CCP) § 1010.6(b)(1)-(6).) Existing law requires the court to permit a party or attorney to file an application for waiver of court fees and costs, in lieu of requiring the payment of the filing fee, as part of the process involving the electronic filing of a document, as specified. (CCP § 1010.6(b)(6).) Existing law permits a court to require electronic filing of documents in complex civil litigation cases, as specified, provided that it does not cause undue hardship or significant prejudice to any party in the action. The Judicial Council is required to adopt uniform rules for the electronic filing and service of documents in the trial courts of the state, which shall include statewide policies on vendor contracts, privacy, and access to public records, and rules relating to the integrity of the electronic service. Existing law requires these AB 2244 (Gatto) Page 2 of ? rules to conform to the conditions set in Section 1010.6 of the Code of Civil Procedure, as amended from time to time. (CCP § 1010.6(c), (e).) Existing Rules of Court set forth uniform rules regarding electronic filing and serving of documents. (California Rules of Court, rules 2.250-2.261.) Existing law also requires the Judicial Council, on or before July 1, 2014, to adopt uniform rules for mandatory electronic filing and service of documents for specified actions in the state's trial courts, which are to be informed by the pilot project, above, and are to include statewide policies on vendor contracts, privacy, access to public records, unrepresented parties, parties with fee waivers, hardships, reasonable exceptions to electronic filing, and rules relating to the integrity of electronic service. Existing law provides that upon the adoption of those rules, a superior court may, by local rule, require mandatory electronic filing, pursuant to the requirements and conditions set forth in this section, including several of the conditions that must be met by any court allowing e-filing of documents and several of the requirements specified for the mandatory e-filing pilot project, above. (CCP § 1010.6(f), (g).) While the practice of electronic filing may create substantial efficiencies and cost savings for both litigants and the courts, the state has been cautious of the hardships that electronic filing might cause for some courts or litigants, particularly low income or unrepresented litigants, given that access to electronic communications are still widely disparate among different cities and counties within this state, and even from home to home in the same neighborhoods based on one's economic means. Some might not be able to afford the technology needed to electronically file, or have access to broadband or internet services. Thus, while it has been long anticipated that electronic filing will be adopted widely, it has been with the understanding that public policy ultimately dictates that uniform access to justice in the courts is imperative. This bill would update specified statutory rules and conditions surrounding mandatory electronic filing, in particular relating to processing fees charged for electronic filing payments, payment options, and the ability of prevailing parties to AB 2244 (Gatto) Page 3 of ? recover electronic filing fees. Proposed Law: This bill would prescribe the following specified limits on fees associated with the electronic filing of court documents: Adds a new condition to the list of conditions that would have to be met both by courts that elect to permit, and courts that otherwise mandate, e-filing and service of documents. Specifically, it would provide that a fee, if any, charged by a court, an electronic filing manager (EFM), or an electronic filing service provider (EFSP) to process a payment for filing fees and other court fees shall not exceed the costs incurred. Consistent with existing law, specifies that the court, an EFM, or an EFSP shall waive any fees charged if the court deems waiver appropriate, including in instances where a party has received a fee waiver. Prohibits an EFSP, as described, from collecting or attempting to collect a fee to complete an electronic filing transaction, including a fee to process a payment, a filing or other court fee, or a fee charged by the EFSP for electronically filing documents, from a party who is exempt from paying fees; provided, however, that the EFSP must complete the filing notwithstanding the fee exemption. Further requires a court or an EFM that provides a court, pursuant to contract, a system for acceptance of electronically transmitted documents and associated filing and other court fees accept more than one method of payment to an EFSP who is required to collect and remit a payment of a filing or other court as an agent of the court, as specified, below. The bill would require the court to determine which methods of payment shall be accepted by the court and the electronic filing manager, and specifies that the methods of payment may include credit or debit cards, electronic funds transfers, electronic networks for financial transactions such as Automated Clearing House and other payment methods that do not charge a transaction AB 2244 (Gatto) Page 4 of ? cost. Authorizes an "agent of the court" to impose a fee for use of a credit or debit card or electronic funds transfer, not to exceed the costs incurred by the agent in providing for payment by credit or debit card or electronic funds transfer. This bill would provide for these purposes, that an EFSP who is required to collect and remit a payment of a filing fee or other court fee, as specified, complete an electronic filing transaction is deemed an agent of the court, and, unless specified otherwise, the electronic filing service provider is deemed an agent of the court for the sole purpose of collecting and remitting such payments for an electronic filing transaction. This bill would further ensure that, consistent with the existing requirement under Section 6159 of the Government Code, above, that any such fees charged by the court be approved by the Judicial Council, that any fees charged by the EFSP be approved by the Judicial Council. Prohibits a court from being held liable for the actions of an agent of the court under the above provisions and would require that an agent of the court report its costs in providing for payment by credit or debit card or electronic funds transfer pursuant to Judicial Council guidelines. Requires the Judicial Council or its authorized representative to have access to and the right to examine the records and documents of an agent of the court for purposes of verifying the accuracy of the fee and cost reports to be issued pursuant to guidelines adopted by the Judicial Council and to verify compliance with this reporting requirement. The agent of the court must: (1) provide the Judicial Council all relevant information requested; (2) permit access to its premises at reasonable times, for the purposes of interviewing employees and inspecting and copying any relevant records; and (3) maintain all records and documents relating to its fees and costs for a minimum of four years from the date the fee is imposed or until the verification process is complete, AB 2244 (Gatto) Page 5 of ? whichever is later. Adds to the list of recoverable costs by prevailing parties: o Fees for the electronic filing or service of documents through an EFSP if a court requires or orders electronic filing or service. o Fees for the hosting of electronic documents if a court requires or orders a party to have documents hosted by an EFSP. This bill provides that this paragraph shall become inoperative on January 1, 2022. Makes other technical, clarifying and non-substantive changes. Prior Legislation: AB 2073 (Silva) Chapter 320/2012 authorized the Orange County Superior Court to establish a pilot project mandating that parties electronically file documents in specified civil cases, and required the Judicial Council to adopt a rule on mandatory electronic filing before July 1, 2014. Staff Comments: The Judicial Council has indicated the provisions of this measure are consistent with ongoing internal efforts to promote the use and fairness of electronic filing. Staff notes that due to the restrictions placed on charging fees for persons subject to fee exemptions/waivers, this bill could result in ongoing operating costs to the entities responsible for the processing costs, which could be the vendor EFSP, the EFM, or the court. To the extent a court serves as the EFSP and/or EFM for low-income and self-represented litigants, many of whom are indigent and qualify for fee waivers, these processing costs would be absorbed by the court's operating budget. Alternatively, to the extent courts enter into vendor contracts for EFSP/EFM services, these unrecoverable costs could be built into the costs of the vendor contracts, which would AB 2244 (Gatto) Page 6 of ? also be a state cost. The magnitude of these costs would be dependent on the unit processing cost and the volume of transactions subject to the processing fee waiver annually, which is unknown but potentially significant. As reported by the Judicial Council: A fully functioning e-filing system (as opposed to "e-delivery," which allows for documents to be delivered to a court email address or other electronic drop box, but does not integrate those documents into the court's case management system) requires both an electronic filing service provider (EFSP) to receive the filing, and an electronic filing manager (EFM), to serve as a "translator" of the information received on the forms from the EFSPs and deliver that information into an individual court's case management system. In California, local courts that are pursuing e-filing are working with their case management system vendors to determine a certification process for e-filing service providers (EFSPs) and an appropriate number of EFSPs for certification. They will also be contracting with a vendor for the development of an EFM to communicate with their case management systems, in order to deliver the benefits of truly paperless filing. 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 (or manages contracts with outside vendors for these services) on behalf of all courts throughout the state. In California, the AB 2244 (Gatto) Page 7 of ? 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. (Judicial Council, The Critical Role of the State Judiciary in Increasing Access for Self-Represented Litigants: Self-Help Access 360? (Jul. 2015) This bill requires the Judicial Council or its authorized representative to have access to and the right to examine the records and documents of an EFSP for purposes of verifying the accuracy of its fee and cost reports issued, and to verify the EFSP's compliance with the bill's provisions. Additionally, the bill requires EFSPs to maintain records and documents relating to its fees and costs for a minimum of four years from the date the fee is imposed, or until the verification process is completed, whichever is later. This requirement would imply that the verification process must be conducted, although it does not impose a strict timeline within which the process must be completed. As a result, the Judicial Council could potentially incur additional workload to conduct the verification process described in this measure which would include interviewing EFSP employees, as well as accessing, inspecting, and copying relevant records of fees/costs for auditing purposes. To the extent this process is already in place and operating, any impact to the Judicial Council would be absorbable. -- END --