BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 2244|
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                                   THIRD READING 


          Bill No:  AB 2244
          Author:   Gatto (D) 
          Amended:  6/13/16 in Senate
          Vote:     21 

           SENATE JUDICIARY COMMITTEE:  7-0, 6/21/16
           AYES:  Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning,  
            Wieckowski

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 8/11/16
           AYES:  Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

           ASSEMBLY FLOOR:  78-0, 5/12/16 (Consent) - See last page for  
            vote

           SUBJECT:   Court fees:  electronic filing


          SOURCE:    Author


          DIGEST:  This bill ensures that if any trial court permits or  
          mandates electronic filing and service of documents, any fees  
          charged by the 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.  This bill further ensures that if a trial court  
          mandates e-filing: (1) a court or an EFM contracted with a court  
          to provide a system for acceptance of electronically transmitted  
          documents and associated fees accept more than one method of  
          payment to an EFSP, as specified; and (2) clarifies that an EFSP  
          is an agent of the court for the sole purpose of collecting and  
          remitting specified payments and any fees set by an EFSP must,  








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          consistent with existing law, be approved by the Judicial  
          Council.  This bill also allows for prevailing parties to  
          recover fees associated with electronic filing and service  
          through an EFSP, as specified.  


          ANALYSIS:  


          Existing law: 


           1) Provides that except as otherwise provided by statute, a  
             prevailing party, as defined, is entitled as a matter of  
             right to recover costs in any action or proceeding. Existing  
             law enumerates the items allowable as costs under the above  
             provision, including, among other things:

                 filing, motion, and jury fees; 

                 any other item that is required to be awarded to the  
               prevailing party pursuant to statute as an incident to  
               prevailing in the action at trial or on appeal.  


           1) Provides that any award of costs is subject to the  
             following, among other things:

                 allowable costs shall be reasonably necessary to the  
               conduct of the litigation rather than merely convenient or  
               beneficial to its preparation; and

                 allowable costs shall be reasonable in amount.  


           1) 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.  Provides that,  
             notwithstanding specified law, a court may impose a fee for  
             the use of a credit or debit card or electronic funds  







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             transfer, not to exceed the costs incurred by the agency in  
             providing for payment by credit or debit card or electronic  
             funds transfer. The Judicial Council must approve any such  
             fee imposed. 


           2) Provides that in any action in which a party has agreed to  
             accept electronic service or in which the court has ordered  
             electronic service, as specified, the court may  
             electronically serve any document issued by the court that is  
             not required to be personally served in the same manner that  
             parties electronically serve documents.  Provides that  
             electronic service shall have the same legal effect as  
             service by mail, except as provided.  


           3) Provides that a trial court may adopt local rules permitting  
             electronic filing (e-filing) of documents, subject to Rules  
             of Court adopted as specified and subject to specified  
             conditions.  These include conditions relating to electronic  
             signatures and fee waivers, among other things.  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 e-filing of a document, as specified.  


           4) 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.  


           5) Requires the Judicial Council 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.  Requires these rules to conform to the conditions  
             set in the Code of Civil Procedure, as specified.  


           6) Sets forth, under Rules of Court, uniform rules regarding  
             e-filing and serving of documents.  (Cal. Rules of Court  







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             2.250-2.261.)   


           7) Provides authority for the Orange County Superior Court, by  
             local rule and until July 1, 2014, to establish a pilot  
             project to require parties to specified civil actions to  
             electronically file and serve documents, subject to specified  
             requirements and rules adopted by Judicial Council, and  
             certain additional statutory conditions.  Those additional  
             conditions include that the court and the parties either have  
             access to more than one electronic service provider capable  
             of electronically filing documents with the court, or have  
             e-filing access directly through the court.  Any fees charged  
             by the court must be for no more than the actual cost of  
             e-filing and service of the documents, whereas any fees  
             charged by the electronic service provider must be  
             reasonable.  In both instances, fees must be waived when  
             deemed appropriate by the court, including for any party who  
             has received a fee waiver.  


           8) Requires the Judicial Council, on or before July 1, 2014, to  
             adopt uniform rules for mandatory e-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 various items, including,  
             among other things, privacy, unrepresented parties, fee  
             waivers, hardships, reasonable exceptions to e-filing, and  
             rules relating to the integrity of electronic service.  Upon  
             adoption of those rules, a superior court may, by local rule,  
             mandate e-filing, pursuant to specified statutory  
             requirements and conditions, including several of the  
             conditions that were specified for the mandatory e-filing  
             pilot project, above.  


          This bill:


          1)Adds a new condition to the list of conditions that courts  
            must meet when electing to permit, or otherwise mandating,  
            e-filing and service of documents.  Specifically, a fee, if  
            any, charged by a court, an EFM, or an EFSP to process a  
            payment for filing fees and other court fees shall not exceed  







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            the costs incurred.


          2)Specifies, consistent with existing law, 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.


          3)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.


          4)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.    
            Requires the court to determine which methods of payment shall  
            be accepted by the court and the EFM, 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  
            methods that do not charge a transaction cost.


          5)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.  
            For these purposes, an EFSP who is required to collect and  
            remit a payment of a filing fee or other court fee, as  
            specified, to complete an electronic filing transaction is  
            deemed an agent of the court, and, unless specified otherwise,  
            the EFSP is deemed an agent of the court for the sole purpose  
            of collecting and remitting such payments for an electronic  
            filing transaction.  Further ensures that, consistent with a  
            specified requirement under existing law, that any such fees  







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            charged by the court or the EFSP be approved by the Judicial  
            Council.  


           6)Prohibits a court from being held liable for the actions of an  
            agent of the court under the above provisions and requires  
            that an agent report its costs in providing for payment by  
            credit or debit card or electronic funds transfer, as  
            specified.  Requires that the Judicial Council or its  
            authorized representative have access to and the right to  
            examine the records and documents of an agent for purposes of  
            verifying the accuracy of these reports and compliance with  
            this reporting requirement. The agent must, among other things  
            provide the Judicial Council all relevant information  
            requested and maintain all records and documents relating to  
            its fees and costs, as specified.  


           7)Adds to the list of recoverable costs by prevailing parties:  

                  fees for the electronic filing or service of documents  
               through an EFSP if a court requires or orders electronic  
               filing or service; and 

                 until January 1, 2022, fees for the hosting of  
               electronic documents if a court requires or orders a party  
               to have documents hosted by an EFSP.  


          1)Makes other technical, clarifying or non-substantive changes. 


          Background


          The federal courts, have long allowed for electronic filing of  
          court documents.  (See Fed. Rule Civ. Proc. rule 5(d)(3), which  
          provides that a court may, by local rule, allow papers to be  
          filed, signed, or verified by electronic means that are  
          consistent with any technical standards established by the  
          Judicial Conference of the United States, and may require e-  
          filing only if reasonable exceptions are allowed.)  The federal  
          rules also, however, prohibit a court clerk from refusing to  
          accept paper filings - even if a local court rule mandates e-  







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          filing.  (Fed. Rule Civ. Proc. Rule 5(d)(4); see also Klemm v.  
          Astrue (9th Cir. 2008) 543 F.3d 1139, 1143.)


          E-filing proponents argue that it creates substantial  
          efficiencies and cost savings for both litigants and the courts:  
          it saves in time, labor, postage, supplies, storage, and travel;  
          creates easier and timelier access to records and documents by  
          the courts and the public; engenders more efficient use of staff  
          time; allows for remote access to court records by lawyers and  
          the public over the Internet; grants attorneys the flexibility  
          to file documents after hours when courts are closed; and gives  
          multiple parties the ability to view the same documents, at the  
          same time.  At the same time, however, this state has been  
          cautious of the hardships that e-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 even afford the technology needed for e-filing, or have  
          access to broadband or Internet services, even if they do have  
          the technology (i.e. computers.)  Thus, while it has been long  
          anticipated that e-filing and e-service will become the norm,  
          and not the exception, it has been with the understanding that  
          public policy ultimately dictates that, when it comes to our  
          courts, access - and uniform access at that - is imperative.   
          This is not to state that the competing interests in  
          efficiencies and access cannot coexist or help advance one  
          another (indeed, allowing e-filing can grant litigants remote  
          access to their courts, saving them valuable time that would  
          otherwise be spent standing in line and away from work -which  
          can be particularly difficult for low-wage and self-represented  
          litigants); it is merely to acknowledge that any rules adopted  
          in this state for e-filing need to be cognizant of the very real  
          concerns related to access so as to not compromise them in the  
          name of technological advancement and efficiency.  


          Accordingly, for years, California has authorized limited  
          e-filing under Section 1010.6 of the Code of Civil Procedure. In  
          1999, SB 367 (Dunn, Chapter 514, Statutes of 1999), among other  
          things, enacted Section 1010.6 to allow trial courts to adopt  
          local rules permitting e-filing and service of documents, and to  







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          require the Judicial Council to adopt uniform rules for the  
          e-filing and service of documents in the trial courts of the  
          state, as specified.  SB 367 also reflected the legislative  
          intent to:  (1) provide for the eventual standardization of  
          e-filing and service procedures on a statewide level; and (2) to  
          provide that a court shall not adopt an e-filing procedure that  
          requires a litigant or attorney to possess specialized,  
          cumbersome, or expensive equipment or software to utilize the  
          e-filing system.  Subsequently, in 2010, SB 1274 (Committee on  
          Judiciary, Chapter 156, Statutes of 2010) authorized parties to  
          consent to, or the court to order, electronic service of  
          documents that are not required to be personally served.  SB  
          1274 also required the Judicial Council to adopt uniform rules  
          relating to the integrity of e-filing and service of documents  
          in the trial courts of the state, and redefined "electronic  
          service" to include both electronic notification and electronic  
          transmission, as specified.  


          Most recently, in 2012, this state enacted additional  
          legislation to authorize a pilot program in Orange County's  
          Superior Court that would allow for mandated e-filing in  
          specified cases, as long as certain enumerated conditions were  
          met.  (AB 2073, Silva, Chapter 320, Statutes of 2012.)   
          Recognizing that other courts may subsequently wish to move  
          toward mandatory e-filing as well, AB 2073 also allowed for that  
          possibility, on the condition that any future courts must also  
          meet requirements of Section 1010.6 and any additional uniform  
          rules adopted by the Judicial Council for the filing and service  
          of documents in the trial courts of the state based upon its  
          study of the Orange County pilot program.  Indeed, in 2013, the  
          Judicial Council approved a proposal, effective July 1, 2013, to  
          allow superior courts to require that parties electronically  
          file and serve documents in civil cases.  Notably, those new  
          rules exempt self-represented parties from any mandatory  
          e-filing and service requirements adopted by participating  
          courts, but also include language that encourages these parties  
          to participate voluntarily. To the extent feasible, courts and  
          other entities are encouraged to assist self-represented parties  
          to electronically file and serve documents.  (See California  
          Courts Press Release, Judicial Council Allows Superior Courts to  
          Require E-filing in Civil Cases (Jun. 28, 2013)  
           
                                                                    Page  9



          This bill updates various statutory rules and conditions  
          surrounding mandatory e-filing, in particular relating to  
          processing fees charged for e-filing payments, payment options,  
          and the ability of prevailing parties to recover e-filing fees.


          Comments


          As stated by the author:


            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. Since its demise 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  
            manager" (EFM) 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.  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 these  
            ambiguities.








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          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          According to the Senate Appropriations Committee:

           Fee restrictions:  Potentially significant costs to EFSPs and  
            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*).     

           EFSP verification process:  Potential future increase in  
            workload (General Fund*) to the Judicial Council to conduct  
            the verification process described in this bill 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


          SUPPORT:   (Verified8/12/16)


          Coalition for Improving Court Access
          Judicial Council 


          OPPOSITION:   (Verified8/12/16)


          None received










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          ASSEMBLY FLOOR:  78-0, 5/12/16
          AYES:  Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,  
            Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Calderon,  
            Campos, 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, Kim, Lackey, Levine, Linder,  
            Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,  
            Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,  
            Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Williams, Wood, Rendon
          NO VOTE RECORDED:  Burke, Jones-Sawyer

          Prepared by:Ronak Daylami / JUD. / (916) 651-4113
          8/15/16 20:22:16


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