BILL ANALYSIS Ó
AB 2244
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CONCURRENCE IN SENATE AMENDMENTS
AB
2244 (Gatto)
As Amended June 13, 2016
Majority vote
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|ASSEMBLY: |78-0 |(May 12, 2016) |SENATE: |36-1 |(August 16, |
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Original Committee Reference: JUD.
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
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.
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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.
The Senate amendments:
1)Specify that an electronic filing service provider as defined
is deemed an agent of the court for the sole purpose of
collecting electronic court filing fees.
2)Provide that the court is not liable for the actions of an
agent of the court in imposing fees for the use of a credit or
debit card, or electronic funds transfer as a method of
payment.
3)Require an agent of the court, as provided, to issue a report
on the agent's costs in providing various payment options, and
to maintain relevant records for inspection by the Judicial
Council.
4)Make technical and clarifying changes.
EXISTING LAW:
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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.)
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)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).)
5)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
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.)
6)Provides that a prevailing party is entitled as a matter of
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right to recover costs in any action or proceeding, as
provided. (Section 1032.)
7)Provides specified items that are allowable recoverable costs
and others that are not allowable recoverable costs. (Section
1033.5)
8)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: According to the Senate Appropriation Committee:
1)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
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costs of the contracts (General Fund*).
2)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
COMMENTS: California's court system is one of the largest in
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.
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
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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:
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.
To date, thirteen 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. To some extent, this bill
addresses several of the issues confronting electronic filing.
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.
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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.
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
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. 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
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cards, electronic fund transfers, Automated Clearing House, and
other payment methods that do not charge a transaction cost,
such as 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.
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. In some matters, 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 includes a five-year sunset which allows the
Legislature to determine whether it is appropriate for these
responsibilities to be shifted to third-party vendors.
Analysis Prepared by:
Eric Dang / JUD. / (916) 319-2334 FN: 0004197
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