BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        SB 270|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
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                                   THIRD READING 


          Bill No:  SB 270
          Author:   Mendoza (D)
          Amended:  5/5/15  
          Vote:     21  

           SENATE BUS, PROF. & ECON. DEV. COMMITTEE:  9-0, 4/20/15
           AYES:  Hill, Bates, Berryhill, Block, Galgiani, Hernandez,  
            Jackson, Mendoza, Wieckowski

           SENATE JUDICIARY COMMITTEE:  5-1, 4/28/15
           AYES:  Jackson, Hertzberg, Leno, Monning, Wieckowski
           NOES:  Anderson
           NO VOTE RECORDED:  Moorlach

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 5/18/15
           AYES:  Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen

           SUBJECT:   Court Reporters Board of California:  civil actions:  
                      corporations


          SOURCE:    Author


          DIGEST:  This bill authorizes the Court Reporters Board of  
          California (CRB) to take court action against an out-of-state  
          individual and corporation who unlawfully renders court  
          reporting services in California by providing injunctive relief  
          and penalties for acts in violation of the CRB's professional  
          and ethical rules for certified shorthand reporters.


          ANALYSIS:   








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          Existing law:


          1) Provides for the certification and regulation of shorthand  
             reporters and for the regulation of shorthand reporting  
             corporations by the CRB within the Department of Consumer  
             Affairs.  (Business and Professions Code (BPC) § 8000 et  
             seq.)


          2) Provides that no person shall engage in the practice of  
             shorthand reporting, as defined, unless that person is the  
             holder of a certificate in full force and effect issued by  
             the CRB.  (BPC § 8016)


          3) Defines shorthand reporting as the making, by means of  
             written symbols or abbreviations in shorthand or machine  
             shorthand writing, or verbatim record of any oral court  
             proceeding, deposition, court ordered hearing or arbitration,  
             or proceeding before any grand jury, referee, or court  
             commissioner and the accurate transcription thereof.  (BPC §  
             8017)


          4) Specifies that any violation of the Shorthand Reporters Act  
             (Act) is a misdemeanor.  (BPC § 8019)


          5) Provides that CRB, in addition to its authority to take  
             disciplinary action, shall have the authority to issue  
             administrative citations or assess fines for the violation of  
             any rules and regulations adopted by the CRB.  (BPC § 8027.5)


          6) Provides that a shorthand reporting corporation is a  
             corporation authorized to render professional services, as  
             defined, as long as that corporation and all of its  
             shareholders, officers, directors, and employees rendering  
             professional services who are certified shorthand reporters  
             (CSR) are in compliance with specified provisions of law.   
             (BPC § 8040)







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                                                                    Page  3




          7) Specifies that it constitutes unprofessional conduct and a  
             violation of the Act for any licensed person to violate,  
             attempt to violate, assist in or abet the violations of, or  
             conspire to violate any specified provisions of law,  
             including any other specified provisions of law.  (BPC §  
             8042)


          8) Provides that a shorthand reporting corporation shall not do  
             or fail to do any act the doing of which or the failure to do  
             which would constitute unprofessional conduct under and  
             statute, rule or regulation which pertains to shorthand  
             reporters or shorthand reporting.  (BPC § 8046)


          9) Requires that a shorthand reporting corporation in conducting  
             its practice shall observe and be bound by such statutes,  
             rules and regulations to the same extent as a person holding  
             a license.  (BPC § 8046)


          10)         Provides for professional standards of practice for  
             certified shorthand reporters including that no CSR may enter  
             into, arrange, or participate in a relationship that  
             compromises the impartiality of the CSR, including, but not  
             limited to, a relationship in which compensation for  
             reporting services is based upon the outcome of the  
             proceeding, or in which a gift, incentive, reward or anything  
             of value is provided by a person or entity which is  
             associated with the proceeding being reported.  (California  
             Code of Regulations, Title 16 § 2475)


          This bill:


          1) Authorizes the CRB to bring a civil action in superior court  
             to enjoin any person, corporation, or corporation organized  
             under the laws of a state of the United States other than  
             this state, from rendering court reporter services in this  
             state without ever being issued a license by the CRB or  
             authorization to render court reporter services in this state  







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             by satisfying the requirements of the Act; and provides that  
             the CRB may request that the Attorney General bring this  
             action.


          2) Authorizes the court, in addition to any other remedy  
             authorized by law, to impose a $1,000 to $2,500 monetary  
             penalty against the person or corporation rendering services  
             without a license or authorization, and that the court may  
             also order restitution and the return of any payments made to  
             the person or corporation.  


          3) Authorizes the court to also enjoin a person or corporation  
             from taking any action that would otherwise constitute a  
             violation of any statute or regulation of the CRB pertaining  
             to the impartiality of the CSR, including, but not limited  
             to, the violation of the professional standards of practice  
             of the CSR and provides that the court may impose a $2,500  
             monetary penalty and restitution for any acts undertaken by  
             any person or corporation rendering court reporter services  
             in this state.


          4) Provides that the court may designate that any transcript  
             prepared by any person or corporation subject to any court  
             action brought by the CRB does not qualify as a certified  
             transcript but requires that CSR be reimbursed for the  
             production of the transcript in accordance with specified  
             transcript fees.


          5) Provides that it shall be a misdemeanor for any person or  
             corporation to knowingly render court reporting services in  
             this state without ever being issued a license by the CRB or  
             being authorized to render court reporter services in this  
             state. 


          6) Requires the courts to award reasonable investigation and  
             enforcement costs and authorize the award of any portion of  
             unallocated penalties, if CRB or the Attorney General is  
             granted an injunction.








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          Background


          Existing law provides the CRB with the authority to certify and  
          regulate shorthand reporters who perform a vital function for  
          the courts and litigants in providing official, verbatim records  
          of a variety of proceedings.  The importance of this  
          transcription function by licensed individuals is reflected in  
          California law, which requires that an official reporter of the  
          superior court take down in shorthand all testimony, objections  
          made, rulings of the court, exceptions taken, arraignments,  
          pleas, sentences, arguments of the attorneys to the jury, and  
          statements and remarks made and oral instructions given by the  
          judge or other judicial officer, in specified cases. Existing  
          law also provides that the report of the official reporter of  
          any court, when transcribed and certified as being a correct  
          transcript of the testimony and proceedings in the case, is  
          prima facie evidence of the testimony and proceedings.  


          In 2010, the CRB found that U.S. Legal, a Texas based  
          corporation, was providing court reporting services in  
          California and offering incentives and/or gifts in exchange for  
          depositions, a violation of California's professional standards.  
           U.S. Legal argued that CRB lacked jurisdiction to issue  
          citations.


          In the subsequent 2012 case, Court Reporters Board of California  
          v. U.S. Legal, the court held that CRB lacked jurisdiction to  
          issue citations and fines over an out-of-state corporation  
          rendering court reporting services, without authorization to do  
          so in California, that had violated professional rules.   
          According to the Court, although U.S. Legal was rendering court  
          reporting services in California and was in violation of  
          gift-giving regulations, there was no explicit authority in  
          current statute authorizing CRB to impose citations or fines  
          against U.S. Legal because it was not authorized to do business  
          in California.  This bill, in addition to other legal remedies,  
          authorizes CRB under this new section to bring an action or  
          request the Attorney General to bring an action to enjoin any  
          unlicensed or unauthorized person, corporation, or foreign  
          corporation from rendering court reporter services in this state  







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          and, in doing so, to seek certain penalties, including fines and  
          restitution, as specified.


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

          According to the Senate Appropriations Committee:

           Unknown additional CRB enforcement costs, dependent upon the  
            number of complaints investigated and enforcement actions.  If  
            additional staff is needed, costs could be in the range of  
            $100,000 annually. (Court Reporters Fund)  

           Unknown additional fine revenues, which are also dependent  
            upon the number of successfully adjudicated cases.  In  
            addition, there could be reimbursements for enforcement and  
            investigation costs that are awarded by the courts. (Court  
            Reporters Fund)


          SUPPORT:   (Verified5/19/15)




          California Court Reporters Association




          Orange County Superior Court Reporters Association 









          OPPOSITION:   (Verified5/19/15)









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          Esquire Deposition Services, LLC
          Magna Legal Services
          U.S. Legal Support, Inc.
          Veritext Corporation



          ARGUMENTS IN SUPPORT:     The California Court Reporters  
          Association (source) writes that "court reporters ensure the  
          integrity of judicial records and are unmatched in their ability  
          to produce a real-time transcript of court proceedings. The  
          Board should have undisputed authority to ensure that any entity  
          rendering court reporting services in California is upholding  
          the state's professional and ethical standards."









          ARGUMENTS IN OPPOSITION:  The firms, Esquire Deposition Services  
          LLC, Magna Legal Services, U.S. Legal Support, Inc., and  
          Veritext Corporation jointly argue that "putting reputable and  
          legitimate non-California entities out of business in California  
          will stifle the technological innovations so important in the  
          modern, competitive legal marketplace."


          Prepared by:Mark Mendoza / B., P. & E.D. / (916) 651-1868
          5/20/15 16:19:34


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