BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 270| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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: SB 270 Page 2 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) SB 270 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 SB 270 Page 4 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. SB 270 Page 5 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 SB 270 Page 6 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) SB 270 Page 7 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 **** END ****