BILL ANALYSIS Ó
SB 270
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Date of Hearing: June 30, 2015
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Susan Bonilla, Chair
SB 270(Mendoza) - As Amended June 23, 2015
Note: This bill is double referred, and if passed by this
Committee, it will be referred to the Assembly Judiciary
Committee.
SENATE VOTE: 29-9
SUBJECT: Court Reporters Board of California: civil actions:
corporations.
SUMMARY: Authorizes the Court Reporters Board of California
(CRB) to bring a civil action, or request the Attorney General
(AG) to bring an action in a superior court to enjoin any
unlicensed person, corporation, or foreign corporation from
rendering court reporter services in this state.
EXISTING LAW:
1)Provides for the regulation and certification of shorthand
reporters by the CRB within the Department of Consumer Affairs
(DCA). Business and Professions Code (BPC) Section 8000 et
seq.)
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2)Prohibits a person from engaging in the practice of shorthand
reporting, as specified, unless that person is the holder of a
certificate in full force and effect issued by the CRB unless
he or she is a salaried, full-time employee of any department
or agency of the state who is employed as a hearing reporter.
(BPC Section 8016)
3)Defines the "practice of shorthand reporting" as the making,
by means of written symbols or abbreviations in shorthand or
machine shorthand writing, of a 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 Section 8017)
4)Specifies that nothing requires the use of a certified
shorthand reporter when not otherwise required by law. (BPC
Section 8017)
5)Except as specified, prohibits a person, firm or corporation
from assuming or using the title "certified shorthand
reported" or the abbreviation "C.S.R." or using any words or
symbols indicating or tending to indicate that he, she, or it
is certified. (BPC Section 8018)
6)Provides the CRB, in addition to its authority to conduct
disciplinary proceedings, the authority to issue
administrative citations or assess fines for the violation of
any rules and regulations adopted by the CRB. (BPC Section
8027.5)
7)Defines a "shorthand reporting corporation" as a corporation
which is authorized to render professional services, as
specified in the Corporations Code (CORP) Section 13401, as
long as that corporation and all of its shareholders,
officers, directors, and employees rendering professional
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services who are certified shorthand reporters are in
compliance with specified requirements in the CORP Code. (BPC
Section 8040)
8)Prohibits a shorthand reporting corporation from doing or
failing to do any act which would constitute unprofessional
conduct under any statute, rule, or regulation which pertains
to shorthand reporters or shorthand reporting. (BPC Section
8046)
9)Requires a shorthand reporting corporation in conducting its
practice to observe and be bound by statutes, rules, and
regulations to the same extent as a person holding a license.
(BPC Sections 8046)
10)Requires every person under the jurisdiction of the CRB who
holds a license or certificate, or temporary license or
certificate, or business that renders professional services,
namely shorthand reporting services, within the meaning of
CORP 13401, to comply with professional standards of practice,
as specified. (California Code of Regulations (CCR) Title 16
Section 2475)
THIS BILL:
11)Permits the CRB, in addition to any other authority or
remedy, to bring a civil action in a superior court, or to
request the AG to bring an action, to enjoin any person,
corporation, or corporation organized under the laws of
another state from rendering court reporter services in this
state without ever being issued a license by the CRB or
authorized to render court reporter services in this state.
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12)States that if a civil action is brought, the court, in
addition to any other remedy authorized by law, must impose a
penalty of not less than $1,000 and no more than $2,500 per
day against the person or corporation rendering services
without a license or authorization, and the court, in addition
to any other restitution provided by law, may also order
restitution and the return of any payments made to the person
or corporation.
13)Authorizes the court, in addition to any other authority or
remedy, if an action is brought, 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 impartiality, including but not limited to
violation of the professional standards of practice of the
CRB, and provides that the court, in addition to any other
penalty provided for by statute or regulation, may impose a
penalty of up to $2,500 and order restitution for any acts
undertaken by any person or corporation rendering court
reporter services in this state.
14)Requires the court in determining the amount of the penalty
referenced in 3) above, to take into consideration the
frequency of the violations and the impact of those
violations, as specified.
15)Requires the court to award reasonable investigation and
enforcement costs to the CRB or the AG if an injunction is
granted, as specified, and also authorizes the court to award
a portion of any unallocated penalties collected, as
specified, to be used for future investigation and
enforcement, and requires any penalty awarded to the CRB to be
deposited in the Court Reporter's Fund, which is subject to
appropriation by the Legislature.
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16)States that numbers 1)-5) above cannot be not be construed to
change, limit, or alter any existing authority of the board,
including existing injunctive authority.
FISCAL EFFECT: According to the Senate Appropriations Committee
Analysis dated May 18, 2015, this bill will result in "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." This bill will also result in "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."
COMMENTS:
Purpose. This bill is sponsored by the California Court
Reporters Association . According to the author, "[this bill]
strengthens the authority of the CRB to regulate or prevent
unlicensed individuals and corporations from unlawfully
rendering court reporting services in California by issuing
fines or injunctions for acts in violation of the CRB's
professional and ethical rules for certified shorthand
reporters.
Under current law, the CRB has limited authority to impose
penalties on any court reporter or court reporting corporation
that is rendering services without a court reporting license.
However, for unlicensed entities, the CRB has had challenges in
imposing fines for any violations. This has jeopardized the
integrity of the court reporting profession and places at a
disadvantage licensed businesses that provide court reporting
services."
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Court Reporters Board. The CRB is responsible for licensing and
disciplining certified shorthand reporters. Certified shorthand
reporters are responsible for reporting depositions in legal
cases as well as court proceedings. Since 1972, the CRB has
permitted the certification of individuals and the registration
of court reporting corporations. Currently, the CRB oversees
approximately 7,000 certified shorthand reporters. The CRB
establishes the educational requirements for certification
including authorizing the minimal educational standards and
approving schools. In order to qualify for licensure as a
certified shorthand reporter, an individual must have a high
school education, twelve months (or 1,400 hours) of full-time
work experience related to making records of hearings, a passing
score on the California State Hearing Reporters Examination and
complete a course from an approved court-reporting school.
Currently in California, certified shorthand reporters work in
two separate capacities: 1) as an "official reporter" who works
as a court reporter employed by a state court or 2) a
"freelance" reporter who is hired privately by court reporting
businesses, firms, or attorneys to report depositions. Both
official and freelance reporters are required to meet the same
educational and examination qualifications. .
Enforcement Authority. In addition to the CRB's licensing
function, the CRB is also tasked with enforcement-related
activities for shorthand reporters who violate the practice act.
BPC Section 8025 states that a certificate to practice as a
shorthand reporter may be suspended, revoked, or denied, or
other disciplinary action may be taken against a certificate
holder for multiple reasons including the conviction of a
misdemeanor if the misdemeanor is substantially related to the
functions and duties of a court reporter, fraud or
misrepresentation in obtaining a certificate, unprofessional
conduct; or, loss or destruction of stenographic notes that
prevents the production of a transcript, among others. In
addition to the provisions of BPC Section 8025, the CRB
specifies through regulation the professional standards of
practice (16 CCR 16 Section 2475) for professionals.
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Under current law, the CRB has the authority to carry out its
licensing and enforcement authority against any person or
corporation (as defined in Section 13401 of the CORP).
According to the author, the CRB has limited authority to impose
penalties on any court reporter or court reporting corporation
that is rendering services without a court reporting license.
While the CRB does not register or certify corporations in
California, BPC Sections 8044 and 8046 provide the CRB with the
explicit authority over corporations incorporated in California;
however, the same authority is not specified in statute for
foreign corporations providing court reporting business in
California. This bill aims to increase the CRB's disciplinary
reach to include those entities or corporations who may be
providing professional court reporter services without a
California-based license by permitting the CRB to discipline
entities who are in violation of professional standards as
regulated by the CRB, or other violations of the Act.
According to the author, this need for this bill is in response
to the CRB's inability to take the appropriate disciplinary
actions against a corporation who was accused of operating in
violation of the CRB's professional standards of practice;
specifically, 16 CCR Section 2475(b)(8) which prohibits any
person or business under the jurisdiction of the CRB from either
directly or indirectly giving or receiving any gift, incentive,
reward, or anything of value to or from any person or entity
associated with a proceeding being reported that is more than
$100.
Court Case. In 2010, the CRB took disciplinary action against a
corporation, charging it with violating 16 CCR Section
2475(b)(8) by issuing a citation and fine. The corporation
which the fine was levied against argued, at that time, that the
CRB lacked the jurisdictional authority to issue a citation to
the company, and did not pay the fine.
As a result in 2012, a formal case was brought against U.S.
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Legal Support, Inc., and in that case, Court Reporters Board of
California vs U.S. Legal Support, Inc. 1-11-CV197817, the court
held that the CRB lacked the jurisdictional authority to issue
citations and fines to an out-of-state corporation rendering
court reporting services in California without authorization to
do so. As the court noted in its decision, although U.S. Legal
Services, Inc. was rendering court reporting services in
California and was in violation of the gift giving rules as
defined in the CRB's regulations, there was no explicit
authority in statute authorizing CRB to impose citations or
fines because it was not authorized to do business in California
under the BPC. In addition to other legal remedies, this bill
will authorize the CRB, under this new section, to bring an
action or request the AG to bring an action to enjoin any
unlicensed or unauthorized person, corporation or foreign
corporation from rendering court reporter services in this state
and in doing so, seek certain penalties including fines and
possibly restitution.
This bill does not require corporations to register with the
CRB, nor does it specifically prohibit certain professional
corporations from rendering court reporting services in
California. However, if a corporation is providing court
reporting services by way of contracting with, or hiring
California-licensed court reporters, then this bill will
specifically authorize the CRB to bring an action (or request
the AG to bring an action) to enjoin a corporation, or
corporation organized under another state, from rendering court
reporting services in California without ever being issued a
license by the CRB or authorization to render court reporter
services in California. In addition, this bill would authorize
the CRB to collect specified penalties against corporations who
may be in violation of the court reporting act.
Opponents to this bill have stated that this bill would
potentially authorize the CRB to put these corporations out of
business, "by imposing drastic civil penalties of between $1000
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and $2500 per day for the provision of unlicensed services, and
creating criminal penalties for perfectly legitimate business
activities occurring every day in California, the intent of the
sponsors of SB 270 is very clear: to put non-California
deposition services companies out of business in California."
Prior Related Legislation. AB 1461 (Ruskin) of 2009, would have
prohibited a firm, partnership, sole proprietorship, or other
business entity providing or arranging for shorthand reporting
services, from doing or failing to do any act that constitutes
unprofessional conduct under any statute, rule or regulation
pertaining to shorthand reporters or shorthand reporting. NOTE:
AB 1461 was held in the Assembly Appropriations Committee.
ARGUMENTS IN SUPPORT:
The California Court Reporters Association writes in support,
"[This bill] strengthens the CRB's efforts to prohibit unlawful
court reporting in California. For example, in 2010, it was
discovered that a Texas based corporation was providing court
reporting services in California in violation of our states
ethical rules on gift giving. The [CRB] had found that this
corporation was offering incentives and gifts in exchange for
being hired to provide court reporters in depositions, a
violation of California's ethical standards that can jeopardize
the impartiality of the court reporter. In this finding, the
corporation argued that the [CRB] lacked jurisdiction over their
services because they were not licensed in California and
therefore not subject to the [CRB's] authority.
In 2012, the court ruled that U.S Legal was indeed rendering
court reporter services in California without being in
compliance with California's statutory requirements. [this bill]
provides specific authority for the [CRB] to seek injunctive
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relief to stop individuals and corporations that are providing
services in California without having ever been licensed in our
state, and imposes penalties if they are also in violation of
California's professional standards."
The Deposition Reporter's Association of California writes in
support, "on behalf of the Deposition Reporters Association of
California, and approximately 1,000 of our members, we write to
express our support for [this bill]?DRA supports [this bill] to
the extent that it seeks to increase penalties and consequences
for such unauthorized practice. DRA supports [this bill] to the
extent that it modestly seeks to gather laws dispersed in other
codes to clarify the authority the [CRB] already has over
corporations."
ARGUMENTS IN OPPOSITION:
According to a consortium of firms including Esquire Deposition
Services, LLC; Magna Legal Services; U.S. Legal Support, Inc.;
and Veritext Corp ., who write in opposition, "While the
provisions of [this bill] appear benign, simply adding
enforcement authority to prevent unlicensed court reporting
services, the bill must be considered in the context of actions
and interpretations of the [CRB] to assert jurisdiction over the
business activities of out of state entities contracting with
California certified shorthand reporters. Interpreting current
provisions of the [BPC], the CRB asserts that entities such as
our clients are rendering court reporting services in
California, requiring licensure as certified shorthand reporters
and subjecting these entities to the practice provisions of the
law. But our clients do not satisfy the legal standard of the
practice of court reporting, which is defined as the making of a
verbatim record of proceedings. Our clients contract with the
very best court reporters in California, all of whom are
properly licensed by the [CRB], because these court reporters
are making the verbatim records of proceedings covered by [BPC]
Section 8017.
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By imposing drastic civil penalties of between $1000 and $2500
per day for the provision of unlicensed services, and creating
criminal penalties for perfectly legitimate business activities
occurring every day in California, the intent of the sponsors of
[this bill] is very clear: to put non-California deposition
services companies out of business in California. The bill even
authorizes courts to declare that perfectly accurate transcripts
prepared by entities subject to the [CRB]'s misinterpretation of
the statute do not qualify as certified transcripts."
POLICY ISSUE:
This bill will specify that if civil action is brought, the
court, in addition to any other remedy authorized by law, must
impose a penalty of not less than $1,000 and no more than $2,500
per day against the person or corporation rendering services
without a license or authorization. The Committee may wish to
inquire of the author why the court must impose a penalty, as
specified, instead of allowing the court to have discretion in
determining the amount of the penalty to assess.
REGISTERED SUPPORT:
California Court Reporters Association (sponsor)
Deposition Reporters Association
Orange County Superior Court Reporters Association
Six individuals
REGISTERED OPPOSITION:
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Esquire Deposition Services
LLC; Magna Legal Services
U.S. Legal Support, Inc.
Veritext Corp.
Analysis Prepared by:Elissa Silva / B. & P. / (916) 319-3301