BILL ANALYSIS Ó SB 270 Page 1 SENATE THIRD READING SB 270 (Mendoza) As Amended August 4, 2016 Majority vote SENATE VOTE: 29-9 ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Business & |9-6 |Salas, Bloom, Dodd, |Brough, Baker, | |Professions | |Eggman, Gomez, |Chávez, Dahle, | | | |Holden, Mullin, Ting, |Gatto, Jones | | | |Wood | | | | | | | |----------------+-----+----------------------+--------------------| |Judiciary |7-3 |Mark Stone, Alejo, |Wagner, Gallagher, | | | |Chau, Chiu, Cristina |Maienschein | | | |Garcia, Holden, Ting | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |14-5 |Gonzalez, Bloom, |Bigelow, Gallagher, | | | |Bonilla, Bonta, |Jones, Obernolte, | | | |Calderon, Daly, |Wagner | | | |Eggman, Eduardo | | | | |Garcia, Holden, | | | | |Quirk, Santiago, | | SB 270 Page 2 | | |Weber, Wood, Chu | | | | | | | | | | | | ------------------------------------------------------------------ SUMMARY: Provides the Court Reporters Board (CRB) with broad powers of enforcement, as specified, over foreign or domestic corporations that offer or arrange for shorthand reporting services, as specified, in California. Specifically, this bill: 1)Authorizes the CRB to seek injunctive relief or issue citations, fines, and other penalties in accordance of existing law against corporations, persons, or entities, whether foreign or domestic, that for a fee or other financial consideration, offer, offer to arrange for, render, or provide the services of a certified shorthand reporter for violations of the following provisions that relate to shorthand reporting: a) Chapter 9 of Title 4 of Part 4 (commencing with Section 2025.010) of the Code of Civil Procedure; b) Part 4 of Division 3 of Title 1 (commencing with Section 13400) of the Corporations Code (CORP)); c) Chapter 12 of Division 3 (commencing with Section 8000) of the Business and Professions Code (BPC); and, d) Section 2475 of Title 16 of the California Code of Regulations (CCR). 2)Provides that nothing in this bill shall be construed to authorize or prohibit an individual without a certificate to SB 270 Page 3 practice shorthand reporting as specified in BPC Section 8017, or construed to authorize or prohibit the provision of shorthand reporting services by a foreign corporation in violation of CORP Section 13401(c) or construed to authorize or prohibit violations of BPC Section 8044. FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill will result in minor and absorbable costs to the CRB for a potential increase in complaint volume resulting in potentially higher citations. 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." 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 at one time, the registration of shorthand reporting corporations. Currently, SB 270 Page 4 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, 12 months (or 1,400 hours) of full-time work experience related to making records of hearings, obtain 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) as 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. Currently, the CRB does not separately license or register court reporting corporations. 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 license to practice as a shorthand reporter may be suspended, revoked, or denied, or other disciplinary action may be taken against a certificate holder for a number of reasons including 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 Section 2475), which include acting without bias toward, or prejudice against, any parties and/or their attorneys; not entering into, arranging, or participating in a relationship that compromises the impartiality of the certified shorthand reporter, including but not limited to a relationship in which compensation for reporting services is based upon the outcome of the proceeding; and maintaining confidentiality of information, among others. SB 270 Page 5 Under current law, the CRB has the authority to carry out its licensing and enforcement authority against any person or corporation, as defined in CORP Section 13401. 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 because each director, shareholder, and officer of a shorthand reporting corporation is required to be a licensed shorthand reporter; however, the same authority is not specified in statute for foreign corporations providing or arranging for court reporting services in California. This bill aims to increase the CRB's disciplinary reach to include those entities or corporations which for a fee offer, offer to arrange for, render, or provide the services of a shorthand reporter, by permitting the CRB to discipline entities for specified violations including those corporations (foreign or domestic) who are arranging for shorthand reporting services, as specified. Scope of Practice. BPC Section 8017 defines 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 transcript thereof. 16 CCR Section 2403 further specifies that the practice of shorthand reporting includes services for actions in superior court such as delivering a copy of the original transcript in a computer-readable form, as specified, labeling disks of transactions with the case name and court number, and the dates of the proceedings contained on the disk, among others. For a deposition, 16 CCR Section 2403 includes making a full or SB 270 Page 6 partial copy of a transcription available, notifying all parties who attended a deposition of requests made by other parties for either an original copy of the transcript, or any portion thereof, and securely sealing the transcript in an envelope or package, as specified. These provisions are aggregated from various sections in the Code of Civil Procedure and the Civil Code. Professional Corporations and The Moscone-Knox Professional Corporation Act (Act). BPC Section 8044 specifies that each director, shareholder, and officer of a shorthand reporting corporation must be a licensed shorthand reporter. Business models for shorthand reporting corporations and other service providers vary throughout the state. While there are a number of licensee-owned corporations in California, there are a number of businesses that do not hold themselves out to be court reporting corporations. These corporations claim to be litigation service providers that only arrange for court reporting services, but are not actually responsible for the making of the written record. According to the author, the need for this bill is in response to the CRB's inability to take the appropriate disciplinary actions against a foreign 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 Reporters Board of California v. U.S. Legal Support, Inc., 1-11-CV197817. 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 SB 270 Page 7 argued that the CRB lacked the jurisdictional authority to issue a citation to the company, and did not pay the fine. As a result, a formal case was brought against U.S. Legal Support, Inc. in 2012. 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 the corporation was not authorized to do business in California under the BPC. This bill will authorize the CRB, under this new section, to seek injunctive relief or issue citations, fines, and other penalties against corporations, persons or entities, whether foreign or domestic, that for a fee or other financial consideration, offer, offer to arrange for, renders, or provides the services of a certified shorthand reporter, for violations of specified areas of law. The issue of professional conduct was raised in the CRB's 2015 Sunset Review Report. As noted in the Committee Background Paper, according to the CRB, additional complaints have been received about overcharging for court transcripts, a violation of Government Code 69950 and is direct consumer harm; the overcharging of one party for transcripts is in practice cost-shifting, or akin to giving a large gift. This is a practice whereby a court reporting firm offers to charge the noticing party a nominal amount if the noticing party chooses to utilize the services of that firm. The costs of the transcripts are then shifted over to the defending attorney(s), who has no ability to choose the shorthand reporter and is essentially stuck with the bill presented in order to obtain a transcript. While the practice is not specifically illegal on its face, the CRB is concerned about the serious ethical considerations that SB 270 Page 8 arise out of this type of scenario. As a result, it is important for the CRB to ensure that the same rules that apply to all licensees that serve to protect consumers are enforced against all entities that provide shorthand reporting services. The authority granted by the bill allows the CRB to take enforcement actions for violations of the laws which comprise virtually all of the applicable statutes and regulations governing shorthand reporters. Analysis Prepared by: Elissa Silva / B. & P. / (916) 319-3301 FN: 0004065