BILL ANALYSIS Ó
SB 270
Page 1
Date of Hearing: August 24, 2016
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Rudy Salas, Chair
SB 270(Mendoza) - As Amended August 19, 2016
SENATE VOTE: 29-9
SUBJECT: Shorthand reporting services.
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, and clarifies that the
provisions of this bill do not regulate the setting of
negotiated transcript fees and reasonable fees for
non-contracting parties.
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.)
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
SB 270
Page 2
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
services who are certified shorthand reporters are in
compliance with specified requirements in the CORP. (BPC
Section 8040)
SB 270
Page 3
8)Specifies that each director, shareholder, and officer of a
shorthand reporting corporation must be a licensed shorthand
reporter. (BPC Section 8044)
9)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)
10)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 Section 8046)
11)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 Section 13401, to comply with professional standards of
practice, as specified. (California Code of Regulations Title
16 (16 CCR) Section 2475)
12)Defines "professional services" to mean any type of
professional service that may be lawfully rendered only
pursuant to a license, certification, or registration
authorized by the BPC, the Chiropractic Act, or the
Osteopathic Act. (CORP Section 13401(a))
13)Defines "foreign professional corporation" to mean a
corporation organized under the laws of a state of the United
States other than this state that is engaged in a profession
SB 270
Page 4
of a type for which there is authorization in the BPC for the
performance of professional services by a foreign professional
corporation. (CORP Section 13401(c))
14)Defines "professional corporation" to mean a corporation
organized under the General Corporation Law, as specified,
that is engaged in rendering professional services in a single
profession, except as otherwise authorized, pursuant to a
certificate of registration issued by the governmental agency
regulating the profession as herein provided and that in its
practice or business designates itself as a professional or
other corporation as may be required by statute. However, any
professional corporation or foreign professional corporation
rendering professional services by persons duly licensed by
the Medical Board of California or any examining committee
under the jurisdiction of that board, the Osteopathic Medical
Board of California, the Dental Board of California, the
Dental Hygiene Committee of California, the California State
Board of Pharmacy, the Veterinary Medical Board, the
California Architects Board, the CRB, the Board of Behavioral
Sciences, the Speech-Language Pathology and Audiology Board,
the Board of Registered Nursing, or the State Board of
Optometry is not be required to obtain a certificate of
registration in order to render those professional services.
(CORP Section 13401(b))
THIS BILL:
15)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:
SB 270
Page 5
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 BPC; and,
d) Section 2475 of Title 16 of the CCR.
16)Provides that nothing in this bill is to be construed to
authorize an individual without a license to practice
shorthand reporting, as defined in BPC Section 8017.
17)Provides that nothing in this section is to be construed to
authorize or prohibit the provision of shorthand reporting
services by a foreign corporation in violation of subdivision
(c) of Section 13401 of the CORP or construed to authorize or
prohibit violations of BPC Section 8044.
18)Specifies that nothing in this bill shall be construed to
regulate the setting of negotiated transcript fees and
reasonable fees for non-contracting parties as long as the
fees are otherwise in compliance with applicable law.
FISCAL EFFECT: According to the Assembly Committee on
Appropriations, this bill will result in minor and absorbable
costs to the CRB for a potential increase in complaint volume
resulting in potentially higher citations.
SB 270
Page 6
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 CSRs. CSRs 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, 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
SB 270
Page 7
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.
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
SB 270
Page 8
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
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
SB 270
Page 9
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
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
SB 270
Page 10
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's 2016
Background Paper, according to the CRB, additional complaints
have been received about overcharging for court transcripts, a
violation of Government Code Section 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 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
SB 270
Page 11
governing shorthand reporters.
Further, this bill seeks to clarify that this bill does not
regulate the setting of negotiated transcript fees and
reasonable fees for non-contracting parties as long as the fees
are otherwise in compliance with applicable law.
Current Related Legislation. AB 2192 (Salas) of the current
Legislative Session, extends the sunset date for the CRB and its
executive officer. Although the bill does not address court
reporting corporations, the issue was raised in the sunset
review hearing on March 9, 2016. STATUS: This bill is pending
on the Assembly Floor.
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:
This bill was held in the Assembly Committee on Appropriations.
ARGUMENTS IN SUPPORT:
None on file.
ARGUMENTS IN OPPOSITION:
The Liberty Mutual Insurance Corporation writes in opposition,
"if passed, [this bill] jeopardizes the ability to contract with
SB 270
Page 12
deposition service firms for these litigation services. There
is simply no public policy justification to eliminate such
contracts. Amendments were offered that would clarify [this
bill] and ensure that deposition service firms could provide
these litigations services including court reporting and
ancillary litigation services based on market rates, but these
amendments were rejected. This will unnecessarily drive up
litigation costs and create inefficiencies in this market place.
Although we recognize the different issues between court
reporters and deposition service firms, we do not necessarily
have a position on those particular issues. However, this bill
will drive up litigation costs and prohibit businesses and other
entities from using deposition service firms for these
litigation and ancillary services."
REGISTERED SUPPORT:
None on file.
REGISTERED OPPOSITION:
Liberty Mutual Insurance Corporation
Analysis Prepared by:Elissa Silva / B. & P. / (916) 319-3301
SB 270
Page 13