BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2015-2016 Regular Session
SB 1256 (Anderson)
Version: February 18, 2016
Hearing Date: May 3, 2016
Fiscal: No
Urgency: No
RD
SUBJECT
Civil law: litigation: The Civility in Litigation Act
DESCRIPTION
This bill would enact the Civility in Litigation Act to
generally require a person who claims to have been aggrieved by
an alleged unlawful act or practice to first send a letter to
the person or entity alleged to have caused the harm, as
specified, before filing any legal action or pursuing legally
mandated alternative dispute resolution. If the person or
entity alleged to have engaged in the unlawful act or practice
responds within 30 days after the specified letter is received,
or delivery of the letter is attempted, this bill would further
require the claimant to engage with the person or entity alleged
to have engaged in the unlawful act or practice in good faith
efforts to be made whole.
This bill would require that a copy of the letter be filed
together with any complaint filed in a court of law and would
subject the claimant to other specified requirements when filing
a complaint with the court. This bill would provide that if a
court, factfinder, or arbiter determines that the provisions of
the bill were not complied with in good faith, that
determination may be grounds for dismissing a claim that would
otherwise be authorized. Lastly, this bill would not apply to
claims arising from matters related to the Family Code, the Fair
Employment and Housing Act, the Penal Code, or the Probate Code,
or to cases of a true emergency, as specified.
BACKGROUND
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California law permits a party to bring various actions in court
to seek redress for harms suffered, following certain
procedures. As a threshold matter, a civil action must be
brought forth in a timely fashion-i.e., within specified
statutes of limitations.
This bill would enact the Civility in Litigation Act to toll the
statute of limitations for a minimum of 30 days and to require,
before filing any legal action or pursuing legally mandated
alternative dispute resolution, that a person who claims to have
been aggrieved by an alleged unlawful act or practice first send
a letter to the person or entity alleged to have caused the harm
and engage "in good faith efforts to be made whole," as
specified.
CHANGES TO EXISTING LAW
Existing law generally provides that civil actions must be
commenced within applicable statutes of limitations under the
Code of Civil Procedure, as specified, without exception, unless
the Legislature prescribes a different limitation by statute in
special cases. (Code Civ. Proc. Sec. 312.)
Existing law provides that evidence that a person has, in
compromise or from humanitarian motives, furnished or offered or
promised to furnish money or any other thing, act, or service to
another who has sustained or will sustain or claims that he or
she has sustained or will sustain loss or damage, as well as any
conduct or statements made in negotiation thereof, is
inadmissible to prove his or her liability for the loss or
damage or any part of it. (Evid. Code Sec. 1152(a).)
This bill would add the "Civility in Litigation Act" to require,
notwithstanding any law, that a person who claims to have been
aggrieved by an alleged unlawful act or practice shall, before
filing any legal action or pursuing legally mandated alternative
dispute resolution, including mandatory arbitration, send a
signed letter, as specified, to the person or entity he or she
alleges to have caused the harm that sets forth alleged facts in
support of the grievance and any other information necessary to
inform the person or entity of the alleged harm suffered. This
bill would toll the statute of limitations on a claim arising
from the alleged unlawful act or practice subject to this
section for a period of 30 days following the date of mailing of
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the letter, as specified, plus any additional period of time
during which the parties engage in negotiations.
This bill would provide, if the person or entity alleged to have
engaged in the unlawful act or practice responds to the person
who claims to have been aggrieved within 30 days after the
letter, above, is received, or delivery of the letter is
attempted, the person claiming to have been aggrieved shall
engage with the person or entity alleged to have engaged in the
unlawful act or practice in good faith efforts to be made whole.
This bill would provide that if the person alleged to have
engaged in an unlawful act or practice fails to respond to the
letter within 30 days after the letter is received, or
delivering of the letter is attempted, the person who claims to
have been aggrieved may pursue other efforts to be made whole,
including filing a complaint in a court of competent
jurisdiction or alternative dispute resolution, including
mandatory arbitration, if applicable.
This bill would provide that if the person who claims to have
been aggrieved files a complaint in a court of law, he or she
shall attach to the complaint a copy of the letter sent pursuant
to this section and proof of its mailing. If the person who
claims to have been aggrieved knows that the letter he or she
sent to the person or entity alleged to have engaged in the
unlawful act or practice was not received, he or she must also:
(1) disclose that information in the complaint; (2) describe the
good faith efforts he or she made to comply with this section;
and (3) include any information explaining whether and why the
requirements of the Civility in Litigation Act were not complied
with.
This bill would provide that, if a court, factfinder, or arbiter
determines that the provisions of this paragraph were not
complied with in good faith, that determination may be grounds
for dismissing a claim that would otherwise be authorized.
Because of the public policy encouraging resolution of disputes
and a full and fair hearing on those disputes, if the court or
other lawfully authorized factfinder dismisses a claim under
this paragraph, he or she must state in writing and with
specificity why the case was dismissed and whether the case was
dismissed with prejudice. This bill would provide that if the
alleged claims by an aggrieved party are not time barred,
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including the tolling of the limitation period as specified for
under the bill, the claims should be dismissed without prejudice
to allow the aggrieved party to cure any alleged defects.
This bill would provide that the Civility in Litigation Act does
not apply to a claim arising from matters related to, or
violations of, the Family Code, the Fair Employment and Housing
Act, the Penal Code, or the Probate Code. The Act would also not
apply in the case of a true emergency in which court relief is
required immediately under the terms and conditions required
under existing law for injunctive relief, as specified.
This bill would provide that attempts to comply with the
Civility In Litigation Act by a person receiving a demand shall
be construed to be an offer to compromise and shall be
inadmissible as evidence pursuant to specified law. Further,
this bill would provide that attempts to comply with a demand
shall not be considered an admission of engaging in an unlawful
act or practice. Evidence of compliance or attempts to comply
with this Act may be introduced by a defendant solely for the
purpose of establishing good faith or to show compliance with
this section.
COMMENT
1. Stated need for the bill
According to the author:
Current law establishes the time and procedure for the
commencement of a civil action. As a matter of public policy
and judicial resources, settlement and or resolution of
disputes and a full and fair hearing of claims is to be
encouraged. Regrettably, what have become known as "drive by"
lawsuits, harassing and sometimes frivolous, have become a way
of life for many small businesses and individuals; stifling
productivity and clogging our court system and wasting
precious judicial resources.
SB 1256 is designed to put some civility back into our legal
system both in furtherance of the public policy favoring
settlement efforts, but also as a prescription for reducing
the financial pressure on our court system and their
resources. [ . . . ]
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In support, the San Diego County Apartment Association writes
that this bill "follows in the footsteps of SB 1186 [Steinberg
and Dutton, Ch. 383, Stats. 2012] that, among other things,
requires that any intent to sue letter pertaining to an ADA
violation, must be sent at least 30-days prior to filing a
lawsuit and must include specific problems and date of violation
so that business owners will know why they are being sued. SB
1256 seems to be extending the similar provisions contained in
SB 1186 to other civil actions. Hopefully, it will resolve many
of the problems with drive-by lawsuits in California by
encouraging settlement efforts prior to going to court."
Also in support, the Civil Justice Association of California
writes that "SB 1256 does not limit the rights of any claimant.
The bill instead will require that the person alleged to have
caused the harm be afforded an opportunity to make the aggrieved
person whole before a complaint is filed. This bill will promote
prompt, early settlement of those claims that can be resolved by
good faith negotiation prior to filing a civil action. The bill
will also discourage the filing of abusive or nuisance claims
designed to extract a settlement from defendants weighing the
cost of defending lawful conduct."
2. This bill places all burdens to comply with the Civility in
Litigation Act on the plaintiff, even if the defendant does
not make good faith efforts to respond
This bill would enact the Civility in Litigation Act to
generally require a person who "claims to have been aggrieved by
an alleged unlawful act or practice" (hereinafter "plaintiff" or
"injured party") to first send a letter to the person or entity
alleged to have caused the harm, as specified, before filing any
legal action or pursuing legally mandated alternative dispute
resolution. (Emphasis added.) If the person or entity alleged
to have engaged in the unlawful act or practice responds within
30 days after the specified letter is received, or delivery of
the letter is attempted, this bill would further require the
claimant to engage with the person or entity alleged to have
engaged in the unlawful act or practice in good faith efforts to
be made whole. Moreover, if the person or entity alleged to
have wronged the plaintiff does not respond, the bill then
charges the person claiming to be aggrieved to "pursue other
efforts to be made whole," "including filing a complaint in a
court of competent jurisdiction or alternative dispute
resolution . . . ."
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First, it is unclear what "other efforts" an injured party might
be able to take to make him or herself whole if the defendant
will not engage in settlement negotiations or if the plaintiff
does not file suit in court (or in an alternative dispute
forum); nonetheless the suggestion is that there are other
options generally available to a plaintiff that would not
require the participation of the person alleged to have caused
the injury. Second, it is unclear why this bill places the onus
wholly on the plaintiff to make him or herself whole, or to
prove good faith efforts were made to resolve issues "civilly"
before going to court-even in instances where the potential
defendant does not cooperate.
To this latter point, the bill provides that while a plaintiff
can proceed to file a complaint in a court of law if the party
alleged to have engaged in the unlawful act or practice does not
respond to the letter in due time, the plaintiff must not only
provide a copy of the proof of its mailing, but the plaintiff
must also: (1) disclose to the court if they know that the
letter was not received (how the plaintiff is to know that fact,
is unclear); (2) describe the good faith efforts he or she made
to comply with the Civility in Litigation Act; and (3) include
any information explaining whether and why the provisions of
this section were not complied with. Again, this is after the
plaintiff has already attached a copy of the letter and the
proof of mailing, in instances where the defendant has not
replied to their letter. Further demonstrating the unequal
treatment of the parties involved in a potential lawsuit, the
bill would ensure that any attempts to comply with the Civility
in Litigation Act by a person receiving a demand shall be
construed to be an offer to compromise and shall be inadmissible
as evidence pursuant to specified law, and shall not be
considered an admission of engaging in an unlawful act or
practice. Notably, no such similar protections are made for
offers of comprise that might undermine the claimant's case if
disclosed or used as evidence in an ensuing lawsuit.
Indeed, the very language of this bill appears to operate under
the premise that most claims are false or without merit and that
most defendants are innocent and unfairly targeted. Relatedly,
the undertone of the bill appears to be that plaintiffs will
not, and do not, engage in good faith efforts to settle cases
outside of the courts under existing law.
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3. Current law already encourages settlement
Despite assertions by proponents that this bill is needed to
encourage settlements in California (see Comment 1), it appears
that California law already attempts to encourage settlements in
many different ways. For example, in small claims cases,
California law requires that a person first ask the other side
for payment before going to court, absent a good reason. The
person can ask in person, by phone, or in writing in what is
known as a "demand letter," and must tell to the court that they
did this, and how, on their court form. (See Code Civ. Proc.
Sec. 116.320, requiring a plaintiff commencing an action in the
small claims court to file a claim under oath that set forth,
among other things, that: (1) the plaintiff, where possible, has
demanded payment and, in applicable cases, possession of the
property; and (2) the defendant has failed or refused to pay,
and, where applicable, has refused to surrender the property.)
Looking beyond small claims cases, California Rules of Court
also authorize courts, more generally, to require mandatory
settlement conferences on the court's own motion or at the
request of any party. (Cal. Rules of Court 3.1380.)
Separately, Section 998 of the Code of Civil Procedure also
seeks to encourage settlement in civil actions by allowing for
the imposition of monetary sanctions against parties to civil
actions that decline pre-trial settlement offers and
subsequently fail to obtain a more favorable outcome at trial.
Specifically, the law provides that, not less than 10 days prior
to commencement of trial or arbitration of a dispute to be
resolved by arbitration, any party may serve an offer in writing
upon any other party to the action to allow judgment to be taken
or an award to be entered in accordance with the terms and
conditions stated at that time. If the offer is not accepted
prior to trial or arbitration or within 30 days after it is
made, whichever occurs first, the offer is to be deemed
withdrawn, and cannot be given in evidence upon the trial or
arbitration. (See Code Civ. Proc. Sec. 998.) Relatedly,
Section 3291 of the Civil Code, provides that if the plaintiff,
in an action to recover damages for personal injury, makes an
offer to compromise pursuant to Section 998 that the defendant
does not accept prior to trial or within 30 days, whichever
occurs first, and the plaintiff obtains a more favorable
judgment, the judgment shall bear interest at the legal rate of
10 percent per annum calculated from the date of the plaintiff's
first offer that is exceeded by the judgment. (Civ. Code Sec.
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3291.) As noted by various courts, both of these statutes are
"designed to encourage settlements and penalize those who refuse
reasonable settlement offers." (See e.g., Hrimnak v. Watkins
(2005) 38 Cal.App.4th 964, 980-981, citing Evers v. Cornelson
(1984) 163 Cal.App.3d 310, 317; Bank of San Pedro v. Superior
Court (1992) 3 Cal.4th 797, 804; Lakin v. Watkins Associated
Industries (1993) 6 Cal. 4th 644, 663.)
Yet other examples exist demonstrating that existing law
encourages settlement between the parties at the outset of a
claim in specific situations. For example, the Public
Contracting Code (which is not exempted by this bill) provides
that a public entity has full authority to compromise or
otherwise settle any claim relating to a contract at any time.
(Pub. Contract Sec. 9201(a).) In relation to public works
claims under $375,000, specifically, the Public Contract Code
provides for the ability of a claimant to demand an informal
conference to meet and confer for settlement of issues in
dispute between the claimant contractor and the local agency
under specified circumstances. Upon a demand, the local agency
must schedule a meet and confer conference within 30 days for
settlement of a dispute. (Pub. Contract Sec. 20104.2(d).)
Following the meet and confer process, if the claim, or any
portion remains in dispute, the claimant may file a claim
pursuant to the Government Tort Claims Act. (Pub. Contract
Sec. 20104.2(e).)
Furthermore, the Evidence Code reflects a public policy
encouraging settlements by way of protecting offers of
compromise, as well as any conduct or statements made during
negotiations for settlement of a claim-thus ensuring the
"complete candor between the parties that is most conducive to
settlement." (Evid. Code Sec. 1152; see Comment to Section
1152, as enacted in 1965.)
It is unclear as to what, if any, empirical information exists
that would demonstrate settlements are on the decline or
otherwise rare in spite of such existing laws promoting
settlement. To the extent that proponents also argue that this
bill will curb "abusive or nuisance claims," no such information
has been provided supporting any contentions that California
courts are inundated or unable to dispense with abusive or
nuisance claims under existing laws relating to frivolous
lawsuits or vexatious litigants. Moreover, given that this bill
does not set any parameters around what can and cannot be
included in these letters (such as pre-litigation demands for
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money), it is entirely possible that, in due time, parties will
return to alleging that the letters required under this bill are
used by plaintiffs to extort or harass innocent parties into
agreeing to money settlements under the threat of facing suit.
Indeed, the bill merely requires that the person set forth
alleged facts in support of the grievance and any other
information necessary to inform the person or entity of the
alleged harm suffered, not unlike a complaint.
In opposition, Consumer Attorneys of California writes that
plaintiffs will often times reach out to potential defendants
prior to filing in an effort to settle cases, "but this effort
depends upon the circumstances of each case. A hard and fast
rule just doesn't make sense nor have we seen evidence that the
current system is broken and in need of a fix." Likewise,
Disability Rights California also writes in opposition that this
bill "creates unnecessary barriers to implementation of all
civil litigation in California, [and] specifically civil rights
laws. In most instances, attorneys and parties try to resolve
claims prior to litigation, so the bill is not needed."
4. Other opposition arguments
In opposition, the Consumer Attorneys of California (CAOC)
writes that this bill is not only one-sided and increases
burdens on plaintiffs, but it will increase litigation, cause
further delay to the already overburdened and underfunded court
system, and ultimately act to further delay justice. CAOC argues
that "[i]n order for a judge to determine that SB 1256's good
faith requirements were violated, he or she would have to review
settlement discussions, which otherwise would be inappropriate
and against the law as settlement offers are generally
confidential. Then the judge would be required to value the case
at the start based on these negotiations alone rather than on
its merits. These procedures would cause confusion and delay by
requiring a judge to make judicial decisions based on initial,
uninvestigated allegations and defenses and would result in an
increase of litigation to determine whether these vague
requirements were met."
Again, CAOC contends that the bill's provisions are "severely
one-sided" in favor of defendants. CAOC specifically raises
concern that the bill allows a case to be dismissed if the
injured party does not negotiate in good faith, but does not
provide for a similar penalty against a defendant who refuses to
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take responsibility or negotiate in good faith. Moreover, as
noted in Comment 3, above, the bill expressly protects the
defendant from any actions made to comply with the procedures in
SB 1256, but provides no similar protection for the plaintiff.
Furthermore, CAOC writes, while the bill requires the plaintiff
to disclose all facts and information necessary to inform the
defendant of the harm suffered, it does not require similar
disclosure from the defendant, thus giving the defendant "a free
and early look at the case, without requiring any information in
exchange."
Additionally, CAOC argues that the bill is an abrogation of the
plaintiff's constitutional right to trial. "Plaintiffs are not
always simply interested in a settlement-often times it is as
important or more important to publically expose defendants'
wrongdoing. This is not only cathartic to the plaintiff but it
helps inform the public of defendant's wrongdoing and thereby
reduces the chance that the defendant will continue to get away
with its bad acts against others." Lastly, CAOC asserts that
it is offensive, if not dangerous and unethical, to have an
absolute mandate that a plaintiff make a good-faith effort to
settle, particularly in cases where the plaintiff has been
sexually harassed or molested by a defendant.
Disability Rights California (DRC) also writes in opposition to
the bill, listing nine different traps created by the bill "for
the unwary." Among other things, DRC lists the following
concerns:
The bill will disadvantage individuals proceeding without
lawyers, who will not know or understand that this is required
before they file on their own behalf.
Many types of litigation require urgent action to prevent
irreparable harm. This includes cases involving harassment,
threats, emergencies, environmental hazards and more. The bill
exempts such litigation from the 30-day pre-filing requirement
ONLY for "true" emergencies, an undefined term, subjecting
individuals and communities to 30 days of harm prior to filing
or the risk that their request for injunctive relief will
result in dismissal of their case.
This measure creates procedural nightmares where parties have
both federal and state claims. The state does not have the
authority to impose procedural barriers on most federal civil
rights claims. So, a party might be required to try to resolve
some claims, but not others? This is unworkable in practice.
Despite the narrow exemption for employment and housing
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discrimination cases under CA Gov. Code 12960 (Fair Employment
and Housing Act), the bill would apply to other types of civil
rights cases, including claims under the Unruh Act, the Ralph
Act, and the Disabled Persons Act.
The measure fails to address the fact that many types of
claims require exhaustion of administrative remedies, and
would create great confusion about whether you need to try to
resolve before proceeding to exhaust (which would create
problems with already extremely short statutes of limitation)
or during the administrative process, including under the CA
Government Torts Claims statutes.
The bill could be particularly troubling when raising claims
against government entities, because negotiating with such
entities can take an extremely long time due to the levels of
approval necessary for resolution.
Support : Civil Justice Association of California; San Diego
County Apartment Association
Opposition : Consumer Attorneys of California; Disability Rights
California
HISTORY
Source : Author
Related Pending Legislation : None Known
Prior Legislation : None Known
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