BILL ANALYSIS                                                                                                                                                                                                    





                             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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