BILL ANALYSIS
SB 1015
Page 1
SENATE THIRD READING
SB 1015 (Murray)
As Amended April 25, 2006
2/3 vote. Urgency
SENATE VOTE : Vote not relevant
JUDICIARY 7-0 APPROPRIATIONS
12-3
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|Ayes:|Jones, Harman, Haynes, |Ayes:|Chu, Sharon Runner, Bass, |
| |Laird, Leslie, Levine, | |Berg, Calderon, De La |
| |Monta?ez | |Torre, Emmerson, Haynes, |
| | | |Karnette, Leno, |
| | | |Ridley-Thomas, Walters |
| | | | |
|-----+-------------------------+-----+----------------------------|
| | |Nays:|Klehs, Nation, Yee |
| | | | |
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SUMMARY : Seeks to modify the existing statute designed to shield
financial information in divorce and separation cases to address a
finding of unconstitutionality made by the appellate court in the
recent decision of Burkle v. Burkle (2006) 135 Cal.App.4th 1045.
Specifically, this bill :
1)States legislative findings including that existing law does not
adequately protect the right of privacy in divorce proceedings,
and that the Legislature intends to more fully protect that
right; that in the context of divorce proceedings, the
unnecessary public disclosure of financial assets, liabilities,
income or expenses and residential addresses raises a
substantial probability of prejudice to a financial privacy
interest that overrides the public's right of access to court
records; and, that the redaction of documents containing such
information is the least restrictive means of protecting the
financial privacy of the parties while recognizing the public's
right of access to court records.
2)Requires the court, upon request by a party, to order redacted
from a pleading all of the following information regarding a
party to the proceeding: a) a social security number; b) the
address of a residence unless that address is provided as the
address for service of process of a party; c) the name on, and
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account number and balance of, a bank account, brokerage
account, or an account at any other financial institution; d)
annual salary or income; and, e) net worth.
3)Requires the court, upon request by a party, to consider --
using a discretionary "balancing test" modeled after current
court rules -- ordering the redaction of other financial
information not specifically subject to the bill's mandatory
redaction requirement (i.e., financial information that is not
the requesting party's account number or bank, brokerage, or
other financial account balance, and is not his or her annual
salary, income or net worth - all of which are subject to
automatic redaction upon request under this bill).
4)Requires that, subject to the direction of the court, no more of
any pleading than is necessary to protect the parties'
overriding right to privacy may be redacted. Requires that
pleadings include any document that sets forth assets,
liabilities, income, or expenses, a marital settlement agreement
or any document attached to such an agreement that lists
financial information.
5)Provides that a request shall be made by noticed motion, and
that any pleading redacted under the proposal may not be
restored except upon petition to the court and good cause shown.
6)Requires that the party making the request to redact a pleading
serve a copy of the pleading containing the financial
information subject to the request on the other party and file a
proof of service with the request to redact.
7)Requires the Judicial Council (JC), if funds are appropriated,
to conduct a study regarding gender fairness in the family
courts and report the results of the study to the Legislature
within 18 months of the appropriation of funds for the study.
Any redacted information provided to the JC for purposes of this
study may only be used for statistical purposes.
8)Requires the JC, by July 1, 2007, to adopt rules setting forth
the procedures for redacting and restoring pleadings pursuant to
this bill, and would permit the JC to charge and collect a
reasonable fee to recover the actual costs of redaction and file
maintenance.
9)Does not preclude a law enforcement or government regulatory
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agency, otherwise authorized, to access the unredacted
pleadings.
10) Contains an urgency provision allowing this bill to take
effect immediately upon enactment.
EXISTING LAW :
1)Provides that Congress shall make no law abridging the freedom
of speech, or of the press. (U.S. Constitution, First
Amendment), and explicitly protects the right to privacy for all
Californians under the state Constitution. (California
Constitution, Article I, Section 1.)
2)Provides that court proceedings shall generally be public (Code
of Civil Procedure Section 124), and that records may only be
sealed by establishing an overriding interest that overcomes the
right of public access, among other factors. These court rules
also provide that no record may be sealed solely by the
stipulation of the parties. (Cal. Rules of Court Rule 243.1.)
3)Requires the court, pursuant to Family Code Section 2024.6, to,
upon request by a party in a dissolution or legal separation,
seal any pleading that list the parties' financial assets and
liabilities and provides the location or identifying information
about those assets and liabilities. However this provision was
recently held an unconstitutional violation of the First
Amendment ( Burkle ).
FISCAL EFFECT : According to the Assembly Appropriations analysis,
in 2004, about 150,000 petitions for marital dissolution were
filed with the courts statewide.
1)The number of noticed motions that would be made seeking
redaction of financial information is unknown, but would
probably involve, at most, a very small percentage of total
petitions. This would result in additional court workload that
more likely could marginally delay other court proceedings
rather than directly increase overall court costs.
The courts would likely receive additional revenue associated
with this new workload. The new Rule of Court to be adopted by
the JC will likely include a provision allowing for a fee to be
charged to the parties in cases where a substantial amount of
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material being submitted for redaction requires the appointment
of a court referee. A similar fee is currently authorized under
Court Rule 243.1, involving the sealing of court records.
2)The JC expects that many more parties will request redaction by
the courts of specified financial information that does not
require a noticed motion. The most recent amendments authorize
the courts to charge a fee to recover the actual costs of this
function.
3)Costs for the gender fairness study will be in the range of
$250,000 every 10 years.
COMMENTS: This bill raises important policy and legal issues
regarding our state constitution's special privacy protection on
the one hand, and our federal and state constitutional commitments
to maximize open access to court proceedings on the other. Just
two years ago, in 2004, the Legislature passed by strong
bi-partisan votes, and the Governor signed, urgency legislation
which established a new mechanism for divorcing or separating
parties to require family courts to seal entire pleadings that
contained any of their financial information [AB 782 (Kehoe),
Chapter 45, Statutes of 2004]. The stated purpose of that earlier
bill was to protect divorcing couples from being forced to expose
their private financial information to public view solely because
they were getting divorced. On January 20, 2006, however, the
Second District Court of Appeals based in Los Angeles held that
the key provision of AB 782, Family Code Section 2024.6, was an
unconstitutional violation of the First Amendment's right of
public access to court proceedings.
This bill seeks to address the court's declared constitutional
infirmities in Family Code Section 2024.6 by, among other things,
adding legislative findings, including that the unnecessary public
disclosure of financial information in a dissolution proceeding
outweighs the public's right to access court documents and
proceedings, and by modifying Family Code Section 2024.6 to
require targeted redaction of financial information rather than
the broad sealing of entire court documents. According to the
author, while open records principles should generally govern
judicial records and court proceedings, the time has come to make
a carefully-tailored exception for records and information in
divorce cases that generally affect only the parties to the
dissolution or legal separation.
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Though the constitutional right of access to civil proceedings is
not as well-developed as the right to attend criminal proceedings,
courts generally have concluded that the First Amendment right of
access applies to civil proceedings as well as to criminal
proceedings. They have also concluded that the First Amendment
right of access equally applies to court documents as well as to
court proceedings.
It is also well-established policy in California to allow maximum
public access to judicial proceedings and records. However
California also has a long tradition of recognizing and protecting
privacy. Unlike many states, as noted above, our state
constitution specifically and specially recognizes the right to
privacy. In addition, our courts, including our Supreme Court,
have specifically extended our right of privacy to financial
privacy. And while California has historically sought to allow
maximum public access to judicial proceedings and records, it is
also important to note there have been some careful
legislatively-created statutory exceptions to this tradition,
including dependency and paternity actions, and mediation of
custody and visitation rights. In these family-related instances,
for example, the Legislature has determined that it is necessary
to close these proceedings in order to protect the participants,
especially children, from harm that could result from public
intrusion into very private matters.
The seminal state Supreme Court case on public access to civil
proceedings which currently appears to control the constitutional
analysis of this legislation is NBC Subsidiary (KNBC-TV) Inc. v.
Sup. Ct. (1999) 20 Cal.4th 1178, decided by the Court in 1999 and
written by Chief Justice Ronald George. In that case, Sondra
Locke sued Clint Eastwood for deceit, intentional interference
with prospective economic advantage and breach of fiduciary duty,
based on an alleged promise by Eastwood to Locke to assist in the
development of various movie projects. In its decision, the
California Supreme Court held that First Amendment scrutiny is
triggered by the closure of civil proceedings. The Court then
adopted a four-prong "balancing test" for determining when public
court proceedings may be closed from public and press view. Under
this "balancing test," court proceedings (and presumably documents
as well) are presumed to be open to the public and the press
unless the court finds: 1) there is an overriding interest to
support the sealing; 2) there is a substantial probability of
prejudice to that interest absent sealing; 3) the sealing required
is narrowly tailored to serve the overriding interest; and, 4)
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there is no less restrictive means available to achieve the
overriding interest. This was the "test" applied by the appellate
court in the recent Burkle case, and it is this test that
presumably will be used by the courts to determine the
constitutionality of this bill should it be subsequently
challenged in court as was the current version of Family Code
Section 2024.6.
In making any such future constitutionality determination, the
courts will need to be cognizant that the Legislature is vested
with the power to determine whether a matter serves a public
purpose. Legislative findings are to be given great weight by the
courts, and are to be upheld unless found to be arbitrary and
unreasonable. Indeed, courts must presume a legislative act is
constitutional, resolving any doubts in favor of the act's
constitutionality, unless there is clear and unquestionable
conflict between the legislative act and the state or federal
constitution.
In addition, following the Burkle decision, it is clear that
protection of at least some of an individual's sensitive financial
information already has been found by the courts to be an
overriding state interest, namely, the goal of protecting
individuals, including divorcing parties, from identity theft and
other abuse that could occur with the release of sensitive
financial information. Should this bill become law like its
predecessor legislation, it may thus be up to the courts to make
the final determination whether its proscriptive framework
adequately comports with the First Amendment requirements set
forth by the California Supreme Court in the NBC decision noted
above.
In prior committee hearings, this bill was amended to, among other
things, add the concept of a balancing test into this bill,
require that any request to the court for redaction of financial
information be by noticed motion, and clarify that temporary
judges and other privately compensated judges do not have
authority to order redaction under this bill. Provisions
requiring a gender study by the JC and permitting the JC to impose
fees for the administration of this bill's redaction process were
also added.
The principal organizational supporter of this bill is the Family
Law Section of the State Bar, who argues this bill is good public
policy and strikes a reasonable and constitutional balance. The
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principal opponent of this bill is the California Newspaper
Publishers Association, who continues to contend this bill
violates the First Amendment and will ultimately be found to be
unconstitutional. In addition, the JC and the California
Commission on the Status of Women are in opposition.
Analysis Prepared by : Drew Liebert / JUD. / (916) 319-2334
FN: 0014092