BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2011-2012 Regular Session
SB 1045 (Emmerson)
As Amended April 17, 2012
Hearing Date: May 1, 2012
Fiscal: No
Urgency: No
RD
SUBJECT
Metal Theft: Damages
DESCRIPTION
This bill would provide that any junk dealer or recycler who
possesses a fire hydrant, a fire department connection, as
specified, or a backflow device or connection to that device or
part of that device without a prescribed written certification,
from the agency or utility owning or previously owning the
material is liable to the agency or utility for the wrongful
possession of that material.
The liability provided for by this bill would be for the actual
damages incurred by the agency or utility, including the value
and cost of replacing the material, labor costs, and the costs
of repairing any damage caused by the removal of the material.
The bill would additionally require the court to also award
exemplary damages of three times the actual damages incurred by
the agency or utility, and provide that the agency or utility
shall also be entitled to recover court costs and reasonable
attorney's fees.
The bill also makes several legislative findings and
declarations.
BACKGROUND
In recent years, metal theft has increased drastically.
According to a Sacramento Bee article, these thefts "have
increased 81 percent, driven by rising prices for the stolen
recyclables, according to an insurance industry report. . . A
(more)
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total of 25,083 claims of theft of copper, bronze, brass and
aluminum were submitted in the last three years . . . .
Ninety-six percent of the thefts were copper. . . . The top five
states generating the most metal theft claims: Ohio, Texas,
George, California, �and] Illinois." (Bill Lindelof, Sacto 911:
Metal thefts on the rise as copper prices increase, March 8,
2012.)
The Sacramento Suburban Water District reports that metal theft
is on the rise in the area, with thieves stealing fire hydrants,
backflow prevention devices (preventing potential contaminants
from entering the potable water system) and other equipment with
brass or other metal fittings that can be sold as scrap metal.
"The District responded to 65 incidents of fire hydrant theft or
tampering since June 2011. The cost of replacing a fire hydrant
is approximately $5,000. More than 115 backflow prevention
devices were stolen in 2011, often from outside commercial
businesses and apartment complexes."
(< http://sswd.org/water/metal-theft.html > (as of April 25,
2012).)
As a result of this growing problem, several bills have been
introduced in recent legislative sessions to address the problem
in varying ways. For example, SB 447 (Maldonado and Florez, Ch.
732, Stats. 2008) required scrap junk dealers and recyclers to
report to local law enforcement officials specified information
about materials scraped at their facilities and by whom, on a
daily basis. SB 691 (Calderon, Ch. 720, Stats. 2008) provided,
among other things, that a junk dealer or recycler shall not pay
for nonferrous material, as defined, unless the payment is made
by cash or check, the check is mailed or the cash or check is
provided no earlier than three days after the date of sale, and
the dealer or recycler obtains a photograph or video of the
seller and certain other identifying information, as specified,
including the thumbprint of a seller, to be retained by the
dealer or recycler for a certain period of time. AB 844
(Berryhill, Ch. 731, Stats. 2008) also required junk dealers to
conform to additional record-keeping and payment restrictions
when purchasing nonferrous materials, as defined.
This year, the author of this bill also introduced another bill,
SB 1387, which provides, among other things, that no junk dealer
or recycler shall possess any fire hydrant, or fire department
connection, as specified, in the absence of a written
certification as prescribed. The provisions in SB 1045 are
substantially related to SB 1387.
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This bill, sponsored by the Eastern Municipal Water District,
would seek to address the increase in metal theft by imposing
liability on junk dealers or recyclers who possess a fire
hydrant, fire department connection, or backflow device, as
specified, without a written certification from the agency or
utility owner.
CHANGES TO EXISTING LAW
Existing law requires that every junk dealer and recycler, as
defined, keep a written record of all sales and purchases made
in the course of his or her business. Records must be kept for
two years after making the final entry of any purchase or sale
of junk or scrap metals and alloys, as defined. (Bus. & Prof.
Code Secs. 21605, 21607.) Existing law also requires that every
junk dealer and recycler set out in the written record required,
specified information. (Bus. & Prof. Code Sec. 21606.)
Existing law prohibits a junk dealer or recycler from providing
payment for nonferrous materials, as defined, unless specified
requirements are met. (Bus. & Prof. Code Sec. 21608.5)
Existing law defines junk dealer as any person engaged in the
business of buying, selling and dealing in junk, any person
purchasing, gathering, collecting, soliciting or traveling about
from place to place procuring junk, and any person operating,
carrying on, conducting or maintaining a junk yard or place
where junk is gathered together and stored or kept for shipment,
sale or transfer. (Bus. & Prof. Code Sec. 21601.)
This bill would provide that any junk dealer or recycler who
possesses a fire hydrant, fire department connection, including,
but not limited to, brass fittings and parts, manhole cover or
lid or part of that cover or lid, or backflow device or
connection to that device or part of that device without a
written certification from the agency or utility owning or
previously owning the material shall be liable to the agency or
utility for the wrongful possession of that material.
This bill would provide that the liability of the junk dealer or
recycler in violation of this bill is for the actual damages
incurred by the agency or utility, including the value of the
material, the cost of replacing the material, labor costs, and
the costs of repairing any damage caused by the removal of the
material.
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This bill would also require that the court award exemplary
damages of three times the actual damages incurred by the agency
or utility.
This bill would provide that the agency or utility shall also be
entitled to recover court costs and reasonable attorney's fees.
This bill would provide that a written certification shall be on
the agency's or utility's letterhead and shall certify both that
the agency or utility has sold the material described or is
offering the material for sale, salvage, or recycling, and that
the person possessing the certification or identified in the
certification is authorized to negotiate the sale of that
material.
This bill would make specified legislative findings, including,
among other things, that theft of fire hydrants, manhole covers,
and backflow devices has significantly increased in recent years
and represents very substantial, and growing, health and safety
issues.
COMMENT
1. Stated need for the bill
According to the author:
Under current law, metal recyclers are prohibited from
accepting fire hydrants for the purpose of recycling.
Recyclers are also required to obtain and keep a photograph,
fingerprint, address, and vehicle license plate number of the
transporting vehicle that delivers the material. Furthermore,
payment for metal over a specific amount must be mailed or
paid after a given period.
To address this metal theft epidemic and strengthen current
law, SB 1045 seeks to provide cities, counties, special
districts, and private utility companies with the additional
tools they need to recover costs and impose stiff civil
penalties on thieves and recyclers who violate the law.
Specifically, SB 1045 would prohibit a junk dealer or recycler
from possessing manhole covers, backflow devices, and fire
hydrants without written certification on the letterhead of
the public agency or utility that owns or previously owned
that material. As a result, this bill would relieve junk
dealers from the responsibility of determining whether or not
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any of the three items in question are stolen since they will
no longer be eligible for recycling without an appropriate
certification. SB 1045 would enable the agency or utility to
recoup the cost of the stolen items and offset repair and
replacement costs, as well as be awarded exemplary damages by
the court of three times the actual damages as a deterrent to
metal theft.
2. Bill would provide for actual damages, exemplary damages,
and attorney's fees and costs
This bill would provide for liability of a junk dealer or
recycler who possesses a fire hydrant or fire department
connections, as specified, without a written certification from
the agency or utility that owns or previously owned the
material. The bill requires a written certification be on the
agency's or utility's letterhead and that it specify both that
(1) the agency or utility has sold the material described or is
offering the material for sale, salvage, or recycling, and (2)
that the person possessing the certification or identified in
the certification is authorized to negotiate the sale of that
material. Any junk dealer or recycler in violation of this
section would be held liable to the agency or utility owning or
previously owning the prohibited material for specified damages.
a. Specified damages where liability is found
Where a junk dealer or recycler if found to be in violation of
this bill and is held liable to the agency or utility, the
agency or utility is entitled to the following specified
damages: actual damages incurred by the agency or utility,
including the value of the material, the cost of replacing the
material, labor costs, and the costs of repairing any damage
caused by the removal of the material, and exemplary damages
of three times the actual damages incurred by the agency or
utility.
According to the author, "�m]etal theft is on the rise as the
price of metal continues to climb. The theft of metals has
devastated both public and private property and has harmed
critical public infrastructure, making it difficult to deliver
essential utilities to customers. Moreover, the theft of
certain metal devices can seriously threaten public health and
safety. For instance, individuals have been severely injured
falling down uncovered manholes and vehicles have incurred
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damage �when] driving over manholes where the covers have been
stolen. In addition, stolen backflow devices leave potable
water sources vulnerable to cross-contamination while stolen
fire hydrants render properties defenseless to fire. While
several laws have been enacted to curb metal theft, it is
still prevalent in California."
The ability for the agency or utility to bring an action
against a junk dealer or recycler in violation of this bill is
important. Relatedly, many of the available damages are not
only justified, but also critical to encourage due diligence
of junk dealers and recyclers when engaging in sales of these
materials and to deter bad actors from engaging in the illegal
sale of these materials.
Many of the damages are directed at making the agency or
utility whole (e.g. actual damages, including cost of
material, costs of replacing the material, labor costs, and
costs of repairing any damage caused by the removal of the
material), while others are aimed more at deterring violations
of the law in order to curb metal thefts. With respect to the
exemplary damages of three times the actual damage in
particular, it is less so about making the agency or utility
whole, and more so about the deterrence and punishment factor
of the damages to a potential or actual violator. The threat
of these damages serves as a significant incentive for junk
dealers and recyclers to take due care in transactions
involving these materials. It would arguably also serve as a
severe disincentive for junk dealers and recyclers to even
risk the completion of a sale when they have even the
slightest question as to the legitimacy of the written
certificate, and would additionally translate into an
effective and ample punishment for bad actors. Certainly, the
availability of exemplary damages for three times the actual
damage may also be important if the agency or utility is ever
found liable to an individual who suffers harm to his or her
person or property as the result of the damage caused by the
theft.
On the other hand, as severe as the harm caused by metal theft
is and as important as it is to deter this activity, it is
also important to not unduly burden or punish a good acting
junk dealer or recycler who attempts to conform to the laws'
requirements and is ultimately deceived by the seller. This
concern arises primarily where a junk dealer or recycler could
do their due diligence to determine whether the seller not
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only has a written certification, as required by this bill,
and even take extra steps to ensure that the certification is
not forged (i.e. a fake replica of the letterhead could
potentially be used), yet still be misled and ultimately found
liable under the provisions of this bill. While in those
instances it may still be justifiable to impose the liability
for actual damages, as specified, onto the defendant, the
justification for the exemplary damages is lessened.
Unless there is a minimal amount of discretion provided for in
awarding these otherwise justifiably harsh damages in
instances in which violations happen despite the junk dealer's
or recycler's demonstrated due diligence, if not extraordinary
efforts to comply, this bill could unintentionally chill the
entire market for these materials out of fear of being held
liable for all of the above listed damages. Such an outcome
arguably does not serve those agencies and utilities that
actually wish to make legitimate sales of their materials.
Therefore, it is important to allow for at least minimal
discretion by a court in those scenarios in which the court
finds the junk dealer or recycler took exceptional steps to
comply, without diluting the effectiveness these exemplary
damages. The following amendment achieves this:
Suggested amendment :
On page 3, line 10, after "utility" insert ", except where
extenuating circumstances do not justify the award of such
exemplary damages in the court's discretion."
b. Attorneys' fees
This bill would also provide that the agency or utility shall
be entitled to recover court costs and reasonable attorney's
fees from the junk dealer or recycler who is found to be in
violation of this bill's provisions.
Generally, in the United States, the "American rule" is that
parties must bear their own costs of civil litigation. In
Alyeska Pipeline Co. v. Wilderness Society (1975) 421 U.S.
240, the United States Supreme Court held that it was the
province of the legislative branch to craft exceptions to the
American rule, and courts were not free to shift such costs
absent express legislative authorization. (Id. at 269-270.)
In 1977, the California Legislature enacted Code of Civil
Procedure Section 1021.5, which appeared to be "in significant
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measure ? an explicit reaction to the United States Supreme
Court's Alyeska decision." (Woodland Hills Residents Assn.,
Inc. v. City Council (1979) 23 Cal.3d 917, 934.)
Section 1021.5 provides courts authority to award attorney's
fees in actions to enforce important rights in the public
interest that confer a significant benefit on a large class of
persons. Specifically, Section 1021.5 was intended to
encourage litigation deemed to be in the public interest by
persons acting as a private attorney general. This doctrine
rests on the recognition that privately initiated lawsuits are
often essential to the effectuation of public policies
embodied in constitutional or statutory provisions, and that
without some mechanism authorizing the award of attorney's
fees, private actions to enforce such public polices will be
impracticable. (Daniels v. McKinney (1983)146 Cal.App.3d 42.)
As explained recently by the California Supreme Court,
"section 1021.5 �addresses] the problem of affordability of
such lawsuits. Because public interest litigation often yields
nonpecuniary and intangible or widely diffused benefits, and
because such litigation is often complex and therefore
expensive, litigants will be unable either to afford to pay an
attorney hourly fees or to entice an attorney to accept the
case with the prospect of contingency fees, thereby often
making public interest litigation "as a practical matter . . .
infeasible." (Conservatorship of Whitley (2010) 50 Cal.4th
1206, 1219.)
The standard set by Section 1021.5 is rigorous and is
conditioned upon three requirements being met: (1) a
significant benefit is provided to the general public; (2) the
necessity and financial burden of private enforcement, or of
enforcement by one public entity against another public
entity, are such as to make the award appropriate; and (3)
such fees should not in the interest of justice be paid out of
the recovery, if any. Additionally, the statute specifically
provides for an important exception to this rule when the
matter involves a public agency, as follows: "With respect to
actions involving public entities, this section applies to
allowances against, but not in favor of, public entities, and
no claim shall be required to be filed therefor, unless one or
more successful parties and one or more opposing parties are
public entities." (Code Civ. Proc. Sec. 1021.5.) In other
words, a public agency may not receive attorneys' fees under
Section 1021.5.
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In addition, the types of suits that would arise as a result
of this bill would largely involve a public entity bringing
suit against a private person or entity, and is not one of the
fee-shifting scenarios provided for by Section 1021.5.
Ultimately, attorney's fees are shifted when a statutory or
constitutional right is important enough to justify shifting
fees from one party onto the other. The shifting helps
protect those rights by allowing individuals to bring cases
because otherwise they would not be able to afford to do so.
(See Choate v. County of Orange (2000) 86 Cal.App.4th 312,
322-23; Code Civ. Proc. Sec. 1021.) That is not the case
here. To address this issue, the following amendment is
suggested, which would remove the attorney's fees provisions:
Suggested amendments :
On page 2, line 14, strike ", plus" and insert period
On page 2, strike line 15
On page 3, line 10, strike "The"
On page 3, strike lines 11 - 12
Support : California Association for Sanitation Agencies;
California Professional Firefighters; East Bay Municipal Utility
District
Opposition : None Known
HISTORY
Source : Eastern Municipal Water District
Related Pending Legislation :
AB 1387 (Emmerson, 2012) See Background.
AB 1508 (Carter, 2012) would modify a current exception to
specified requirements placed on junk dealers and recyclers for
payment of nonferrous materials, to state instead that those
requirements do not apply to the redemption of nonferrous
material having a value of not more than twenty dollars ($20) in
a single transaction, when the majority (as opposed to primary
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purpose) of the transaction is for the redemption of beverage
containers under the California Beverage Container Recycling and
Litter Reduction Act. This bill is currently in the Senate
Banking and Finance Committee.
Prior Legislation :
AB 316 (Carter, Ch. 317, Stats. 2011), among other things,
provided that every person who feloniously steals, takes, or
carries away copper materials of another, including, but not
limited to, copper wire, copper cable, copper tubing, and copper
piping, of a value exceeding $950, is guilty of grand theft.
The bill also made the grand theft of copper punishable by fines
or imprisonment, or both, as specified.
AB 1859 (Adams, Ch. 659, Stats. 2008) provided that any person
who buys or receives, for purposes of salvage, any part of a
fire hydrant or fire department connection (such as bronze or
brass fittings and parts) that has been stolen or obtained in
any matter constitution theft or extortion, knowing the property
to be so stolen or obtained, shall be subject to a criminal fine
of not more than $3,000.
AB 844 (Berryhill and Maze, Ch. 722, Stats. 2008) See
Background.
SB 691 (Calderon, Ch. 720, Stats. 2008) See Background.
SB 447 (Maldonado and Florez, Ch. 732, Stats. 2008) See
Background.
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