BILL ANALYSIS �
AB 2507
Page 1
Date of Hearing: April 22, 2014
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
AB 2507 (Bocanegra) - As Amended: April 10, 2014
SUBJECT : Public Records Act: Exemptions: Pending Litigation
KEY ISSUES :
1)Should a government agency, while it is a defendant in a civil
action, be permitted to shield the amount that it spends on
outside counsel from Public Record Requests?
2)because the California COnstitution gives the people a right
to access public records, and demands that any statute
limiting public access be narrowly construed, should the
legislature overturn court opinions that have appropriately
construed limitations narrowly?
SYNOPSIS
The California Public Records Act (CPRA) requires that all
records maintained by a government agency be open to public
inspection unless the documents fall under one of several
exemptions. One of these exemptions provides that a government
agency is not required to disclose records "pertaining to
pending litigation" until the matter is finally adjudicated or
settled. Stressing that any exemption to the CPRA should be
construed narrowly and in favor of disclosure, the appellate
courts held that the exemption only applies to documents that
were prepared by the agency "for use in litigation." The CPRA
also exempts from disclosure documents that would be deemed
privileged or "work product." A December 2013 ruling by the
Second District Court of Appeal, consistent with prior case law,
held that attorney billing invoices are not prepared "for use in
litigation" and therefore are not exempt from CPRA requests, but
that any work product or privileged information could be
redacted from those records. This bill seeks to overturn the
Second District's ruling in favor of transparency by expressly
stating that, where the agency is a defendant in a civil action,
the exempted records include "outside attorneys' invoices,
billing statements, and requests for payment." According to the
bill's findings and declarations, the rationale for this bill
goes something like this: if an opposing party knows how much an
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agency is spending on attorneys, it will know how committed the
agency is to prosecuting or defending the case, which in turn
might be used as leverage in settlement discussions.
Notwithstanding the claims that such information might be used
for such purposes, no evidence has been presented to the
Committee that opposing parties have actually used such a
strategy to any great extent, if at all. Moreover, as noted by
its opponents, this bill will not only block access to the
opposing party, it will prohibit any person who wants to know
how much a government entity is spending on litigation,
potentially unwisely, from accessing this information. This is
why the California Newspaper Publishers Association opposes this
bill. Given the importance of access to public records in a
democracy, the California Constitution requires that any
limitation on access be narrowly construed and justified by
findings demonstrating a competing public interest. The
analysis raises the important question as to whether there is
sufficient evidence that any such interest is at risk.
SUMMARY : Exempts from disclosure under the California Public
Records Act records pertaining to pending litigation to which
the public agency is a defendant in a civil action, including
outside attorney's invoices, billing statements, or requests for
payment, until the pending litigation has been finally
adjudicated or settled.
EXISTING LAW :
1)Declares that the people have a right to access information
concerning the conduct of the people's business, and
therefore, the meetings of public bodies and the writings of
public officials and agencies shall be open to public
scrutiny. Requires that any statute that limits this right of
access be narrowly construed. Further requires that any
statute limiting access be adopted with findings demonstrating
the interest protected by the limitation and the need for
protecting that interest. (California Constitution, Article
I, Section 3 (b) (1)-(2).)
2)Requires state and local public agencies to make public
records available upon receipt of a request that reasonably
describes an identifiable record not otherwise exempt from
disclosure. (Government Code Section 6250 et seq.)
3)Provides that the California Public Records Act (CPRA) does
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not require disclosure of certain records, including records
pertaining to pending litigation to which the agency is a
party, or to claims made pursuant to the Government Claims
Act, until the pending action or claim has been finally
adjudicated or otherwise settled. (Government Code Section
6254(b).)
4)Provides that the CPRA does not apply to any records the
disclosure of which is prohibited pursuant to federal or state
law, including, but not limited to, provisions of the Evidence
Code relating to privilege. (Government Code Section
6254(k).)
5)Holds, under case law, that the "pending litigation" exemption
in the CPRA applies only to documents specifically prepared by
the public agency for use in litigation or in anticipation of
litigation, and holds further that billing invoices are not
prepared for "use in litigation" and therefore should be
disclosed upon request. (Fairly v. Superior Court (1998) 66
Cal. App. 4th 1414; County of Los Angeles v. Los Angeles
Superior Court (Cynthia Anderson-Barker, Real Party in
Interest) (2012) 211 Cal. App. 4th 57, rev. denied 2013 Cal.
LEXIS 1237.)
6)Requires an agency to justify the withholding of any record by
demonstrating that, based on the facts of the particular case,
the public interest served by not disclosing the record
clearly outweighs the public interest served by disclosure of
the record. (Government Code Section 6255.)
7)Prohibits limitations on access to a public records based upon
the purpose for which the record is requested, if the record
is otherwise subject to disclosure. (Government Code 6257.7.)
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
COMMENTS : The California Public Records Act (CPRA) requires
every state and local agency to make its records available for
public inspection upon request, subject to certain exemptions.
The CPRA derives from Article I ("The Declaration of Rights") of
the California Constitution and is rooted in the principle that
the conduct of government should be subject to public scrutiny.
The placement of the right of access to public records in
Section 3 of Article I of the state constitution puts it on par
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with the people's fundamental rights of assembly and petition.
Because of the obviously high value placed on access to public
records, the California Constitution expressly requires that the
right of access in the CPRA be broadly construed, and that any
limitation on this access be "narrowly construed." (Article 1
Section 3(b)(2).) In addition, the state constitution requires
that any limitation on access to public records be supported
"with findings demonstrating the interest protected by the
limitation and the need for protecting that interest." (Id.)
The Narrow Construction of the "Pending Litigation" Exemption :
Notwithstanding the strong constitutional and policy preference
in favor of open access to public records, Government Code
Section 6254 of the CPRA sets forth a number of exemptions that
allow a government agency to withhold certain records, or redact
certain portions of records, on the assumption that, under
certain circumstances, the public interest in keeping the
records confidential may outweigh the public interest in
subjecting records to public scrutiny. Of particular relevance
to this bill, subdivision (b) of Section 6254 exempts from
public disclosure "records pertaining to pending litigation to
which the public agency is a party," until the matter has been
"finally adjudicated or otherwise settled."
By common consent, the leading case to consider the underlying
purpose of the pending litigation exemption is Fairley v.
Superior Court (1998) 66 Cal. App. 4th 1414. Fairley conceded
that "the purpose of the [pending litigation] exemption is
primarily to prevent a litigant opposing a public entity from
using the CPRA to accomplish earlier or greater access to
records pertaining to pending litigation or tort claims than
would otherwise be allowed under the rules of discovery."
However, Fairley also stressed that, in interpreting the scope
of the exemption, this purpose must be offset against the larger
goals of the CPRA: "[T]he whole purpose of the CPRA is to shed
public light on the activities of government entities, and it is
a small price to pay to require disclosure of public records
even to a litigant opposing the government, outside of the rules
of discovery." (Fairley, at 1421-1422.) In an effort to
balance these competing concerns, and following the
constitutional mandate that any limitation on public access must
be "narrowly construed," Fairley held that under the pending
litigation exemption "a public entity may refuse to disclose
documents which it prepares for use in litigation." [Emphasis
added.]
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Fairley's "for use in litigation" standard has been affirmed
many times, most recently by the Second District Court of Appeal
in County of Los Angeles v. Los Angeles Superior Court (Cynthia
Anderson-Barker) (2013) Cal. App. 4th 211 Cal. App. 4th 57, rev.
denied 2013 Cal. LEXIS 1237 [hereafter Anderson-Barker.] That
case involved the efforts of a law firm representing a plaintiff
in a civil rights action against Los Angeles County to obtain
"all invoices or other requests for payment," and other billing
records, that were submitted by the law firm representing the
County in that action. The trial court, citing Fairley,
rejected the County's claim that these records could be withheld
under the pending litigation exemption, concluding that the
exemption only applied to documents that were prepared "for use
in litigation." The exemption did not apply to billing and
payment records, because such records are not prepared "for use
in litigation," but are merely an incidental byproduct of
litigation. The trial court held, however, that the County
could properly redact any information that revealed work
product, including anything that revealed the nature of the
legal research performed or the thought processes and
impressions of counsel. In short, the records could be redacted
to show only "the information that is not work product - the
hours worked, the identity of the person performing the work,
and the amount charged." (Anderson-Barker, at 61.) Although
the court concluded that none of the records contained
privileged information, such information could have been
redacted under Government Code Section 6254(k), which allows
withholding of documents that are deemed privileged under the
Evidence Code or any other state or federal law.
Importantly in considering this measure, the Court of Appeal
affirmed the trial court's holding that the billing records were
not exempt from a public records request, and the California
Supreme Court denied review, suggesting that it had no
substantial quarrel with the reasoning of the appellate court.
(2013 Cal. LEXIS 1237.)
In addition to agreeing that billing records are not prepared
"for use in litigation," as was required by Fairley, the Court
of Appeal also cited case law, statutory text, and
constitutional mandates to provide additional reasons in support
of the trial court's ruling. For example, citing Government
Code Section 6257.7 and County of Los Angeles v. Axelrad (2000)
82 Cal. App. 4th 819, the Court stressed that, under CPRA, the
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"purpose" of a request is immaterial. Government Code Section
6257.7 clearly states that access to public records shall not be
based upon the "purpose" for which the record is requested. The
Axelrad opinion, citing prior case law, concluded that the
reason for such a rule is that "there is no practical way of
limiting the use of the information, once disclosed, to the
purpose asserted by the requester. Indeed, there is no way of
assuring that the information will not be used by the requester
for other purposes, or, for that matter, will not be used by
third parties who manage to obtain the information once it has
been disclosed to [the requester]." (Axelrad quoting Hughes
Salaried Retirees v. Adm'r of Hughes (9th Circuit 1995) 72 F.3d
686, 693.) As the Court concluded in Anderson-Barker, "the mere
fact that Anderson-Barker may be seeking public records to
assist her colleagues in connection with a pending action is not
relevant to the issue before us." (Anderson-Barker, supra, at
63.)
Finally, and perhaps most persuasively, several opinions have
stressed that the California constitution mandates that any
statute that furthers the right of access to public records
shall be "broadly construed" and any statute that limits the
right of access shall be "narrowly construed." This is
precisely what the courts have done in concluding that "records
pertaining to pending litigation" means records that were
prepared "for use in litigation," not merely any document that
came into existence as a result of the litigation.
[(Anderson-Barker, supra, at 63-64; See also Axelrad, supra at
825 (holding that exemptions to the CPRA should be "narrowly
construed"); Marken v. Santa Monica-Malibu School District
(2012) 202 Cal. App. 4th 1250, 1262 (same); Citizens for a
Better Environment v. Department of Food & Agriculture (1985)
171 Cal. App. 3d 704, 711(same).]
In sum, a review of the pertinent case law appears to make clear
that courts have properly followed the constitutional mandate to
construe the pending litigation exemption narrowly. However
this bill nevertheless seeks to reverse this well-reasoned case
law by expressly inserting in the statute that the exemption
should be broadly construed to include invoices and billing
records.
Stated Need for Bill : According to the bill's declarations and
findings, as well as other information provided to the Committee
by the author and supporters, this bill is purportedly needed to
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prevent opposing counsel from gaining information that it could
not otherwise obtain through the rules of discovery.
Presumably, the greatest danger is that, if opposing counsel
know how much a government agency has devoted to defending a
case, or can identify the outside counsel that have been
assigned to the case, then the opposing counsel will gain some
tactical and strategic advantage. For example, knowing how much
a government agency is willing to spend on a case might indicate
the agency's level of commitment, and this in turn might affect
the other side's willingness to negotiate a settlement or to
demand a higher settlement. However this concern appears
speculative, for no evidence has been offered demonstrating
opposing counsel in specific cases has ever actually used
billing records in this manner, much less that they have
exploited it to their advantage and to the detriment of a public
agency.
Clearly, opposing counsel should not have access to any work
product or privileged information that it could not obtain
through discovery. However there does not appear to be any
absolute rule stating that an opposing party could never obtain
billing records through discovery; whether such a request would
be honored would depend upon the nature of the case. As a
general rule, opposing counsel's requests of this nature must be
"relevant," generally meaning they shall be for information that
is either already admissible evidence or is "reasonably
calculated" to lead to the discovery of admissible evidence.
(Code of Civil Procedure Section 2017.010.) It may be difficult
to imagine a scenario in which billing records could reasonably
lead to the discovery of admissible evidence, but if under the
peculiar circumstances of a case they could, then they would be
discoverable.
Even if such documents could not be obtained under discovery,
the requesting party is not prohibited from trying to obtain
documents by other lawful means outside of discovery - including
making a lawful public records request. If the request would
clearly disadvantage the agency as a litigant - for example, by
revealing work product, impressions, or privileged information -
then the agency could deny the request entirely (with an
explanation), or it could redact those portions containing the
protected information and release the rest. Work product can
include, among other things, information that reveals counsel's
research, thoughts, or impressions on the case. As is
appropriate, the pending litigation exemption already allows
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redaction of information that would reveal the agency's
litigation strategy to an opposing party. This is the kind of
information that the pending litigation exemption seeks to
shield, and the courts have reasonably concluded - contrary,
opponents note, to the claims made by the proponents of this
measure - that billing records do not warrant such shielding.
The Duration of "Pending" Litigation and the Public's Right to
Know How Much an Agency is Spending : The CPRA's "pending
litigation" exemption only lasts, of course, as long as the case
is pending. This would also be true of the billing records that
could be withheld under this bill. Once the case is adjudicated
or otherwise settled, the records will become assessable to
public inspection unless they fall under some other exemption.
The author and supporters argue that this bill would not prevent
the public from learning how much an agency is spending to
defend a lawsuit; it would only prevent the public from
obtaining that information while the matter was pending.
Opponents of the bill, on the other hand, point out that
litigation can last for several years. Indeed, the Court of
Appeals decision that this bill seeks to overturn involved an
effort to obtain billing records for a case which has been
pending in Los Angeles Superior Court since 1999 (over 15
years!), apparently with no end in sight. In the underlying
claim, the plaintiffs allege that several law enforcement
officials - including those of Los Angeles County - violated
various state and federal civil rights laws while arresting and
detaining the plaintiffs. Taxpayers might reasonably want to
know - after fifteen years and counting - if public funds would
be better spent to finally settle the case. It may be, where a
case involves an important precedent, that continuing to defend
the case is important and in the long-term public interest. But
this bill, opponents contend, would deny taxpayers the necessary
information to reach their own conclusions, one way or the
other, and take whatever steps were permissible to express these
conclusions to public officials.
Indeed, the case that eventually gave rise to this bill raises
other questions about its underlying rationale. While opposing
counsel have made public records request of Los Angeles County
in the past, it was only in this most recent case that a request
was made for billing records. In other words, even without
disclosure of the billing records to this point, the case has
dragged on for fifteen years, no doubt at considerable expense
to the county. It is difficult to imagine that access to
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billing records will make matters any worse. Indeed, if the
proponents are correct about the potential impact of disclosing
billing records, opponent note that disclosure and transparency
in the very case that apparently has led to this measure might
actually help bring the case to some sort of reasonable
resolution.
ARGUMENTS IN SUPPORT : According to the County of Los Angeles
(County), AB 2507 will "clarify the California Public Records
Act exemption for information pertaining to pending litigation
extends to a public entities' [sic] attorney billing records,
such as invoices or time records." The County claims that the
current statute is inadequate in that it "is not fully explicit
as to whether attorney invoices and related documents in pending
litigation are exempt from CPRA's disclosure provisions." The
County contends that this places a public agency at a
disadvantage, "as opposing counsel in active cases may use CPRA
requests as a vehicle to obtain related records that otherwise
would not be available to them through normal discovery
procedures." The County also claims that the disclosure of
billing records "could be damaging to the legal interests of
public agencies because such records, when disclosed during
pendency of litigation, may reveal significant strategic facts
to the opposing litigant, such as potential settlement value of
a case." While the County agrees that the public has a right to
know information related to the cost of litigation, it believes
that this right is best served by making the information
available "upon conclusion of any litigation." Thus, the County
concludes, "AB 2507 would maintain access for the public while
also protecting the taxpayers from inflated settlement costs."
The California State Association of Counties supports this bill
because it will prevent disclosure of "public entity attorney
billings, time records and invoices [that] could be damaging to
the legal interest of those agencies since such records may
reveal significant strategic facts to an opposing litigant and
result in inflated settlements that would pose greater financial
risks to taxpayers." Similarly, the Rural County
Representatives of California argues that allowing opposing
counsel access to billing records does "not provide any public
value except to signal to other litigants the amount of legal
costs absorbed by the county. Without this exemption, we
believe those involved in litigation can 'game the system' with
respect to settlement costs and drive up costs to county
taxpayers." Many other organizations representing various state
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and local agencies support this bill for substantially the same
reason: providing access to billing records gives the opposing
party a "strategic" advantage and will drive up settlement
costs.
ARGUMENTS IN OPPOSITION : The ACLU of California argues that the
right of public access embodied in the California Public Records
Act includes the right to know "how the government is spending
the taxpayers' money. Attorney billing records, including
payments to outside counsel, are no exception, as they
demonstrate how a public agency spends public funds. If those
records show actual work product information, it can be redacted
and the remainder of the billing statement disclosed." ACLU
notes that the California Court of Appeal recently upheld this
standard and it sees "no reason to overturn this decision." As
for the proponents' claim that this information will eventually
be made available once the litigation has been finally
adjudicated or settled, ACLU points out that "some litigation,
especially civil rights and discrimination actions, can last for
years," meaning that "key information on how public agencies
spend public monies would be inaccessible for long periods of
time."
Californians Aware (CA) opposes this bill for many of the same
reasons articulated by ACLU, but it also criticizes the bill's
legislative findings alleging that opposing counsel will somehow
exploit this information to gain a tactical advantage. CA
writes that "disclosure may inspire some educated guesswork by
the lawyer whose client is suing the government. But that
speculative and marginal risk does not justify keeping taxpayers
in the dark about how - or how much - public funds are being
spent by the government's contract counsel until the case is
finally over, which can mean a period of years - especially with
the public unaware of mounting costs." CA adds that the recent
Court of Appeal decision made it clear that "redaction permits
the public agency and its lawyers to keep confidential the work
product specifics that would unquestionably allow the adversary
an unfair advantage." Moreover, CA argues, "contemporaneous
public access to the accumulating expense of litigation provides
at least some measure of accountability for the defense of
actions whose continuation may or may not be in the public's
best interest."
The California Newspaper Publishers Association (CNPA) opposes
this bill for substantially the same reasons noted above. In
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addition, CNPA writes that the danger presented by this bill can
be seen in the recent Los Angeles Times report revealing that
the Central Basin Water District, located in Los Angeles County,
"created a $2.7 million slush fund intentionally using the
pending litigation exemptions in the Brown Act and the Public
Records Act to hide their activities." As to the underlying
rationale for this bill - that opposing counsel will exploit the
information to gain an unfair advantage - CNPA asserts that "the
case that disclosure of attorney billing statements and invoices
somehow harms an agency in litigation has simply not been made.
The court rejected LA County's argument when it was asked to
protect this information from disclosure; the Assembly Judiciary
Committee should do the same."
The California Association of Federal Firearms Licensees
(CAL-FFL) points out that in enacting the CPRA in 1968, the
Legislature expressly found and declared that "access to
information concerning the conduct of the people's business is a
fundamental and necessary right of every person in this state,"
and CAL-FFL notes that the CPRA is in turn rooted in the
California Constitution's Declaration of Rights, which states,
in pertinent part, that the people have a right to access
information relating to government conduct and, therefore,
public records "shall be open to public scrutiny." CAL-FLL also
contends that such information may be useful detecting
potentially fraudulent relations. For example, if a public
agency received pro-bono or discounted legal services from
third-party law firms as a quid pro quo for offering the
third-party law firm no-bid contracts, CAL-FLL believes that
such arrangements "could not be sniffed out or subjected to
scrutiny until it was too late."
This bill is opposed by the Consumer Attorneys of California,
the Western Center on Law and Poverty, the California Employment
Lawyers Association, and the First Amendment Coalition for
substantially the same reasons as those set forth above.
REGISTERED SUPPORT / OPPOSITION :
Support
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Association of California Health Care Districts
California Association of Joint Powers Authorities
California Association of Public Authorities - In-Home Support
Services Program
California Association of Sanitation Agencies
California Board of Accountancy
California State Association of Counties
California State University, Office of the Chancellor
Los Angeles County Board of Supervisors
Orange County Board of Supervisors
Rural Counties Representatives of California
Urban Counties Caucus
Opposition
ACLU of California
California Association of Federal Firearms Licensees
California Employment Lawyers Association
California Newspaper Publishers Association
Consumer Attorneys of California
First Amendment Coalition
Western Center on Law and Poverty
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334