BILL ANALYSIS Ó SB 270 Page 1 Date of Hearing: August 10, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 270 (Mendoza) - As Amended August 4, 2016 ----------------------------------------------------------------- |Policy |Judiciary |Vote:|7 - 3 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Business and Professions | |9 - 6 | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill provides the Court Reporters Board (CRB) with broad powers of enforcement, as specified, over foreign or domestic corporations that offer or arrange for court reporter services in California. Specifically, this bill: 1)Authorizes the CRB to seek injunctive relief or issue citations, fines, and other penalties against corporations, persons or entities, whether foreign or domestic, that for a fee or other financial consideration, offer, offer to arrange for, render, or provide the services of a certified shorthand SB 270 Page 2 reporter, for violations regarding the taking of oral depositions within the Civil Discovery Act, the rendering of shorthand reporting services by professional corporations, the licensing law for shorthand reporters, and the Professional Standards of Practice for shorthand reporters. 2)Provides that nothing in this bill is to be construed to authorize or prohibit the provision of shorthand reporting services by an unlicensed, foreign corporation. FISCAL EFFECT: Minor and absorbable costs to the CRB for a potential increase in complaint volume resulting in potentially higher citations. COMMENTS: 1)Purpose. According to the author, "SB 270 addresses a complex problem that pits California Court Reporting firms and licensed court reporters against out-of-state corporations. These corporations not only arrange for shorthand reporting services, they also determine the fees charged to parties and set timelines for the delivery of transcripts, among other things. All of these activities are strictly regulated to ensure impartiality in the handling of transcripts, legal documents, that are essentially an extension of a court proceeding. Corporations, either foreign or domestic, that are not headed by a licensed court reporter believe they can ignore and violate ethical rules and laws of impartiality and objectivity when they are arranging for court reporting services. These corporations have interpreted current law to mean they are not subject to the SB 270 Page 3 jurisdiction of the board because they are not licensees. This has created an un-fair playing field within the industry. Most disturbing is that under current law, licensed court reporters find themselves liable for the ethical violations of these companies; even if the reporter has no knowledge of or involvement in the violation." 2)Background. The CRB is responsible for licensing and disciplining certified shorthand reporters, approximately 7,000 in California. Currently, in California, certified shorthand reporters work in two separate capacities: a) as an "official reporter" who works as a court reporter employed by a state court, or b) as a "freelance reporter" who is hired privately by court reporting businesses, firms, or attorneys to report depositions. Both official and freelance reporters are required to meet the same educational and examination qualifications, which are established by the CRB. In order to qualify for licensure as a certified shorthand reporter, an individual must have a high school education, twelve months (or 1,400 hours) of full-time work experience related to making records of hearings, a passing score on the California State Hearing Reporters Examination, and completion of a course from an approved court-reporting school. In addition to the licensing and discipline functions, the CRB specifies the professional standards of practice for professionals. According to the author, the need for this bill stems from the inability of the CRB to take appropriate disciplinary action against a foreign (out-of-state) corporation that was accused of operating in violation of the CRB's professional standards of practice-a problem identified by a Santa Clara Superior Court decision. In that case, the CRB issued a citation to defendant U.S. Legal, assessing a fine of $2,500 for violation of professional standards, specifically the prohibition on gift-giving. U.S. Legal refused to pay the fine, and SB 270 Page 4 challenged in court the Board's jurisdiction to issue the citation under California law. The CRB argued that the defendant was a foreign corporation as defined under the Moscone-Knox Professional Corporations Act, and therefore a "shorthand reporting corporation" as otherwise defined under the Business and Professions Code which is subject to the regulation. In holding for the defendant, the court found that neither the Moscone-Knox Act nor the Business and Professions Code extended authority to the CRB to issue citations to foreign corporations like U.S. Legal that do not meet the statutory definition of "foreign professional corporation," by virtue of the fact that they do not actually hold a license or certificate in this state. Accordingly, this bill would provide such enforcement authority to the CRB. 3)Arguments in Support. The California Court Reporters Association writes in support: SB 270 provides specific authority for the board to seek injunctive relief to stop individuals and corporations that are providing services in California without having ever been licensed in our state, or to impose penalties if they are also in violation of California's professional standards. Court reporters ensure the integrity of judicial records and are unmatched in their ability to produce a real-time transcript of court proceedings. The board should have undisputed authority to ensure that any entity rendering court reporting services in California is upholding the state's professional and ethical standards. 4)Arguments in Opposition. A coalition of deposition service SB 270 Page 5 companies remains opposed to the bill. These companies are Esquire Deposition Services, LLC; Magna Legal Services; U.S. Legal Support, Inc. and Veritext Corp. They state: The bill effectively creates a new quasi- licensing program for companies "offering" court reporting services, regulating activities which courts have expressly concluded do not constitute the practice of court reporting. The bill illogically and inappropriately attempts to apply regulations applicable to the practice of court reporting to the business of deposition services companies, thereby disrupting perfectly legitimate business relationships, and leaving companies completely unsure of which activities are permitted and which are not. Further, the bill would give the Court Reporters Board unfettered authority to issue citations and penalties against companies which will not even enjoy the protections of a property interest in a license. The effect will be to drive business out of the state and make litigation more costly and less efficient. Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081