As of January 1, 2016, portions of the Code of Civil Procedure have been revised regarding the requirements of court reporters and deposition notices. Most notably, Code of Civil Procedure section 2025.220, subdivision (a)(8), has been added to require parties noticing depositions to advise other parties of any contract or relationship between the noticing party or a third party financing the case and any deposition officer. The noticing attorney must also disclose if his or her client or a third-party financing the action directed the attorney to use a particular deposition officer.
A. Background Of New Requirements
Added as part of Assembly Bill 1197, these revisions to Section 2025.220 are the latest chapter in the fight between large and small court reporting agencies regarding the propriety of a practice known as “contracting,” whereby a large corporation enters into an exclusive contract with a court reporting agency to provide all reporting services for the corporation. Contracting agencies typically are larger companies that can cover depositions across numerous jurisdictions. Smaller, non-contracting agencies object that such contracts unfairly allow the larger agencies to lock up a large amount of business by giving low rates to the party hiring the agency while simultaneously shifting costs by setting higher rates for parties ordering copies of the transcript.
Legislators were concerned that in recent years large reporting agencies were effectively running the smaller agencies out of the industry by establishing long-term contractual agreements with large corporations in the business of insurance, construction, and banking. After entering into the contract, the corporations then require their counsels to use specific agencies for all or most of the depositions noticed on behalf of the corporation. In return for the guaranteed business to these dedicated reporting agencies, the corporation receives reduced fees and special services from the court reporting agencies.
Two of these special services that have been targeted as being “problematic” are deposition databases and free deposition summaries. Attorneys representing companies with exclusive court reporting agreements also may receive their copies of deposition transcripts much faster than the opposing party. This allows extra time for that attorney to look over the deposition transcript before a hearing, or to include portions of the deposition transcript into their legal briefs. Ultimately, the ongoing and undisclosed contractual relationships between a party and a reporting agency could provide an unfair advantage to the party in litigation. As such, legislators determined that the other parties to the litigation have a right to know about such relationships.
B. Operation Of New Law
Under the pre-existing law of Code of Civil Procedure section 2025.320, depositions must be conducted under the supervision of an officer who is authorized to administer an oath and is subject to all of the following requirements:
(1) The officer must not be financially interested in the action and shall not be a relative or employee of any attorney of the parties, or of any of the parties;
(2) Services and products offered or provided by the reporting agency to any party or to any party’s attorney or third party who is financing the action must be offered to all parties or their attorneys attending the deposition at the same time; and
(3) The court reporter must not do either of the following:
(a) provide to any party or any party’s attorney or third party who is financing the action any service or product consisting of the reporter’s notations or comments regarding the demeanor of any witness, attorney, or party present at the deposition; or
(b) collect any personal identifying information about the witness as a service or product to be provided to any party or third party who is financing the action.
Objections to the qualifications of the deposition officer are waived unless made before the deposition begins or as soon thereafter as the basis for that objection becomes known or could be discovered by reasonable diligence. Violation of the above provisions may result in a civil penalty of up to $5,000.00.
Additionally, as noted above, newly enacted Section 2025.220, subdivision (a)(8), provides new disclosures that must be included in deposition notices. First, the noticing party must disclose the existence of a contract between the court reporting agency and either the noticing party or a third party who is financing all or part of the action. Also, the notice must disclose if the party noticing the deposition, or a third party financing all or part of the action, directed the attorney to use a particular reporting agency. In other words, the deposition notice must disclose if the attorney noticing the deposition is aware of a contract between its client or the defending insurance carrier and the reporting agency, or if the client or insurance carrier directed the attorney to use a particular reporting agency. In some cases, both disclosures may be required.
Section 2025.220 makes an important distinction between the “party noticing the deposition” and the party’s attorney. It requires disclosure of contracts between the party (or third party financing the action) and the reporting agency. However, attorneys noticing the deposition do not need to disclose contracts between the attorney’s law firm and the reporting agency.
If the noticing party fails to make a required disclosure, the opposing party can object to the deposition. However, if the noticing party discloses a contract with the reporting agency, the law does not provide that an opposing party can object on that basis alone. Originally, Assembly Bill 1197 did allow for such an objection, but that section was ultimately removed from the enacted statute. However, if the disclosure is made, the opposing party can then inquire to the noticing attorney or the reporting agency concerning any “special services” the reporting agency provides to the noticing party, such as providing free deposition summaries or access to deposition databases. Per Section 2025.320, the reporting agency is required to provide the same services to all parties. Depending on the scope of the “special services” or if the reporting agency refuses to provide the “special services” to all parties, an opposing party may object to the qualifications of the court reporter.
C. Potential Effects
Ultimately, the legislature’s goal was to increase awareness, rather than to restrict contracting in the reporting industry. On its own, the law does not prevent the noticing party from using its preferred reporting agency, or specifically sanction parties who fail to make the required disclosures. Further, opposing parties that are not already aware of a relationship between the noticing party and the reporting agency likely have no way of knowing if the party failed to make a required disclosure. In the end, the legislature’s stated hope was that the increased awareness would help ensure the impartiality of the court reporter.
For more information concerning this topic, or for any of your other legal needs, please contact Lincoln, Gustafson and Cercos, LLP.