Out-of-state court reporting firms face new regulations in law

California-based court reporting firms won a long-sought goal when Gov. Jerry Brown signed a bill subjecting their large, out-of-state competitors to new regulations.

AB 2084, signed by the governor Friday, will require these companies to follow many of the same rules as their in-state counterparts. These include rules on minimum transcript format standards, how they charge fees and offering transcripts to both sides without delay. These rules will be backed up by a $10,000 per violation civil penalty.

The out-of-state firms did preserve the right to offer volume discounts and loyalty programs. More importantly, they will not need to register with the California Court Reporters Board. A bill passed last year, AB 1660, would have required these firms to register but was vetoed by Brown.

Both bills were carried by Assemblyman Ash Kalra, D-San Jose, an attorney who spent 11 years in the Santa Clara County public defender’s office.

“We knew we were not going to require registration, but of the different requirements one would have to follow under registration, we pulled out four specific ones we think at least create some integrity in the process and parity with out-of-state companies,” Kalra said.

“I believe there was a question about the governor’s position if they sent the same bill back to him that he vetoed last year,” said Mike Belote, a lobbyist representing a coalition of out-of-state firms. “At the eleventh hour they pivoted, and instead of a registration program, they did this civil penalty.”

The eleventh hour, in this case, meant the bill received a major overhaul on Aug. 24, just one week before the end of the legislative session. Kalra confirmed some of the changes were made in response to meetings with the governor’s office.

The sides then clashed at a contentious Aug. 29 hearing of the Senate Business, Professions and Economic Development Committee that was called specifically to hear the bill. The hearing occurred after the deadline to amend legislation, meaning the committee had to confine itself to a simple up-or-down vote. It passed 7-2 with Republicans opposed.

Belote represents a trio of the largest of state firms, Esquire Deposition Solutions LLC, U.S. Legal Support Inc. and Veritext Corp. He said he was concerned about “ambiguities” created by the regulations, particularly because his clients “do a lot of non-transcription work.”

It’s unclear under the bill language, Belote said, to what extent trial preparation services would need to be offered to both sides.

But Kalra said a California firm that wanted to offer transcription services in Texas, where U.S. Legal is headquartered, would need to register with the state board there and follow many rules similar to those that out-of-state companies have to follow in California.

The dispute over regulation has also spilled into courtrooms. In his veto message for AB 1660 last year, Brown wrote, “This bill affects matters that are currently under review by an appellate court,” a pending private attorney general action brought under California’s Unfair Competition Law.

Kalra said he was satisfied that AB 2084 did not create a conflict with the ongoing case.

Kalra said outside of any needed cleanup legislation, he has no plans to wade back into this fight.

“I don’t know if I want to do anything else on court reporting anytime soon,” Kalra said. “This was really a two-year adventure.”

Brown has also signed scores of other bills announced late last week and over the weekend. This includes AB 2599, which will require jails to post information about arrestees’ right to have their arrest records sealed if they are not convicted.

AB 2605, which Brown signed on Thursday, creates an exemption to rest period rules for safety workers employed by the petrochemical industry. This is a direct response to a state Supreme Court case that found rest breaks cannot be legally interrupted by employers. Augustus v. ABM Security Services Inc., 2016 DJDAR 12608.