SACRAMENTO - The leader of a California legal reform group sees “situational due process” as a growing concern in Sacramento.

“The term applies to policymakers who are looking at whether or not there is appropriate due process,” said John Doherty, the president of the Civil Justice Association of California. “It appears that depending on the situation or the characteristics of the person who is involved, the due process concerns will change.”

Doherty feels there are inconsistencies in two current bills that provide specific examples of this in the California legislature.

AB 814, introduced by Assemblymember Richard Bloom, D-Santa Monica, in February, would provide pre-litigation subpoena power to city attorneys in cities with a population greater than 750,000 if they believe there was a violation of the state’s Unfair Competition Law.

Doherty contends that the bill extends the ability of those attorneys to make discovery demands of defendants without informing them of the accusations that have been raised against them.

“We consistently raise due process concerns about the persons on the receiving end of these subpoenas, and request for production of documents and deposition demands,” he said. “To say, wait a second, this is a burden and an expense for folks.”

CJAC has joined a group of organizations in asking that legislators include in the bill a few due process protections, such as allowing defendants to file motions to quash, the ability to hear what they have been accused of as part of the process and the right to ask a third party to verify the suspicions of the attorneys.

When asked why he introduced the bill, Bloom said that pre-litigation subpoena power allows prosecutors to quickly and efficiently investigate allegations of wrongdoing. In the case of Wells Fargo, he said in an email, it took the Los Angeles city attorney’s office 16 months to collect enough evidence to file a lawsuit.

Bloom added that if the attorney had access to this tool, that timeframe would have been shorter and consumers wouldn’t have been at risk for more than a year. He also added that he doesn’t expect any negative effects if the bill becomes law.

“The Attorney General and all district attorneys have had pre-litigation subpoena power for decades and there has been no adverse impact shown,” Bloom said. “This bill expands that authority to city attorneys, minimally increasing the number of entities that have pre-litigation subpoena power from 59 jurisdictions (58 counties and the AG) to 63 jurisdictions.”

Sen. Bill Dodd, D-Napa, introduced SB 33 in December, also in response to the recent Wells Fargo scandal. His bill aims to prevent a financial institution from compelling arbitration in cases involving contracts that were created fraudulently by the financial institution without consumers’ consent and by unlawfully using consumers’ personal information.

Doherty argues that SB 33 undermines agreed-to arbitration efforts, particularly since the bill applies to any contract with a business under the broad definition of “financial institution,” and not just those created under fraudulent circumstances.

A letter of opposition to SB 33 from the California Chamber of Commerce and organizations including CJAC argued to Senate members that the bill “unfairly attacks the use of arbitration agreements in consumer contracts with ‘financial institutions’ as broadly defined, is likely preempted by the Federal Arbitration Act (FAA), and will negatively impact ‘financial institutions’ with unnecessary and costly class action litigation that does not ultimately benefit the consumer.”

“If I am a consumer and I go to a company, and as part of my agreement to purchase services or get services from company, I agree to an arbitration, SB 33 would, despite that being a perfectly valid contractual agreement, say that those are thrown out,” he said. “One of the reasons the author is

stating the need for it is they have due process concerns over people’s right to get into court instead of having to go to arbitration.”

Dodd’s office did not respond to a request for comment on SB 33, though he said previously in a press release announcing the bill that “it’s unacceptable for consumers to be blocked from our public courts to recover damages for fraud and identity theft.”

“Allowing victims their day in court not only allows them to recover, it can prevent more victims by putting an end to illegal business practices,” he said.

Doherty contends that the concept of “situational due process” applies to these two bills, because on one side, there are concerns about the due process rights of consumers, and on the other, there are concerns about the due process rights of businesses.

From his perspective, businesses in California have a tougher time getting their concerns heard.

“Due process, regardless of the characteristics of the defendant, was for a long time a concern of the Democratic Party,” Doherty said. “Even criminals who commit the most horrible crimes, their due process rights were a concern, but that concern seems to have morphed.

“'Businesses are bad, consumers need to be protected,' seems to have overtaken concerns about due process.”

Doherty points out that all Californians can be impacted by “situational due process,” but small businesses are the most likely to suffer from its harmful effects. Fundamentally, he says, the state’s citizens need to make sure their legislators and leaders are maintaining a balance between efforts to prosecute wrongdoing and the rights of defendants.

Despite the concerns of CJAC and other business groups, both bills have moved forward. AB 814 passed the Assembly in April and is now before the Senate. SB 33 passed the Senate in May and is now before the Assembly.

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