Existing law prohibits a foreign corporation from transacting intrastate business without a certificate of qualification from the Secretary of State, and requires a statement filed for a certificate of qualification to include, among other things, an agent for service of process within the state. Existing law prohibits a foreign limited liability company transacting intrastate business in this state from maintaining an action or proceeding in this state unless it has a certificate of registration filed with the Secretary of State, and requires an application for a certificate of registration to include, among other things, an agent for service of process.

This bill would specify that a foreign corporation and foreign limited liability company may consent to service of process for a search warrant by email or submission to a designated Internet Web portal.

Existing law prohibits a foreign corporation from transacting intrastate business without a certificate of qualification from the Secretary of State, and requires a statement filed for a certificate of qualification to include, among other things, an agent for service of process within the state. Existing law prohibits a foreign limited liability company transacting intrastate business in this state from maintaining an action or proceeding in this state unless it has a certificate of registration filed with the Secretary of State, and requires an application for a certificate of registration to include, among other things, an agent for service of process.

This bill would specify that a foreign corporation and foreign limited liability company may consent to service of process for a search warrant by email or submission to a designated Internet Web portal.

Existing law prohibits a foreign corporation from transacting intrastate business without a certificate of qualification from the Secretary of State, and requires a statement filed for a certificate of qualification to include, among other things, an agent for service of process within the state. Existing law prohibits a foreign limited liability company transacting intrastate business in this state from maintaining an action or proceeding in this state unless it has a certificate of registration filed with the Secretary of State, and requires an application for a certificate of registration to include, among other things, an agent for service of process.

This bill would specify that a foreign corporation and foreign limited liability company may consent to service of process for a search warrant by email or submission to a designated Internet Web portal.

 THIRD READING  

Bill No: AB 844

Author: Bloom (D)

Introduced: 2/26/15

Vote: 21

SENATE PUBLIC SAFETY COMMITTEE: 7-0, 6/9/15

AYES: Hancock, Anderson, Glazer, Leno, Liu, Monning, Stone

ASSEMBLY FLOOR: 77-0, 5/7/15 - See last page for vote

SUBJECT: Search warrants: foreign corporations and foreign limited liability companies

SOURCE: Los Angeles County District Attorney’s Office

DIGEST: This bill authorizes a foreign corporation and foreign limited liability company to consent to service of process for a search warrant by email or submission to a designated Internet Web portal.

ANALYSIS:

Existing law:

1. Requires when properly served with a search warrant issued by the California court, a foreign corporation subject to this section to provide to the applicant, all records sought pursuant to that warrant within five business days of receipt, including those records maintained or located outside this state. (Penal Code, § 1524.2 (b)(1).)

2. Defines a “search warrant” as an order in writing in the name of the People, signed by a magistrate, directed to a peace officer, commanding him or her to search for a person or persons, a thing or things, or personal property, and in the case of a thing or things or personal property, bring the same before the magistrate. (Penal Code, § 1523.)

3. States that a California corporation that provides electronic communication services or remote computing services to the general public, when served with a warrant issued by another state to produce records that would reveal the identity of the customers using those services, data stored by, or on behalf of, the customer, the customer’s usage of those services, the recipient or destination of communications sent to or from those customers, or the content of those communications, shall produce those records as if that warrant had been issued by a California court. (Penal Code, § 1524.2, subd. (c).)

4. Provides that the terms “electronic communication services” and “remote computing services” shall be construed in accordance with applicable federal law. (Penal Code, § 1524.2 (a)(1).)

5. Defines “properly served” as a search warrant has been delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile to a person or entity listed. (Penal Code, § 1524.2 (a)(6).)

6. States that a provider of wire or electronic communication services or a remote computing service, upon the request of a peace officer, shall take all necessary steps to preserve records and other evidence in its possession pending the issuance of a search warrant or a request in writing and an affidavit declaring an intent to file a warrant to the provider. Records shall be retained for a period of 90 days which shall be extended for an additional 90-day upon a renewed request by the peace officer. (Penal Code, § 1524.3, (d).)

7. Requires any domestic or foreign corporation, before it may be designated as the agent for the purpose of service of process of any entity, to file a certificate executed in the name of the corporation by an officer thereof stating all of the following:

• The complete street address of its office or offices in this state, wherein any entity designating it as such agent may be served with process;

• The name of each person employed by it at each such office to whom it authorizes the delivery of a copy of any such process; and

• Its consent that delivery thereof to any such person at the office where the person is employed shall constitute delivery of any such copy to it, as such agent. (Corporations Code, § 1505.)

8. Provides that delivery by hand of a copy of any process against the corporation (a) to any natural person designated by it as agent or (b), if a corporate agent has been designated, to any person named in the latest certificate of the corporate agent filed with the Secretary of State at the office of such corporate agent shall constitute valid service on the corporation. (Corporations Code, § 1701.)

9. Prohibits a foreign corporation from transacting intrastate business without having first obtained from the Secretary of State a certificate of qualification. To obtain that certificate it shall file, on a form prescribed by the Secretary of State, a statement and designation signed by a corporate officer or, in the case of a foreign association that has no officers, signed by a trustee stating:

• Its name and the state or place of its incorporation or organization;

• The street address of its principal executive office;

• The street address of its principal office within this state, if any;

• The mailing address of its principal executive office, if different from the addresses specified above;

• The name of an agent upon whom process directed to the corporation may be served within this state, as specified;

• Its irrevocable consent to service of process directed to it upon the agent designated and to service of process on the Secretary of State if the agent so designated or the agent’s successor is no longer authorized to act or cannot be found at the address given; and

• If it is a corporation which will be subject to the Insurance Code as an insurer, it shall so state that fact. (Corporations Code, § 2105 (a).)

10. Specifies that consent extends to service of process directed to the foreign corporation’s agent in California for a search warrant issued pursuant to Section 1524.2 of the Penal Code, or for any other validly issued and properly served search warrant, for records or documents that are in the possession of the foreign corporation and are located inside or outside of this state. This subparagraph shall apply to a foreign corporation that is a party or a nonparty to the matter for which the search warrant is sought. For purposes of this subparagraph, “properly served” means delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile to a person or entity listed as specified. (Corporations Code, § 2105 (a)(6)(B).)

11. States that delivery by hand of a copy of any process against a foreign corporation (a) to any officer of the corporation or its general manager in this state, or if the corporation is a bank to a cashier or an assistant cashier, (b) to any natural person designated by it as agent for the service of process, or (c), if the corporation has designated a corporate agent, to any person named in the latest certificate of the corporate agent filed with the Secretary of State shall constitute valid service on the corporation. (Corporations Code, § 2110.)

12. Provides that a foreign limited liability company may apply for a certificate of registration to transact business in this state by delivering an application to the Secretary of State for filing on a form prescribed by the Secretary of State. (Corp. Code, § 17708.02 (a).)

13. Regulates, under the federal Stored Communications Act, access to electronic communications from providers of electronic communications services. Under the Act a person is prohibited from (a) intentionally accessing without authorization a facility through which an electronic communication service is provided; or (b) intentionally exceeding an authorization to access that facility; and thereby obtaining, altering or preventing the authorized access to a wire or electronic communication while in electronic storage in such a system. The Act requires governmental entities to obtain a warrant prior to requiring a provider of electronic communication service or remote computing service to disclose a record or other information pertaining to a subscriber to or customer of such service. (18 U.S.C. § 2701 et seq.)

This bill allows a foreign corporation or foreign limited liability company to consent to service of process for a search warrant by email or submission to a designated Internet Web portal.

Background

Existing law requires both a domestic and foreign corporation to designate an agent for the purpose of service of process when the corporation files a certificate in the office of the Secretary of State to transact business in California. (Corporations Code, §§ 1505 and 2105.) An agent for service of process is an individual who resides in the state, or a corporation, designated to accept court documents if the business entity is sued. Designating a person or an entity to receive service of process ensures that the corporation has formal notice of a law suit and any related court documents. The designated agent for service of process is also the entity upon whom a search warrant would be served for records or documents that are in the possession of the foreign corporation. In order to be “properly served,” the applicable statutes require the court documents to be “delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile to a person or entity listed as specified.” (Penal Code § 1524.2 (a)(6); Corp. Code, § 2105 (a)(6)(B).)

This bill adds other means of notice as specified by the foreign corporation or the foreign limited liability company, including email or submission via an Internet Web portal designated by the corporation for the purpose of service of process.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 6/10/15)

Los Angeles County District Attorney’s Office (source)

California Bankers Association

California District Attorneys Association

California State Sheriffs’ Association

OPPOSITION: (Verified 6/10/15)

None received

ASSEMBLY FLOOR: 77-0, 5/7/15

AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins

NO VOTE RECORDED: Campos, Roger Hernández, Steinorth

Prepared by: Mary Kennedy / PUB. S. /

6/10/15 12:57:45

**** END ****

SENATE COMMITTEE ON PUBLIC SAFETY

Senator Loni Hancock, Chair

2015 - 2016 Regular

Bill No: AB 844 Hearing Date: June 9, 2015

Subject: Search Warrants: Foreign Corporations and Foreign Limited Liability Companies

HISTORY

Source: Los Angeles District Attorney’s Office

Prior Legislation: SB 1980 (McPherson) Ch. 864, Statutes of 2002

SB 662 (Figueroa) Ch. 896, Statutes of 1999

Support: California Bankers Association; California District Attorneys Association; California State Sheriffs’ Association

Opposition: None known

Assembly Floor Vote: 77 - 0

PURPOSE

The purpose of this bill is to authorize a foreign corporation and foreign limited liability company to consent to service of process for a search warrant by email or submission to a designated Internet Web portal.

Existing law requires when properly served with a search warrant issued by the California court, a foreign corporation subject to this section to provide to the applicant, all records sought pursuant to that warrant within five business days of receipt, including those records maintained or located outside this state. (Penal Code, § 1524.2, subd. (b)(1).)

Existing law defines a "search warrant" as an order in writing in the name of the People, signed by a magistrate, directed to a peace officer, commanding him or her to search for a person or persons, a thing or things, or personal property, and in the case of a thing or things or personal property, bring the same before the magistrate. (Penal Code, § 1523.)

Existing law states that a California corporation that provides electronic communication services or remote computing services to the general public, when served with a warrant issued by another state to produce records that would reveal the identity of the customers using those services, data stored by, or on behalf of, the customer, the customer’s usage of those services, the recipient or destination of communications sent to or from those customers, or the content of those communications, shall produce those records as if that warrant had been issued by a California court. (Penal Code, § 1524.2, subd. (c).)

Existing law provides that the terms "electronic communication services" and "remote computing services" shall be construed in accordance with applicable federal law. (Penal Code, § 1524.2, subd. (a)(1).)

Existing law defines "properly served” as a search warrant has been delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile to a person or entity listed. (Penal Code, § 1524.2, subd. (a)(6).)

Existing law states that a provider of wire or electronic communication services or a remote computing service, upon the request of a peace officer, shall take all necessary steps to preserve records and other evidence in its possession pending the issuance of a search warrant or a request in writing and an affidavit declaring an intent to file a warrant to the provider. Records shall be retained for a period of 90 days which shall be extended for an additional 90-day upon a renewed request by the peace officer. (Penal Code, § 1524.3, subd. (d).)

Existing law requires any domestic or foreign corporation, before it may be designated as the agent for the purpose of service of process of any entity, to file a certificate executed in the name of the corporation by an officer thereof stating all of the following:

• The complete street address of its office or offices in this state, wherein any entity designating it as such agent may be served with process;

• The name of each person employed by it at each such office to whom it authorizes the delivery of a copy of any such process; and

• Its consent that delivery thereof to any such person at the office where the person is employed shall constitute delivery of any such copy to it, as such agent. (Corporations Code, § 1505.)

Existing law provides that delivery by hand of a copy of any process against the corporation (a) to any natural person designated by it as agent or (b), if a corporate agent has been designated, to any person named in the latest certificate of the corporate agent filed with the Secretary of State at the office of such corporate agent shall constitute valid service on the corporation. (Corporations Code, § 1701.)

Existing law prohibits a foreign corporation from transacting intrastate business without having first obtained from the Secretary of State a certificate of qualification. To obtain that certificate it shall file, on a form prescribed by the Secretary of State, a statement and designation signed by a corporate officer or, in the case of a foreign association that has no officers, signed by a trustee stating:

• Its name and the state or place of its incorporation or organization;

• The street address of its principal executive office;

• The street address of its principal office within this state, if any;

• The mailing address of its principal executive office, if different from the addresses specified above;

• The name of an agent upon whom process directed to the corporation may be served within this state, as specified;

• Its irrevocable consent to service of process directed to it upon the agent designated and to service of process on the Secretary of State if the agent so designated or the agent’s successor is no longer authorized to act or cannot be found at the address given; and

• If it is a corporation which will be subject to the Insurance Code as an insurer, it shall so state that fact. (Corp. Code, § 2105, subd. (a).)

Existing law specifies that consent extends to service of process directed to the foreign corporation’s agent in California for a search warrant issued pursuant to Section 1524.2 of the Penal Code, or for any other validly issued and properly served search warrant, for records or documents that are in the possession of the foreign corporation and are located inside or outside of this state. This subparagraph shall apply to a foreign corporation that is a party or a nonparty to the matter for which the search warrant is sought. For purposes of this subparagraph, "properly served" means delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile to a person or entity listed as specified. (Corporations Code, § 2105, subd. (a)(6)(B).)

Existing law states that delivery by hand of a copy of any process against a foreign corporation (a) to any officer of the corporation or its general manager in this state, or if the corporation is a bank to a cashier or an assistant cashier, (b) to any natural person designated by it as agent for the service of process, or (c), if the corporation has designated a corporate agent, to any person named in the latest certificate of the corporate agent filed with the Secretary of State shall constitute valid service on the corporation. (Corporations Code, § 2110.)

Existing law provides that a foreign limited liability company may apply for a certificate of registration to transact business in this state by delivering an application to the Secretary of State for filing on a form prescribed by the Secretary of State. The application shall state all of the following:

• The name of the foreign limited liability company, or an alternate name, as specified;

• The state or other jurisdiction under whose law the foreign limited liability company is organized and the date of its organization in that state or other jurisdiction, and a statement that the foreign limited liability company is authorized to exercise its powers and privileges in that state or other jurisdiction;

• The street address of the foreign limited liability company’s principal office and of its principal business office in this state, if any;

• The name and street address of the foreign limited liability company’s initial agent for service of process in this state who meets the qualifications specified. If a corporate agent is designated, only the name of the agent shall be set forth;

• A statement that the Secretary of State is appointed the agent of the foreign limited liability company for service of process if the agent has resigned and has not been replaced or if the agent cannot be found or served with the exercise of reasonable diligence; and

• The mailing address of the foreign limited liability company if different than the street address of the principal office, or principal business office in this state. (Corp. Code, § 17708.02, subd. (a).)

Existing federal law, the Stored Communications Act regulates access to electronic communications from providers of electronic communications services. Under the Act a person is prohibited from (1) intentionally accessing without authorization a facility through which an electronic communication service is provided; or (2) intentionally exceeding an authorization to access that facility; and thereby obtaining, altering or preventing the authorized access to a wire or electronic communication while in electronic storage in such a system. The Act requires governmental entities to obtain a warrant prior to requiring a provider of electronic communication service or remote computing service to disclose a record or other information pertaining to a subscriber to or customer of such service. (18 U.S.C. § 2701 et seq.)

This bill would allow a foreign corporation or foreign limited liability company to consent to service of process for a search warrant by email or submission to a designated Internet Web portal.

RECEIVERSHIP/OVERCROWDING CRISIS AGGRAVATION

For the past eight years, this Committee has scrutinized legislation referred to its jurisdiction for any potential impact on prison overcrowding. Mindful of the United States Supreme Court ruling and federal court orders relating to the state’s ability to provide a constitutional level of health care to its inmate population and the related issue of prison overcrowding, this Committee has applied its “ROCA” policy as a content-neutral, provisional measure necessary to ensure that the Legislature does not erode progress in reducing prison overcrowding.

On February 10, 2014, the federal court ordered California to reduce its in-state adult institution population to 137.5% of design capacity by February 28, 2016, as follows:

• 143% of design bed capacity by June 30, 2014;

• 141.5% of design bed capacity by February 28, 2015; and

• 137.5% of design bed capacity by February 28, 2016.

In February of this year the administration reported that as “of February 11, 2015, 112,993 inmates were housed in the State’s 34 adult institutions, which amounts to 136.6% of design bed capacity, and 8,828 inmates were housed in out-of-state facilities. This current population is now below the court-ordered reduction to 137.5% of design bed capacity.”( Defendants’ February 2015 Status Report In Response To February 10, 2014 Order, 2:90-cv-00520 KJM DAD PC, 3-Judge Court, Coleman v. Brown, Plata v. Brown (fn. omitted).

While significant gains have been made in reducing the prison population, the state now must stabilize these advances and demonstrate to the federal court that California has in place the “durable solution” to prison overcrowding “consistently demanded” by the court. (Opinion Re: Order Granting in Part and Denying in Part Defendants’ Request For Extension of December 31, 2013 Deadline, NO. 2:90-cv-0520 LKK DAD (PC), 3-Judge Court, Coleman v. Brown, Plata v. Brown (2-10-14). The Committee’s consideration of bills that may impact the prison population therefore will be informed by the following questions:

• Whether a proposal erodes a measure which has contributed to reducing the prison population;

• Whether a proposal addresses a major area of public safety or criminal activity for which there is no other reasonable, appropriate remedy;

• Whether a proposal addresses a crime which is directly dangerous to the physical safety of others for which there is no other reasonably appropriate sanction;

• Whether a proposal corrects a constitutional problem or legislative drafting error; and

• Whether a proposal proposes penalties which are proportionate, and cannot be achieved through any other reasonably appropriate remedy.

COMMENTS

1. Need for This Bill

According to the author:

AB 844 would amend the definition of “properly served” in PC§1524.2(a)(6) to reflect the common and increasingly prevalent practice of communications and computing service companies to insist on electronic service of process. Such policies may request that service be by email, or via a web portal provided by the company.

2. Service of Process

Existing law requires both a domestic and foreign corporation to designate an agent for the purpose of service of process when the corporation files a certificate in the office of the Secretary of State to transact business in California. (Corporations Code, §§ 1505 and 2105.) An agent for service of process is an individual who resides in the state, or a corporation, designated to accept court documents if the business entity is sued. Designating a person or an entity to receive service of process ensures that the corporation has formal notice of a law suit and any related court documents. The designated agent for service of process is also the entity upon whom a search warrant would be served for records or documents that are in the possession of the foreign corporation. In order to be "properly served," the applicable statutes require the court documents to be "delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile to a person or entity listed as specified." (Pen. Code, § 1524.2, subd. (a)(6); Corp. Code, § 2105, subd. (a)(6)(B).)

This bill adds other means of notice as specified by the foreign corporation or the foreign limited liability company, including email or submission via an Internet web portal designated by the corporation for the purpose of service of process.

3. Support

According to the sponsor, the Los Angeles County District Attorney’s Office:

Evidence such as text messages, email, mobile app data, IP logs, photos and documents stored in the cloud, and countless other kinds of electronically stored information have become vital sources of evidence for criminal prosecutions. This evidence is in the hands of third party companies that are often located outside of California. Fortunately, there are state and federal laws that work in tandem to give us authority not only to obtain this evidence but also to admit in it court expediently. Unfortunately, however, the enabling state statute has not kept up with new methods for service of process. The California law does not explicitly recognize electronic service of process other than by facsimile.

Federal law governs the collection of electronic communications¹ from providers of electronic communications services (ECS) and remote computing services (RCS). The Stored Communications Act governs the collection of such evidence when it is in storage (i.e., in situations other than a wiretap)². The SCA requires covered entities to honor government requests to preserve and turn over information about subscribers and their transactions and stored communications.³ The SCA requires that a covered entity honor a properly issued search warrant from any state court of “general criminal jurisdiction” “authorized by the law of that State to issue search warrants”.⁴

California has a complementary statute governing the collection of such evidence from remote computing and electronic communications services. Cal. Pen. Code § 1524.2 requires that California corporations and foreign corporations qualified to business in our state honor search warrants for information about subscribers and their transactions and stored communications, wherever those records are stored.⁵ For good measure, Cal. Corp. Code § 2105 specifically requires foreign corporations to consent to service pursuant to PC§1524.2.

A problem is that the statute’s definition of “properly served” is out-of-date. The following forms of service are permitted: “delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile…”⁶ It is becoming increasingly common for ISP’s and others to insist on electronic service, either by email or via a web portal established for this purpose.⁷

The proposed legislation would update the definition of “properly served” to comport with today’s technological innovations and modern business practices.

--END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 844

Author:(Bloom)

As Introduced Ver:February 26, 2015

Majority vote

SUMMARY:

Authorizes a foreign corporation and foreign limited liability company to consent to service of process for a search warrant by email or submission to a designated Internet Web portal.

EXISTING LAW:

1. Requires, when properly served with a search warrant issued by the California court, a foreign corporation subject to this section to provide to the applicant, all records sought pursuant to that warrant within five business days of receipt, including those records maintained or located outside this state.

2. Defines a "search warrant" as an order in writing in the name of the People, signed by a magistrate, directed to a peace officer, commanding him or her to search for a person or persons, a thing or things, or personal property, and in the case of a thing or things or personal property, bring the same before the magistrate.

3. States that a California corporation that provides electronic communication services or remote computing services to the general public, when served with a warrant issued by another state to produce records that would reveal the identity of the customers using those services, data stored by, or on behalf of, the customer, the customer’s usage of those services, the recipient or destination of communications sent to or from those customers, or the content of those communications, shall produce those records as if that warrant had been issued by a California court.

4. Defines "properly served" as a search warrant has been delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile to a person or entity listed.

5. States that a provider of wire or electronic communication services or a remote computing service, upon the request of a peace officer, shall take all necessary steps to preserve records and other evidence in its possession pending the issuance of a search warrant or a request in writing and an affidavit declaring an intent to file a warrant to the provider. Records shall be retained for a period of 90 days which shall be extended for an additional 90-day upon a renewed request by the peace officer.

6. Requires any domestic or foreign corporation, before it may be designated as the agent for the purpose of service of process of any entity, to file a certificate executed in the name of the corporation by an officer thereof stating all of the following:

   1. The complete street address of its office or offices in this state, wherein any entity designating it as such agent may be served with process;

   2. The name of each person employed by it at each such office to whom it authorizes the delivery of a copy of any such process; and

   3. Its consent that delivery thereof to any such person at the office where the person is employed shall constitute delivery of any such copy to it, as such agent.

7. Provides that delivery by hand of a copy of any process against the corporation: (a) to any natural person designated by it as agent or (b), if a corporate agent has been designated, to any person named in the latest certificate of the corporate agent filed with the Secretary of State at the office of such corporate agent shall constitute valid service on the corporation.

8. Prohibits a foreign corporation from transacting intrastate business without having first obtained from the Secretary of State a certificate of qualification. To obtain that certificate it shall file, on a form prescribed by the Secretary of State, a statement and designation signed by a corporate officer or, in the case of a foreign association that has no officers, signed by a trustee stating:

   1. Its name and the state or place of its incorporation or organization;

   2. The street address of its principal executive office;

   3. The street address of its principal office within this state, if any;

   4. The mailing address of its principal executive office, if different from the addresses specified above;

   5. The name of an agent upon whom process directed to the corporation may be served within this state, as specified;

   6. Its irrevocable consent to service of process directed to it upon the agent designated and to service of process on the Secretary of State if the agent so designated or the agent’s successor is no longer authorized to act or cannot be found at the address given; and

   7. If it is a corporation which will be subject to the Insurance Code as an insurer, it shall so state that fact.

9. Specifies that consent extends to service of process directed to the foreign corporation’s agent in California for a search warrant issued pursuant to Penal Code (PC) Section 1524.2, or for any other validly issued and properly served search warrant, for records or documents that are in the possession of the foreign corporation and are located inside or outside of this state. This subparagraph shall apply to a foreign corporation that is a party or a nonparty to the matter for which the search warrant is sought. For purposes of this subparagraph, "properly served" means delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile to a person or entity listed as specified.

10. Provides that a foreign limited liability company may apply for a certificate of registration to transact business in this state by delivering an application to the Secretary of State for filing on a form prescribed by the Secretary of State. The application shall state all of the following:

    1. The name of the foreign limited liability company, or an alternate name, as specified;

    2. The state or other jurisdiction under whose law the foreign limited liability company is organized and the date of its organization in that state or other jurisdiction, and a statement that the foreign limited liability company is authorized to exercise its powers and privileges in that state or other jurisdiction;

    3. The street address of the foreign limited liability company's principal office and of its principal business office in this state, if any;

    4. The name and street address of the foreign limited liability company's initial agent for service of process in this state who meets the qualifications specified. If a corporate agent is designated, only the name of the agent shall be set forth;

    5. A statement that the Secretary of State is appointed the agent of the foreign limited liability company for service of process if the agent has resigned and has not been replaced or if the agent cannot be found or served with the exercise of reasonable diligence; and

    6. The mailing address of the foreign limited liability company if different than the street address of the principal office, or principal business office in this state. (Corporations Code Section 17708.02(a))

FISCAL EFFECT:

Unknown. This bill is keyed non-fiscal by the Legislative Counsel.

COMMENTS:

According to the author, "AB 844 would amend the definition of 'properly served' in PC Section 1524.2(a)(6) to reflect the common and increasingly prevalent practice of communications and computing service companies to insist on electronic service of process. Such policies may request that service be by email, or via a web portal provided by the company."

Analysis Prepared by: Stella Choe / PUB. S. / (916) 319-3744 FN: 0000277

Date of Hearing: May 4, 2015

ASSEMBLY COMMITTEE ON BANKING AND FINANCE

Matthew Dababneh, Chair

ABPCA Bill Id:AB 844

Author:(Bloom) – As Introduced Ver:February 26, 2015

SUBJECT: Search warrants: foreign corporations and foreign limited liability companies

SUMMARY: Authorizes a foreign corporation and a foreign limited liability company (LLC) to consent to service of process for a search warrant by email or submission to a designated Internet Web portal.

EXISTING STATE LAW:

1. Requires any domestic or foreign corporation, before it may be designated as the agent for the purpose of service of process of any entity, to file a certificate executed in the name of the corporation by an officer thereof stating all of the following:
   
   

   1. The complete street address of its office or offices in this state, wherein any entity designating it as such agent may be served with process;
      
      

   2. The name of each person employed by it at each such office to whom it authorizes the delivery of a copy of any such process; and,
      
      

   3. Its consent that delivery thereof to any such person at the office where the person is employed shall constitute delivery of any such copy to it, as such agent. (Corporations Code, Section 1505)
      
      

2. Provides that delivery by hand of a copy of any process against the corporation: to any natural person designated by it as agent or, if a corporate agent has been designated, to any person named in the latest certificate of the corporate agent filed with the Secretary of State (SOS) at the office of such corporate agent shall constitute valid service on the corporation. (Corporations Code, Section 1701)
   
   

3. Prohibits a foreign corporation from transacting intrastate business without having first obtained from the SOS a certificate of qualification. To obtain that certificate it shall file, on a form prescribed by the SOS, a statement and designation signed by a corporate officer or, in the case of a foreign association that has no officers, signed by a trustee stating:
   
   

   1. Its name and the state or place of its incorporation or organization;
      
      

   2. The street address of its principal executive office;
      
      

   3. The street address of its principal office within this state, if any;
      
      

   4. The mailing address of its principal executive office, if different from the addresses specified above;

   5. The name of an agent upon whom process directed to the corporation may be served within this state, as specified;
      
      

   6. Its irrevocable consent to service of process directed to it upon the agent designated and to service of process on the SOS if the agent so designated or the agent’s successor is no longer authorized to act or cannot be found at the address given; and,
      
      

   7. If it is a corporation which will be subject to the Insurance Code as an insurer, it shall so state that fact. (Corporations Code, Section 2105, subdivision (a))
      
      

4. Specifies that consent extends to service of process directed to the foreign corporation’s agent in California for a search warrant issued pursuant to Section 1524.2 of the Penal Code, or for any other validly issued and properly served search warrant, for records or documents that are in the possession of the foreign corporation and are located inside or outside of this state. This subparagraph shall apply to a foreign corporation that is a party or a nonparty to the matter for which the search warrant is sought. For purposes of this subparagraph, "properly served" means delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile to a person or entity listed, as specified. (Corporations Code, Section 2105, subdivision (a)(6)(B))
   
   

5. States that delivery by hand of a copy of any process against a foreign corporation (a) to any officer of the corporation or its general manager in this state, or if the corporation is a bank to a cashier or an assistant cashier, (b) to any natural person designated by it as agent for the service of process, or (c), if the corporation has designated a corporate agent, to any person named in the latest certificate of the corporate agent filed with the SOS shall constitute valid service on the corporation. (Corporations Code, Section 2110)

6. Provides that a foreign LLC may apply for a certificate of registration to transact business in this state by delivering an application to the SOS for filing on a form prescribed by the SOS. The application shall state all of the following:

1. The name of the foreign LLC, or an alternate name, as specified;

2. The state or other jurisdiction under whose law the foreign LLC is organized and the date of its organization in that state or other jurisdiction, and a statement that the foreign LLC is authorized to exercise its powers and privileges in that state or other jurisdiction;

3. The street address of the foreign LLCs principal office and of its principal business office in this state, if any;

4. The name and street address of the foreign LLCs initial agent for service of process in this state who meets the qualifications specified. If a corporate agent is designated, only the name of the agent shall be set forth;

5. A statement that the SOS is appointed the agent of the foreign LLC for service of process if the agent has resigned and has not been replaced or if the agent cannot be found or served with the exercise of reasonable diligence; and,

6. The mailing address of the foreign LLC if different than the street address of the principal office, or principal business office in this state. (Corporations Code, Section 17708.02, subdivision (a))

7. Requires, when properly served with a search warrant issued by the California court, a foreign corporation subject to this section to provide to the applicant, all records sought pursuant to that warrant within five business days of receipt, including those records maintained or located outside this state. (Penal Code, Section 1524.2, subdivision (b)(1))

8. Defines a "search warrant" as an order in writing in the name of the People, signed by a magistrate, directed to a peace officer, commanding him or her to search for a person or persons, a thing or things, or personal property, and in the case of a thing or things or personal property, bring the same before the magistrate. (Penal Code, Section 1523)

9. States that a California corporation that provides electronic communication services or remote computing services to the general public, when served with a warrant issued by another state to produce records that would reveal the identity of the customers using those services, data stored by, or on behalf of, the customer, the customer’s usage of those services, the recipient or destination of communications sent to or from those customers, or the content of those communications, shall produce those records as if that warrant had been issued by a California court. (Penal Code, Section 1524.2, subdivision (c))

10. Provides that the terms "electronic communication services" and "remote computing services" shall be construed in accordance with applicable federal law. (Penal Code, Section 1524.2, subdivision (a)(1))

11. Defines "properly served” as a search warrant has been delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile to a person or entity listed. (Penal Code, Section 1524.2, subdivision (a)(6))

12. States that a provider of wire or electronic communication services or a remote computing service, upon the request of a peace officer, shall take all necessary steps to preserve records and other evidence in its possession pending the issuance of a search warrant or a request in writing and an affidavit declaring an intent to file a warrant to the provider. Records shall be retained for a period of 90 days which shall be extended for an additional 90-day upon a renewed request by the peace officer. (Penal Code, Section 1524.3, subdivision (d))

EXISTING FEDERAL LAW: The Stored Communications Act (the Act) regulates access to electronic communications from providers of electronic communications services. Under the Act a person is prohibited from (1) intentionally accessing without authorization a facility through which an electronic communication service is provided; or (2) intentionally exceeding an authorization to access that facility; and thereby obtaining, altering or preventing the authorized access to a wire or electronic communication while in electronic storage in such a system. The Act requires governmental entities to obtain a warrant prior to requiring a provider of electronic communication service or remote computing service to disclose a record or other information pertaining to a subscriber to or customer of such service. (18 U.S.C. § 2701 et seq.)

FISCAL EFFECT: None.

COMMENTS:

Need for the bill:

According to the author, "California's statutes definition of "properly served" is out of date. The following forms of service are permitted for a properly served search warrant" "delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile." It is becoming increasingly common for Internet Service Providers and others to insist on electronic service of documents, either by email or via web portal established for this purpose. The proposed legislation would update the definition of "properly served" to comport with today's technological innovations and modern business practices."

Background:

Existing law prohibits foreign corporations and foreign LLCs from transacting intrastate business without obtaining a certificate of qualification from the SOS. Both a domestic and foreign corporation must designate an agent for the purpose of service of process when the foreign corporation or foreign LLC files a certificate in the office of the SOS to transact business in California. (Corp. Code, §§ 1505 and 2105.) An agent for service of process is an individual who resides in the state, or a corporation, designated to accept court documents if the business entity is sued. Designating a person or an entity to receive service of process ensures that the corporation has formal notice of a law suit and any related court documents. The designated agent for service of process is also the entity upon whom a search warrant would be served for records or documents that are in the possession of the foreign corporation or foreign LLC.

In order to be "properly served," the applicable statutes require the court documents to be "delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile to a person or entity listed, as specified." (Pen. Code, § 1524.2, subd. (a)(6); Corp. Code, § 2105, subd. (a)(6)(B).)

This bill adds other means of notice as specified by the foreign corporation or the foreign LLC, including email or submission via an Internet web portal designated by the corporation for the purpose of service of process.

Previous Legislation:

SB 467 (Leno), of the 2013-2014 Legislative Session, would have required a search warrant when a governmental agency is seeking the contents of a wire or electronic communication that is stored, held or maintained by a provider, as specified. AB 467 was vetoed.

SB 1980 (McPherson), Chapter 864, Statutes of 2002, created state procedures, similar to those in federal law, for a governmental entity to gather specified records, not including the contents of stored communications, from a provider of electronic communication service or a remote computing service by search warrant.

SB 662 (Figueroa), Chapter 896, Statutes of 1999, established a procedure for obtaining and serving a search warrant on a foreign corporation that provides electronic communication services or remote computing service to the general public and is registered to do business in California.

Double-referral:

This measure passed out the Assembly Public Safety Committee on consent.

REGISTERED SUPPORT / OPPOSITION:

Support

Los Angeles County District Attorney's Office (Sponsor)

California Bankers Association

California District Attorneys Association (CDAA)

California State Sheriffs' Association (CSSA)

Opposition

None on file.

Analysis Prepared by: Kathleen O'Malley / B. & F. / (916) 319-3081

Date of Hearing: April 14, 2015

Counsel: Stella Choe

ASSEMBLY COMMITTEE ON PUBLIC SAFETY

Bill Quirk, Chair

ABPCA Bill Id:AB 844

Author:(Bloom) – As Introduced Ver:February 26, 2015

SUMMARY:

Authorizes a foreign corporation and foreign limited liability company to consent to service of process for a search warrant by email or submission to a designated Internet Web portal.

EXISTING LAW:

1. Requires, when properly served with a search warrant issued by the California court, a foreign corporation subject to this section to provide to the applicant, all records sought pursuant to that warrant within five business days of receipt, including those records maintained or located outside this state. (Pen. Code, § 1524.2, subd. (b)(1).)
   
   

2. Defines a "search warrant" as an order in writing in the name of the People, signed by a magistrate, directed to a peace officer, commanding him or her to search for a person or persons, a thing or things, or personal property, and in the case of a thing or things or personal property, bring the same before the magistrate. (Pen. Code, § 1523.)
   
   

3. States that a California corporation that provides electronic communication services or remote computing services to the general public, when served with a warrant issued by another state to produce records that would reveal the identity of the customers using those services, data stored by, or on behalf of, the customer, the customer’s usage of those services, the recipient or destination of communications sent to or from those customers, or the content of those communications, shall produce those records as if that warrant had been issued by a California court. (Pen. Code, § 1524.2, subd. (c).)
   
   

4. Provides that the terms "electronic communication services" and "remote computing services" shall be construed in accordance with applicable federal law. (Pen. Code, § 1524.2, subd. (a)(1).)
   
   

5. Defines "properly served” as a search warrant has been delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile to a person or entity listed. (Pen. Code, § 1524.2, subd. (a)(6).)
   
   

6. States that a provider of wire or electronic communication services or a remote computing service, upon the request of a peace officer, shall take all necessary steps to preserve records and other evidence in its possession pending the issuance of a search warrant or a request in writing and an affidavit declaring an intent to file a warrant to the provider. Records shall be retained for a period of 90 days which shall be extended for an additional 90-day upon a renewed request by the peace officer. (Pen. Code, § 1524.3, subd. (d).)

7. Requires any domestic or foreign corporation, before it may be designated as the agent for the purpose of service of process of any entity, to file a certificate executed in the name of the corporation by an officer thereof stating all of the following:
   
   

   1. The complete street address of its office or offices in this state, wherein any entity designating it as such agent may be served with process;

2. The name of each person employed by it at each such office to whom it authorizes the delivery of a copy of any such process; and
   
   

3. Its consent that delivery thereof to any such person at the office where the person is employed shall constitute delivery of any such copy to it, as such agent. (Corp. Code, § 1505.)

8. Provides that delivery by hand of a copy of any process against the corporation (a) to any natural person designated by it as agent or (b), if a corporate agent has been designated, to any person named in the latest certificate of the corporate agent filed with the Secretary of State at the office of such corporate agent shall constitute valid service on the corporation. (Corp. Code, § 1701.)

9. Prohibits a foreign corporation from transacting intrastate business without having first obtained from the Secretary of State a certificate of qualification. To obtain that certificate it shall file, on a form prescribed by the Secretary of State, a statement and designation signed by a corporate officer or, in the case of a foreign association that has no officers, signed by a trustee stating:
   
   

   1. Its name and the state or place of its incorporation or organization;
      
      

   2. The street address of its principal executive office;
      
      

   3. The street address of its principal office within this state, if any;
      
      

   4. The mailing address of its principal executive office, if different from the addresses specified above;
      
      

   5. The name of an agent upon whom process directed to the corporation may be served within this state, as specified;
      
      

   6. Its irrevocable consent to service of process directed to it upon the agent designated and to service of process on the Secretary of State if the agent so designated or the agent’s successor is no longer authorized to act or cannot be found at the address given; and
      
      

   7. If it is a corporation which will be subject to the Insurance Code as an insurer, it shall so state that fact. (Corp. Code, § 2105, subd. (a).)
      
      

10. Specifies that consent extends to service of process directed to the foreign corporation’s agent in California for a search warrant issued pursuant to Section 1524.2 of the Penal Code, or for any other validly issued and properly served search warrant, for records or documents that are in the possession of the foreign corporation and are located inside or outside of this state. This subparagraph shall apply to a foreign corporation that is a party or a nonparty to the matter for which the search warrant is sought. For purposes of this subparagraph, "properly served" means delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile to a person or entity listed as specified. (Corp. Code, § 2105, subd. (a)(6)(B).)
    
    

11. States that delivery by hand of a copy of any process against a foreign corporation (a) to any officer of the corporation or its general manager in this state, or if the corporation is a bank to a cashier or an assistant cashier, (b) to any natural person designated by it as agent for the service of process, or (c), if the corporation has designated a corporate agent, to any person named in the latest certificate of the corporate agent filed with the Secretary of State shall constitute valid service on the corporation. (Corp. Code, § 2110.)
    
    

12. Provides that a foreign limited liability company may apply for a certificate of registration to transact business in this state by delivering an application to the Secretary of State for filing on a form prescribed by the Secretary of State. The application shall state all of the following:
    
    

    1. The name of the foreign limited liability company, or an alternate name, as specified;
       
       

    2. The state or other jurisdiction under whose law the foreign limited liability company is organized and the date of its organization in that state or other jurisdiction, and a statement that the foreign limited liability company is authorized to exercise its powers and privileges in that state or other jurisdiction;
       
       

    3. The street address of the foreign limited liability company’s principal office and of its principal business office in this state, if any;
       
       

    4. The name and street address of the foreign limited liability company’s initial agent for service of process in this state who meets the qualifications specified. If a corporate agent is designated, only the name of the agent shall be set forth;
       
       

    5. A statement that the Secretary of State is appointed the agent of the foreign limited liability company for service of process if the agent has resigned and has not been replaced or if the agent cannot be found or served with the exercise of reasonable diligence; and
       
       

    6. The mailing address of the foreign limited liability company if different than the street address of the principal office, or principal business office in this state. (Corp. Code, § 17708.02, subd. (a).)
       
       

EXISTING FEDERAL LAW: The Stored Communications Act regulates access to electronic communications from providers of electronic communications services. Under the Act a person is prohibited from (1) intentionally accessing without authorization a facility through which an electronic communication service is provided; or (2) intentionally exceeding an authorization to access that facility; and thereby obtaining, altering or preventing the authorized access to a wire or electronic communication while in electronic storage in such a system. The Act requires governmental entities to obtain a warrant prior to requiring a provider of electronic communication service or remote computing service to disclose a record or other information pertaining to a subscriber to or customer of such service. (18 U.S.C. § 2701 et seq.)

FISCAL EFFECT:

Unknown

COMMENTS:

1. Author's Statement: According to the author, "AB 844 would amend the definition of 'properly served' in PC§1524.2(a)(6) to reflect the common and increasingly prevalent practice of communications and computing service companies to insist on electronic service of process. Such policies may request that service be by email, or via a web portal provided by the company."
   
   

2. Service of Process: Existing law requires both a domestic and foreign corporation to designate an agent for the purpose of service of process when the corporation files a certificate in the office of the Secretary of State to transact business in California. (Corp. Code, §§ 1505 and 2105.) An agent for service of process is an individual who resides in the state, or a corporation, designated to accept court documents if the business entity is sued. Designating a person or an entity to receive service of process ensures that the corporation has formal notice of a law suit and any related court documents. The designated agent for service of process is also the entity upon whom a search warrant would be served for records or documents that are in the possession of the foreign corporation.
   
   In order to be "properly served," the applicable statutes require the court documents to be "delivered by hand, or in a manner reasonably allowing for proof of delivery if delivered by United States mail, overnight delivery service, or facsimile to a person or entity listed as specified." (Pen. Code, § 1524.2, subd. (a)(6); Corp. Code, § 2105, subd. (a)(6)(B).)
   This bill adds other means of notice as specified by the foreign corporation or the foreign limited liability company, including email or submission via an Internet web portal designated by the corporation for the purpose of service of process. According to the author of this bill, this addition reflects the common and increasingly prevalent practice of communications and computing service companies to insist on service of process through electronic means.
   
   

3. Argument in Support: According to the Los Angeles County District Attorney's Office, the sponsor of this bill, "Federal law governs the collection of electronic communications from providers of electronic communications services (ECS) and remote computing services (RCS). The Stored Communications Act governs the collection of such evidence when it is in storage (i.e., in situations other than a wiretap). The SCA requires covered entities to honor government requests to preserve and turn over information about subscribers and their transactions and stored communications. The SCA requires that a covered entity honor a properly issued search warrant from any state court of 'general criminal jurisdiction' authored by the law of that State to issue search warrants.
   
   "California has a complimentary statute governing the collection of such evidence from remote computing and electronic communication services. California Penal Code Section 1524.2 requires that California corporations and foreign corporations qualified to do business in our state to honor search warrants for information about subscribers and their transactions and stored communications, wherever those records are stored. For good measure, California Corporations Code Section 2105 specifically requires foreign corporations to consent to service pursuant to Penal Code Section 1524.2.
   
   "A problem is that the statute's definition of 'properly served' is out-of-date. The following forms of service are permitted: 'delivery by hand, or in a manner reasonably allowing for proof of delivery if delivered by the United States mail, overnight delivery service, or facsimile…" It is becoming increasingly common for ISP's and others to insist on electronic service, either by email or via a web portal established for this purpose.
   
   

4. Related Legislation: SB 178 (Leno) would prohibit a government entity from compelling the production of or access to electronic communication information or electronic device information, as defined, without a search warrant or wiretap order, except for emergency situations, as defined. SB 178 is pending hearing by the Senate Committee on Appropriations.
   
   

5. Prior Legislation:
   
   

   1. SB 467 (Leno), of the 2013-2014 Legislative Session, would have required a search warrant when a governmental agency is seeking the contents of a wire or electronic communication that is stored, held or maintained by a provider, as specified. AB 467 was vetoed.
      
      

   2. SB 1980 (McPherson), Chapter 864, Statutes of 2002, created state procedures, similar to those in federal law, for a governmental entity to gather specified records, not including the contents of stored communications, from a provider of electronic communication service or a remote computing service by search warrant.
      
      

   3. SB 662 (Figueroa), Chapter 896, Statutes of 1999, established a procedure for obtaining and serving a search warrant on a foreign corporation that provides electronic communication services or remote computing service to the general public and is registered to do business in California.
      
      

REGISTERED SUPPORT / OPPOSITION:

Support

Los Angeles County District Attorney's Office (Sponsor)
California District Attorneys Association
California State Sheriffs' Association

Opposition

None

Analysis Prepared by:

Stella Choe / PUB. S. / (916) 319-3744