THIRD READING  

Bill No: AB 669

Author: Holden (D)

Introduced: 2/15/19

Vote: 21

SENATE JUDICIARY COMMITTEE: 9-0, 6/4/19

AYES: Jackson, Borgeas, Allen, Caballero, Jones, Monning, Stern, Umberg, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 68-2, 4/8/19 - See last page for vote

SUBJECT: Attorney General: assurance of voluntary compliance

SOURCE: Attorney General Xavier Becerra

DIGEST:

This bill authorizes the Attorney General to resolve disputes by acceptance of assurances of voluntary compliance (AVC).

ANALYSIS:

Existing law:

1. Authorizes a court, if parties to pending litigation stipulate for settlement of the case, in whole or in part, to enter judgment pursuant to the terms of the settlement upon motion by the parties. Such settlement terms can be stipulated in a writing signed by the parties outside the presence of the court or orally before the court. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement. (Code Civ. Proc. § 664.6.)
2. Provides that an injunction is a writ or order requiring a person to refrain from a particular act. An injunction may be granted by the court in which the action is brought, or by a judge thereof; and when granted by a judge, it may be enforced as an order of the court. (Code Civ. Proc. § 525.)
3. Establishes the Supervision of Trustees and Fundraisers for Charitable Purposes Act (“the Act”). (Gov. Code § 12580 et seq.) The Act authorizes the Attorney General to institute certain actions or proceedings and to settle them by acceptance of an AVC through which any person alleged to be engaged in any method, act, or practice in violation of the Act agrees to discontinue that method, act, or practice. The assurance of compliance must be in writing and be filed with a superior court in this state for approval. In the event of an alleged violation, the Attorney General may, at their discretion, either initiate contempt proceedings or proceed as if the AVC has not been accepted. (Gov. Code § 12591.2.)

This bill:

1. Authorizes the Attorney General to accept an AVC, in lieu of a stipulated judgment, to resolve an action brought in the name of the people of the State of California.
2. Provides that such AVCs must be filed with and subject to approval by the court. When filed with and approved, the assurances are enforceable in the same manner, with the same remedies, and to the same extent, as a stipulated judgment and permanent injunction.

Background

There are various methods for settling litigation between parties. Parties to a lawsuit may enter into a stipulated judgment, whereby they agree to terms settling the relevant controversy with the stipulated terms becoming a court order once signed by the court. The stipulated judgment can also provide for the court to retain jurisdiction over the parties in order to enforce the terms of the settlement. A court can also grant an injunction in an action, which is a writ or order generally requiring a person to refrain from a particular act. An injunction may be enforced as an order of the court.

This bill provides an additional tool to the Attorney General for settling cases on behalf of the state. Pursuant to this bill, the Attorney General is authorized to accept an AVC, in lieu of a stipulated judgment, to resolve an action brought in the name of the people of California. Such agreements must be filed with, and be subject to the approval of, the court. Such agreements are enforceable similar to stipulated judgments and injunctions. The primary goal is to streamline settlements with defendants in multistate cases, ensuring more efficient use of limited Department of Justice (DOJ) resources.

This bill is sponsored by Attorney General Xavier Becerra. There is no known opposition.

Comments

According to the author:

This proposal would provide general statutory authority for the AG to document the settlement of non-charity related cases through an AVC. More specifically, this bill: (1) authorizes the use of AVCs at the AG’s discretion; (2) requires an AVC to be filed with and approved by the court, to ensure transparency and appropriate judicial oversight; and (3) ensures that the commitments that a defendant makes in an AVC are enforceable to the same extent as commitments made in a stipulated judgment and permanent injunction – tools that the AG uses to resolve consumer protection and environmental enforcement actions.

Assurance of voluntary compliance as a tool for state law enforcement. AVCs are essentially agreements that parties enter into in order to resolve disputes without more formal litigation. More than half of the states in the United States authorize their attorneys general to settle controversies through this method. AVCs provide a more streamlined and efficient approach to addressing alleged violations of law. Each state has particular procedures and remedies attached to the authorized use of AVCs.

For instance, the Attorney General of California is currently authorized to accept such AVCs in order to settle alleged violations of the Supervision of Trustees and Fundraisers for Charitable Purposes Act (“the Act”). (Gov. Code § 12591.2.) Through these AVCs, persons alleged to be engaged in methods, acts, or practices in violation of the Act can agree to discontinue that conduct and may further agree to voluntary payments, including reimbursement for the costs of the investigation or restitution for allegedly aggrieved persons.

The AVC is not considered an admission of a violation of the Act. These AVCs are required to be in writing and to be filed and approved by a superior court. The Act authorizes the Attorney General to either initiate contempt proceedings or proceed as if the AVC has not been accepted in the event of an alleged violation.

Providing the Attorney General with another tool. Currently, the Attorney General is only statutorily authorized to accept AVCs in connection with alleged violations of the Act. However, the Attorney General is often involved in multistate litigation with other state attorneys general, enforcing the wide range of laws within the Attorney General’s jurisdiction. As many of these states broadly authorize the use of AVCs to enforce their laws and provide clear mechanisms for their enforcement, these multistate cases are often resolved through this method. In such situations, California’s Attorney General must either file an action in the courts to secure a stipulated judgment or to rely on AVCs not specifically authorized and for which California law does not provide specific enforcement mechanisms or remedies.

This bill provides explicit authority for the Attorney General to resolve actions on behalf of Californians by way of AVCs in lieu of stipulated judgments. In order to ensure transparency and enforceability, the bill requires these AVCs to be filed with the court and subject to the court’s approval, albeit without providing explicit standards for the courts to apply. When so filed and approved, and AVC is enforceable in the same manner, with the same remedies, and to the same extent, as a stipulated judgment and permanent injunction. This provides the Attorney General a more flexible tool to settle cases, including consumer protection and environmental claims, while still having an ability to adequately and efficiently enforce the terms of the voluntary settlement through the courts.

Attorney General Xavier Becerra, the sponsor of this bill, argues that AVCs will help “maximize the efficient use of DOJ resources.” He provides the following example in support:

The [Attorney General (AG)] often works closely with other state Attorneys General in multistate cases involving large defendants that operate across state borders. Approximately 25-30 other states have laws that authorize the use of AVCs to settle cases, and provide for the enforceability of those AVCs under state law. . . . California does not have such authority (except in charitable trust cases). In multistate cases, there is always a concern that a defendant that is entering into AVCs with our sister states may balk at entering into a stipulated judgment with California, forcing us into litigation, and thereby unnecessarily consuming limited prosecutorial resources.

By broadly authorizing the use of AVCs in California, this bill gives the AG the ability to use a tool that can be particularly helpful in facilitating settlements in multistate cases where our sister states are already using AVCs to do so. AVCs can save time and resources that would otherwise be consumed in negotiating a stipulated judgment or in litigation, if such negotiations are unsuccessful. In addition, by authorizing the use of a strong AVC tool, this bill helps ensure that, from an enforcement perspective, Californians are just as protected and well-situated as residents of our sister states if and when the AG elects to enter into an AVC.

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

SUPPORT: (Verified 6/22/19)

Attorney General Xavier Becerra (source)

OPPOSITION: (Verified 6/22/19)

None received

ASSEMBLY FLOOR: 68-2, 4/8/19

AYES: Aguiar-Curry, Bauer-Kahan, Berman, Bloom, Boerner Horvath, Bonta, Burke, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Diep, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Limón, Low, Maienschein, Mayes, Medina, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Salas, Santiago, Smith, Mark Stone, Ting, Voepel, Weber, Wicks, Wood, Rendon

NOES: Brough, Waldron

NO VOTE RECORDED: Arambula, Bigelow, Calderon, Carrillo, Eduardo Garcia, Levine, Mathis, McCarty, Melendez, Blanca Rubio

Prepared by: Christian Kurpiewski / JUD. / (916) 651-4113

6/26/19 15:53:59

**** END ****

SENATE JUDICIARY COMMITTEE

Senator Hannah-Beth Jackson, Chair

2019-2020 Regular Session

Bill No: AB 669 (Author:Holden)

Version: February 15, 2019

Hearing Date: June 4, 2019

Fiscal: Yes

Urgency: No

Consultant: CK

SUBJECT

Attorney General: assurance of voluntary compliance

DIGEST

This bill authorizes the Attorney General to resolve disputes by acceptance of assurances of voluntary compliance.

EXECUTIVE SUMMARY

There are various methods for settling litigation between parties. Parties to a lawsuit may enter into a stipulated judgment, whereby they agree to terms settling the relevant controversy with the stipulated terms becoming a court order once signed by the court. The stipulated judgment can also provide for the court to retain jurisdiction over the parties in order to enforce the terms of the settlement. A court can also grant an injunction in an action, which is a writ or order generally requiring a person to refrain from a particular act. An injunction may be enforced as an order of the court.

This bill provides an additional tool to the Attorney General for settling cases on behalf of the state. Pursuant to the bill, the Attorney General is authorized to accept an assurance of voluntary compliance (AVC), in lieu of a stipulated judgment, to resolve an action brought in the name of the people of California. Such agreements must be filed with, and be subject to the approval of, the court. Such agreements are enforceable similar to stipulated judgments and injunctions. The primary goal is to streamline settlements with defendants in multistate cases, ensuring more efficient use of limited Department of Justice (DOJ) resources.

This bill is sponsored by Attorney General Xavier Becerra. There is no known opposition.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Authorizes a court, if parties to pending litigation stipulate for settlement of the case, in whole or in part, to enter judgment pursuant to the terms of the settlement upon motion by the parties. Such settlement terms can be stipulated in a writing signed by the parties outside the presence of the court or orally before the court. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement. (Code Civ. Proc. § 664.6.)
2. Provides that an injunction is a writ or order requiring a person to refrain from a particular act. An injunction may be granted by the court in which the action is brought, or by a judge thereof; and when granted by a judge, it may be enforced as an order of the court. (Code Civ. Proc. § 525.)
3. Establishes the Supervision of Trustees and Fundraisers for Charitable Purposes Act (“the Act”). (Gov. Code § 12580 et seq.) The Act authorizes the Attorney General to institute certain actions or proceedings and to settle them by acceptance of an AVC through which any person alleged to be engaged in any method, act, or practice in violation of the Act agrees to discontinue that method, act, or practice. The assurance of compliance must be in writing and be filed with a superior court in this state for approval. In the event of an alleged violation, the Attorney General may, at their discretion, either initiate contempt proceedings or proceed as if the AVC has not been accepted. (Gov. Code § 12591.2.)

This bill:

1. Authorizes the Attorney General to accept an AVC, in lieu of a stipulated judgment, to resolve an action brought in the name of the people of the State of California.
2. Provides that such AVCs must be filed with and subject to approval by the court. When filed with and approved, the assurances are enforceable in the same manner, with the same remedies, and to the same extent, as a stipulated judgment and permanent injunction.

COMMENTS

1. Stated intent of the bill

According to the author:

This proposal would provide general statutory authority for the AG to document the settlement of non-charity related cases through an AVC. More specifically, this bill: (1) authorizes the use of AVCs at the AG’s discretion; (2) requires an AVC to be filed with and approved by the court, to ensure transparency and appropriate judicial oversight; and (3) ensures that the commitments that a defendant makes in an AVC are enforceable to the same extent as commitments made in a stipulated judgment and permanent injunction – tools that the AG uses to resolve consumer protection and environmental enforcement actions.

1. Assurance of voluntary compliance as a tool for state law enforcement

AVCs are essentially agreements that parties enter into in order to resolve disputes without more formal litigation. More than half of the states in the United States authorize their attorneys general to settle controversies through this method. AVCs provide a more streamlined and efficient approach to addressing alleged violations of law. Each state has particular procedures and remedies attached to the authorized use of AVCs.

For instance, the Attorney General of California is currently authorized to accept such AVCs in order to settle alleged violations of the Supervision of Trustees and Fundraisers for Charitable Purposes Act (“the Act”). (Gov. Code § 12591.2.) Through these AVCs, persons alleged to be engaged in methods, acts, or practices in violation of the Act can agree to discontinue that conduct and may further agree to voluntary payments, including reimbursement for the costs of the investigation or restitution for allegedly aggrieved persons.

The AVC is not considered an admission of a violation of the Act. These AVCs are required to be in writing and to be filed and approved by a superior court. The Act authorizes the Attorney General to either initiate contempt proceedings or proceed as if the AVC has not been accepted in the event of an alleged violation

1. Providing the Attorney General with another tool when representing California’s interests

Currently, the Attorney General is only statutorily authorized to accept AVCs in connection with alleged violations of the Act. However, the Attorney General is often involved in multistate litigation with other state attorneys general, enforcing the wide range of laws within the Attorney General’s jurisdiction. As many of these states broadly authorize the use of AVCs to enforce their laws and provide clear mechanisms for their enforcement, these multistate cases are often resolved through this method. In such situations, California’s Attorney General must either file an action in the courts to secure a stipulated judgment or to rely on AVCs not specifically authorized and for which California law does not provide specific enforcement mechanisms or remedies.

This bill provides explicit authority for the Attorney General to resolve actions on behalf of Californians by way of AVCs in lieu of stipulated judgments. In order to ensure transparency and enforceability, the bill requires these AVCs to be filed with the court and subject to the court’s approval, albeit without providing explicit standards for the courts to apply. When so filed and approved, and AVC is enforceable in the same manner, with the same remedies, and to the same extent, as a stipulated judgment and permanent injunction. This provides the Attorney General a more flexible tool to settle cases, including consumer protection and environmental claims, while still having an ability to adequately and efficiently enforce the terms of the voluntary settlement through the courts.

Attorney General Xavier Becerra, the sponsor of this bill, argues that AVCs will help “maximize the efficient use of DOJ resources.” He provides the following example in support:

The [Attorney General (AG)] often works closely with other state Attorneys General in multistate cases involving large defendants that operate across state borders. Approximately 25-30 other states have laws that authorize the use of AVCs to settle cases, and provide for the enforceability of those AVCs under state law. . . . California does not have such authority (except in charitable trust cases). In multistate cases, there is always a concern that a defendant that is entering into AVCs with our sister states may balk at entering into a stipulated judgment with California, forcing us into litigation, and thereby unnecessarily consuming limited prosecutorial resources.

By broadly authorizing the use of AVCs in California, this bill gives the AG the ability to use a tool that can be particularly helpful in facilitating settlements in multistate cases where our sister states are already using AVCs to do so. AVCs can save time and resources that would otherwise be consumed in negotiating a stipulated judgment or in litigation, if such negotiations are unsuccessful. In addition, by authorizing the use of a strong AVC tool, this bill helps ensure that, from an enforcement perspective, Californians are just as protected and well-situated as residents of our sister states if and when the AG elects to enter into an AVC.

SUPPORT

Attorney General Xavier Becerra (sponsor)

OPPOSITION

None known

RELATED LEGISLATION

Pending: SB 506 (Hueso, 2019) authorizes the Attorney General to represent the Department of Finance and to succeed the Electricity Oversight Board, as specified, in any litigation or settlement to obtain ratepayer recovery for the effects of the 2000–02 energy crisis. The bill provides guidance for the distribution of associated proceeds. This bill is currently in the Assembly awaiting referral.

Prior: SB 2015 (Sher, Ch. 475, Stats. 2015) authorized the Attorney General, among other things, to resolve alleged violations of the Supervision of Trustees and Fundraisers for Charitable Purposes Act by way of AVCs.

PRIOR VOTES:

Assembly Floor (Ayes 68, Noes 2)

Assembly Appropriations Committee (Ayes 16, Noes 0)

Assembly Judiciary Committee (Ayes 11, Noes 0)

**************

ASSEMBLY THIRD READING

ATR Bill Id:AB 669

Author:(Holden)

As Introduced Ver:February 15, 2019

Majority vote

SUMMARY:

Provides the Attorney General new authority to accept an assurance of voluntary compliance, in lieu of a stipulated judgment, in order to streamline settlements, especially in large multistate actions.

Major Provisions

1. Provides that the Attorney General may accept an assurance of voluntary compliance, in lieu of a stipulated judgment, to resolve an action brought in the name of the people of the State of California, so long as the assurance is filed with and subject to approval by the court.
2. Provides that an assurance of voluntary compliance filed with and approved by the court shall be enforceable in the same manner, with the same remedies, and to the same extent, as a stipulated judgment and permanent injunction.

COMMENTS:

Seeking to streamline settlements with defendants in multistate cases and to ensure the efficient use of Department of Justice resources, this bill would permit the Attorney General to utilize voluntary assurances of compliance to resolve litigation brought on behalf of the people of California. These compliance measures require a settling party to assure the Attorney General that they will comply with the law and all terms of a settlement agreement. Given that nearly 30 other state attorneys general possess this tool, providing California's Attorney General with the ability to utilize an assurance of voluntary compliance will help the Attorney General better protect the rights of Californians in multistate litigation.

Under existing law, most settlements are memorialized via stipulated judgment. In effect, these judgments are essentially contractual agreements acknowledged in open court. In the event that a settlement involves multiple parties for litigation initiated outside of California, in order to record the judgment, a separate action would need to be commenced in California before the judgment could be entered, resulting in costs for all parties. While an assurance of voluntary compliance is similar in that it functions as an agreement resulting in the end of formal adjudication of a legal issue, when explicitly authorized by state law, an assurance provides non-contractual remedies to guarantee compliance.

In order to better equip the Attorney General to resolve multistate civil actions, this bill would provide the Attorney General with broad-based powers to adopt an assurance of voluntary compliance as a means to end litigation. The current proposal would enable the Attorney General to seek injunctions and treat a failure to maintain compliance with the agreement like a breach of a settlement. This bill avoids the necessity for commencement of new actions just to enforce a settlement, and instead permits the court to quickly act to ensure ongoing adherence with an assurance of voluntary compliance.

According to the Author:

This proposal would provide general statutory authority for the Attorney General to document the settlement of non-charity related cases through an assurance of voluntary compliance.

By broadly authorizing the use of assurances of voluntary compliance in California, this bill gives the Attorney General the ability to use a tool that can be particularly helpful in facilitating settlements in multistate cases where our sister states are already using assurances of voluntary compliance to do so. Assurances of voluntary compliance can save time and resources that would otherwise be consumed in negotiating a stipulated judgment or in litigation, if such negotiations are unsuccessful.

Arguments in Support:

In support of this measure, the bill's sponsor, Attorney General Xavier Becerra, states that this bill:

Seeks to streamline settlements with defendants in multistate cases and ensure the efficient use of Department of Justice resources. Outside the narrow context of the charitable trust law, there is no express legal authority in California for the Attorney General to enter into an assurance of voluntary compliance, to have that assurance of voluntary compliance reviewed and entered by the court, or to obtain judicial enforcement of an assurance of voluntary compliance's requirements. This means that the Attorney General lacks the ability to use this settlement tool in many other areas of law where it could be used to have courts enforce public rights and consumer protections. Out of court settlement agreements have some utility, but they are inappropriate in consumer protection and environmental law enforcement actions where transparency and judicial oversight and critical, and they lack enforcement mechanisms beyond the limited remedies provided by contract law. Accordingly, this proposal would provide general statutory authority for the Attorney General to document the settlement of non-charity related cases through an assurance of voluntary compliance.

Arguments in Opposition:

None

FISCAL COMMENTS:

According to the Assembly Appropriations Committee, minor and absorbable workload costs to the trial courts to adjudicate assurances of voluntary compliance.

VOTES:

ASM JUDICIARY: 11-0-1

YES: Mark Stone, Chau, Chiu, Gonzalez, Holden, Kalra, Fong, Maienschein, Obernolte, Petrie-Norris, Reyes

ABS, ABST OR NV: Gallagher

ASM APPROPRIATIONS: 16-0-2

YES: Gonzalez, Bigelow, Bloom, Bonta, Calderon, Carrillo, Chau, Diep, Eggman, Fong, Gabriel, Friedman, Obernolte, Petrie-Norris, Quirk, Robert Rivas

ABS, ABST OR NV: Brough, Maienschein

UPDATED:

VERSION: February 15, 2019

CONSULTANT: Nicholas Liedtke / JUD. / (916) 319-2334 FN: 0000091

Date of Hearing: April 3, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 669

Author:(Holden) – As Introduced Ver:February 15, 2019

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill provides the attorney general (AG) new authority to accept an assurance of voluntary compliance, in lieu of a stipulated judgment, in order to streamline settlements, especially in large multi-state actions. The bill further provides that an assurance of voluntary compliance filed with and approved by the court shall be enforceable in the same manner, with the same remedies, and to the same extent, as a stipulated judgment and permanent injunction.

FISCAL EFFECT:

Minor and absorbable workload costs to the trial courts to adjudicate assurances of voluntary compliance.

COMMENTS:

1. Purpose. According to the author:

This proposal would provide general statutory authority for the [AG] to document the settlement of non-charity related cases through an assurance of voluntary compliance. By broadly authorizing the use of assurances of voluntary compliance in California, this bill gives the [AG] the ability to use a tool that can be particularly helpful in facilitating settlements in multistate cases where our sister states are already using assurances of voluntary compliance to do so. Assurances of voluntary compliance can save time and resources that would otherwise be consumed in negotiating a stipulated judgment or in litigation, if such negotiations are unsuccessful.

1. Background. Under existing law, most settlements are memorialized via stipulated judgment. In effect, these judgments are essentially contractual agreements filed in court and may be enforced through court action. In the event that a settlement involves multiple parties to litigation initiated outside California, in order to record a settlement agreement and subsequent agreed judgment, a separate action would have to be filed in California before judgment could be entered, resulting in costs for all parties. While an assurance of voluntary compliance is similar in that it functions as an agreement resulting in the settlement of a pending action and a mutually agreed upon resolution, when explicitly authorized by state law, an assurance of voluntary compliance provides remedies to guarantee compliance. However, due to the lack of existing legal authority for the use of an assurance of voluntary compliance in most legal disputes, California’s AG may sign onto an assurance of voluntary compliance between other states’ attorneys general and parties to litigation that may be difficult to enforce without additional actions in California. Authorizing assurances for voluntary compliance will likely have the effect of decreasing workload on the courts because parties will no longer have to perfunctorily file suit in California for the purposes of immediately settling and filing a valid settlement agreement in California.
   
2. Support. According to AG Xavier Becerra:

[AB 669] Seeks to streamline settlements with defendants in multistate cases and ensure the efficient use of Department of Justice resources. Outside the narrow context of the charitable trust law, there is no express legal authority in California for the [AG] to enter into an assurance of voluntary compliance, to have that assurance of voluntary compliance reviewed and entered by the court, or to obtain judicial enforcement of an assurance of voluntary compliance’s requirements. This means that the [AG] lacks the ability to use this settlement tool in many other areas of law where it could be used to have courts enforce public rights and consumer protections. Out of court settlement agreements have some utility, but they are inappropriate in consumer protection and environmental law enforcement actions where transparency and judicial oversight and critical, and they lack enforcement mechanisms beyond the limited remedies provided by contract law. Accordingly, this proposal would provide general statutory authority for the [AG] to document the settlement of non-charity related cases through an assurance of voluntary compliance.

Analysis Prepared by: Kimberly Horiuchi / APPR. / (916) 319-2081

Date of Hearing: March 26, 2019

ASSEMBLY COMMITTEE ON JUDICIARY

Mark Stone, Chair

ABPCA Bill Id:AB 669

Author:(Holden) – As Introduced Ver:February 15, 2019

SUBJECT: Attorney General: assurance of voluntary compliance

KEY ISSUE: SHOULD THE ATTORNEY GENERAL OF THE STATE OF CALIFORNIA BE PROVIDED WITH THE POWER TO ENTER INTO AN ASSURANCE OF VOLUNTARY COMPLAINCE WITH PARTIES TO LITIGATION, AS A MEANS OF RESOLVING A LEGAL ACTION, IN LIEU OF REQUIRING STIPULATED JUDGMENTS?

SYNOPSIS

This bill aims to provide the Attorney General of California with the ability to accept an assurance of voluntary compliance as a means of settling multistate legal disputes. Presently nearly 30 other state attorneys general possess this authority, placing California at a disadvantage in accepting and enforcing multistate settlement agreements. This bill would provide that, not only could the Attorney General accept an assurance of voluntary compliance, but also that a California court could issue injunctions and other remedies to ensure that an assurance of compliance can be enforced in California.

This measure is sponsored by the Attorney General of California, Xavier Becerra, who argues that this bill gives his office with a valuable tool to encourage multistate settlement agreements, and provides for the efficient enforcement of such agreements by the Department of Justice. This bill has no known opposition.

SUMMARY: Provides the Attorney General new authority to accept an assurance of voluntary compliance, in lieu of a stipulated judgment, in order to streamline settlements, especially in large multistate actions. Specifically, this bill:

1. Provides that the Attorney General may accept an assurance of voluntary compliance, in lieu of a stipulated judgment, to resolve an action brought in the name of the people of the State of California.
2. Requires an assurance of voluntary compliance accepted by the Attorney General to be filed with and subject to approval by the court.
3. Provides that an assurance of voluntary compliance filed with and approved by the court shall be enforceable in the same manner, with the same remedies, and to the same extent, as a stipulated judgment and permanent injunction.

EXISTING LAW:

1. Provides for enforceability of the following judgments at the conclusion of a civil action:
   1. A money judgment;
   2. A judgment for possession of personal property;
   3. A judgment for possession of real property;
   4. A judgment for sale of real or personal property; and
   5. A judgment requiring performance of an act not described above or requiring forbearance from performing an act. (Code of Civil Procedure Section 681.010.)
2. Provides that the Judicial Council of California may provide by rule for the practice and procedure in proceedings regarding civil judgments. (Code of Civil Procedure Section 681.030.)
3. Provides that, generally, a judgment is enforceable upon entry by the court. (Code of Civil Procedure Section 683.010.)
4. Provides that a final injunction may be granted to prevent the breach of an obligation existing in favor of the applicant:
   1. Where pecuniary compensation would not afford adequate relief;
   2. Where it would be extremely difficult to ascertain the amount of compensation which would afford adequate relief;
   3. Where the restraint is necessary to prevent a multiplicity of judicial proceedings; or,
   4. Where the obligation arises from a trust. (Civil Code Section 3422.)
5. Provides that in any case where the Attorney General has authority to institute an action or proceeding to enforce the Uniform Supervision of Trustees for Charitable Purposes Act, the Attorney General may accept an assurance of voluntary compliance through which any person alleged to be engaged in any method, act, or practice in violation agrees to discontinue that method, act, or practice. (Government Code Section 12591.2.)
6. Provides that the assurance authorized in 5) may, among other terms, include a stipulation of a voluntary payment by the person for the cost of the investigation or an amount to be held in escrow pending the outcome of an action; or restitution to aggrieved persons; or both, but that an assurance of voluntary compliance shall not be considered an admission of a violation for any purpose. (Ibid.)
7. Provides that the assurance of compliance authorized in 5) shall be in writing and shall be filed with a superior court in this state for approval and if approved shall thereafter be filed with the clerk of the court. Provides that matters closed may at any time be reopened by the court for further proceedings in the public interest. (Ibid.)
8. Provides that in the event of an alleged violation of the assurance authorized in 5), the Attorney General may, at their discretion, either initiate contempt proceedings or proceed as if the assurance of voluntary compliance has not been accepted. (Ibid.)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: Seeking to streamline settlements with defendants in multistate cases and to ensure the efficient use of Department of Justice resources, this bill would permit the Attorney General to utilize voluntary assurances of compliance to resolve litigation brought on behalf of the people of California. These compliance measures require a settling party to assure the Attorney General that they will comply with the law and all terms of a settlement agreement. Given that nearly 30 other state attorneys general possess this tool, providing California’s Attorney General with the ability to utilize an assurance of voluntary compliance will help the Attorney General better protect the rights of Californians in multistate litigation.

Author’s Statement. The author contends that existing law ties the hands of the Attorney General and the Department of Justice in multistate litigation. Existing law requires the Attorney General to seek a stipulated judgment from defendants. The author states that if other states offer defendants the ability to provide an assurance of voluntary compliance, the defendant might balk at entering into a stipulated judgment with California. Thus, in support of this measure, the author argues:

This proposal would provide general statutory authority for the Attorney General to document the settlement of non-charity related cases through an assurance of voluntary compliance.

By broadly authorizing the use of assurances of voluntary compliance in California, this bill gives the Attorney General the ability to use a tool that can be particularly helpful in facilitating settlements in multistate cases where our sister states are already using assurances of voluntary compliance to do so. Assurances of voluntary compliance can save time and resources that would otherwise be consumed in negotiating a stipulated judgment or in litigation, if such negotiations are unsuccessful.

Assurance of voluntary compliance vs. a stipulated judgment. Under existing law, most settlements are memorialized via stipulated judgment. In effect, these judgments are essentially contractual agreements acknowledged in open court. In the event that a settlement involves multiple parties for litigation initiated outside of California, in order to record the judgment, a separate action would need to be commenced in California before the judgment could be entered, resulting in costs for all parties. While an assurance of voluntary compliance is similar in that it functions as an agreement resulting in the end of formal adjudication of a legal issue, when explicitly authorized by state law, an assurance provides non-contractual remedies to guarantee compliance. However, due to the lack of existing legal authority for the use of an assurance of voluntary compliance in most legal disputes, California’s Attorney General may sign onto an assurance of voluntary compliance between other states’ attorneys general and parties to litigation that may be difficult to enforce without additional actions in California.

Given that an assurance of voluntary compliance is a creation of statute, the remedies provided by such assurances can vary between states, and accordingly, a diverse array of legal options have been adopted by various states. For example in Louisiana, a party can be held in contempt of court for failing to adhere to an assurance of voluntary compliance. (LA Rev Stat Section 51:1410.) In Illinois, a violation of an assurance of voluntary compliance produces an evidentiary presumption in subsequent proceedings. (815 ILCS 505/1.) This diversity of options allows each state to adopt those remedies which are most applicable to the practices and procedures that generally apply in that state’s courts.

Existing law provides the Attorney General with the ability to utilize an assurance in vary narrow circumstances. Currently, the Attorney General possess limited powers to utilize an assurance of voluntary compliance in matters related to the Uniform Supervision of Trustees for Charitable Purposes Act. While originally rooted in common law, the Attorney General’s power to regulate trusts has been codified on the belief that private individuals could not as effectively prevent the misuse of the trust property. (Lisa M. Bell and Robert B. Bell, Supervision of Charitable Trusts in California (1980) 32 Hastings L.J. 433, 434.) While most of that act focuses on the Attorney General’s supervision of charities, the Legislature vested enforcement powers with the Attorney General as well. As a part of those powers, the Attorney General may seek an assurance of voluntary compliance. In order to facilitate the specific needs of charitable trust enforcement, in the event an agreement is violated, existing law enables the Attorney General to seek contempt changes or proceed with legal action as if the agreement had never existed. (Government Code section 12591.2.)

This bill. In order to better equip the Attorney General to resolve multistate civil actions, this bill would provide the Attorney General with broad-based powers to adopt an assurance of voluntary compliance as a means to end litigation. As noted above, this power varies on a state-by-state basis. The current proposal would enable the Attorney General to seek injunctions and treat a failure to maintain compliance with the agreement like a breach of a settlement. This bill avoids the necessity for commencement of new actions just to enforce a settlement, and instead permits the court to quickly act to ensure ongoing adherence with an assurance of voluntary compliance.

This bill also enhances the efficiency of resolving agreements. This bill would enable the Attorney General to accept, with out-of-state partners, an assurance of voluntary compliance, without having to then seek a stipulated judgment in a California court, or otherwise accept a difficult-to-maintain agreement. Given the flexibility of an assurance of voluntary compliance, in the event that any issue arises with the assurance, each state would be free to pursue its own local remedies to enforce compliance. This power would be particularly helpful in environmental and consumer protection cases, when a party may fall out of compliance in one state, but not in another, and thus localized remedies are appropriate.

New powers would not conflict with existing authority. This bill would provide the Attorney General with a general grant of authority to enter into an assurance of voluntary compliance. This bill would not impact the more specific grant provided for charitable trust litigation. Similarly, should this measure pass, the bill would not preclude the Legislature from providing for more specifically tailored authority for the use of an assurance of voluntary compliance in other areas of litigation. The overlap is consistent with other laws governing the Attorney General and the Department of Justice. For example, the Attorney General is vested with general subpoena power, and yet numerous state statutes provide highly specific subpoena powers in a variety of matters, including powers overlapping with other state agencies. This bill simply provides the Attorney General with the overarching ability to utilize an assurance of voluntary compliance to generate efficiencies in enforcing multistate settlement agreements.

ARGUMENTS IN SUPPORT: In support of this measure, the bill’s sponsor, Attorney General Xavier Becerra, states that this bill:

Seeks to streamline settlements with defendants in multistate cases and ensure the efficient use of Department of Justice resources. Outside the narrow context of the charitable trust law, there is no express legal authority in California for the Attorney General to enter into an assurance of voluntary compliance, to have that assurance of voluntary compliance reviewed and entered by the court, or to obtain judicial enforcement of an assurance of voluntary compliance’s requirements. This means that the Attorney General lacks the ability to use this settlement tool in many other areas of law where it could be used to have courts enforce public rights and consumer protections. Out of court settlement agreements have some utility, but they are inappropriate in consumer protection and environmental law enforcement actions where transparency and judicial oversight and critical, and they lack enforcement mechanisms beyond the limited remedies provided by contract law. Accordingly, this proposal would provide general statutory authority for the Attorney General to document the settlement of non-charity related cases through an assurance of voluntary compliance.

REGISTERED SUPPORT / OPPOSITION:

Support

Attorney General Xavier Becerra (sponsor)

Opposition

None on file

Analysis Prepared by: Nicholas Liedtke / JUD. / (916) 319-2334