On September 30, 2023, Governor Gavin Newsom signed SB-235 into law. SB-235 will affect the rights and obligations of the parties as it pertains to the exchange and disclosure of factual information during discovery. Specifically, the new law amends California Code of Civil Procedure section 2016.090 and institutes a procedure for initial disclosure of information and documents that is similar to that followed in Federal court. The changes apply only to civil actions filed on or after January 1, 2024 and shall remain in effect until January 1, 2027.
Code of Civil Procedure section 2016.090 previously authorized the court, with the stipulation of the parties to a civil action other than an unlawful detainer or small claims action, to order the parties to provide initial disclosures to the other parties to the action within 45 days of the court’s order. Those initial disclosures were to contain information regarding persons who have information, or records containing information, supporting the party’s claims and defenses, and information regarding agreements which would make a person or an insurance company liable to satisfy a judgment in the action through reimbursement or indemnification.
SB-235 amends Section 2016.090 to now require each party that has appeared in a civil action to provide initial disclosures, as specified, to the other parties to the action within 60 days of a demand by any party to the action unless modified by the stipulation of the parties. The initial disclosures shall include:
- The names, addresses, telephone numbers, and email addresses of all persons likely to have discoverable information, along with the subjects of that information, that the disclosing party may use to support its claims or defenses, or that is relevant to the subject matter of the action or the order on any motion made in that action, unless the use would be solely for impeachment. The disclosure does not require the parties to include persons who are expert trial witnesses or are retained as consultants who may later be designated as expert trial witnesses;
- A copy, or a description by category and location, of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses, or that is relevant to the subject matter of the action or the order on any motion made in that action, unless the use would be solely for impeachment;
- Any contractual agreement and any insurance policy under which an insurance company may be liable to satisfy, in whole or in part, a judgment entered in the action or to indemnify or reimburse for payments made to satisfy the judgment;
- Any and all contractual agreements and any and all insurance policies under which a person, as defined in Section 175 of the Evidence Code, may be liable to satisfy, in whole or in part, a judgment entered in the action or to indemnify or reimburse for payments made to satisfy the judgment. Only those provisions of an agreement that are material to the terms of the insurance, indemnification, or reimbursement are required to be included in the initial disclosure. Material provisions include, but are not limited to, the identities of parties to the agreement, the nature and limits of the coverage, and any and all documents regarding whether any insurance carrier is disputing the agreement’s or policy’s coverage of the claim involved in the action.
The amendment requires that a party “shall make its initial disclosures based on the information then reasonably available to it. A party is not excused from making its initial disclosures because it has not fully investigated the case, because it challenges the sufficiency of another party’s disclosures, or because another party has not made its disclosures.”
In accordance with existing law, a party may propound supplemental demands for information twice before the initial setting of a trial date and once after the initial setting of a trial date. The court may also, upon a showing of good cause, grant leave of a party to propound one additional supplemental demand. The new code also contains various exceptions. For instance, the new requirements do not apply to actions commenced under the Family or Probate Code or an action in which a party has been granted preference.
In addition, SB-235 also modifies Code of Civil Procedure section 2023.050 which requires a court to impose a $250 sanction against a party, person, or attorney upon findings that the party, person, or attorney (1) failed to respond in good faith to a document request, (2) produced the requested documents within 7 days of a motion to compel that is filed by the requesting party as a result of the other party, person, or attorney’s failure to respond in good faith, or (3) failed to meet and confer in person, by telephone, by letter, or other means of communication in writing, to resolve any dispute regarding the request. The new law increases the amount of the sanction to $1,000.
The impact of the changes is a potential streamlining of the process of fact investigation and discovery between the parties. Similar to the initial disclosure requirements in Federal court, each side is now going to be required to disclose all existing relevant witness information and documents in response to a demand for initial disclosure. In addition, these new rules will hopefully reduce the amount of written discovery that is required to be exchanged between the parties to obtain relevant information and documents. It is important to note that this rule will also require counsel to be more proactive in identifying what information and documents are relevant early on in a case to ensure that such information is contained in the initial disclosure, especially in light of the increase in discovery sanctions.
However, the new rule appears to run contrary to some existing discovery rules, including Code of Civil Procedure section 2017.210, which provides that “[a] party may also obtain discovery as to whether that insurance carrier is disputing the agreement's coverage of the claim involved in the action, but not as to the nature and substance of that dispute.” The new disclosure requirements could potentially lead to further discovery of insurance claims files to investigate and obtain information and documents pertaining to an insurance company’s coverage positions in a case.
As this new law becomes a part of regular practice, it remains to be seen how the courts will enforce these requirements.