Pre-recess flurry: legislators face number of issues before Sept. 9 break.

California's legislators returned to work Aug. 15 for a final flurry of activity before they recess for the year on Sept. 9. The contentious issues they are grappling with include driver's licenses for undocumented immigrants and same-sex marriage, among others.

Additionally, many substantive issues have been placed on the November special election ballot in the form of propositions to be decided by voters. The November special election is becoming a watershed event for Gov. Schwarzenegger, who is pitted against organized labor in a battle that neither side wants to lose.

Labor views the election as a measurement of the governor's declining popularity. If he loses the initiative battle, they will see him as a beatable governor going into next year's reelection campaign.

On the ballot are other subjects and initiatives that would, among other things, change the way legislative districts are determined, limit the ability of public employee unions to use member dues for political campaigns, change school funding, extend the period of time for teachers to gain tenure and regulate energy sales in California.

CalCPA Member John Campbell Runs for Congress

Gov. Schwarzenegger has set Oct. 4 as the date for a special election for voters to select the replacement for former Congressman Chris Cox, who President Bush appointed SEC Commissioner.

A second special election is set for Dec. 6 but will only be held if no candidate is able to win more than 50 percent of the vote in the Oct. 4 primary.

Former legislator Marilyn Brewer and current state senator and CalCPA member John Campbell, CPA, are considered to be the front-runners in what may be a very crowded field.

If Sen. Campbell is elected, he would be the second California CPA sitting in Congress. Brad Sherman, an attorney CPA and a former member of the Board of Equalization, has been representing the 27th Congressional District in Congress since 1996.

The 48th Congressional District, which Campbell is running for, is considered a safe Republican seat.

Pre-dispute Jury Waivers

On Aug. 4, the California Supreme Court ruled in the long-awaited Grafton Partners v. Superior Court case that Grafton's dispute with Pricewaterhouse Coopers over audit work could go to a jury trial despite Grafton having signed a pre-dispute contract that would have allowed a trial in front of a judge in lieu of a jury.

The court made it clear that the decision does not affect arbitration agreements and that the jury waiver, if signed after the dispute arose, would have been binding on Grafton.

According to legal experts, the decision makes California one of only two states that do not honor pre-dispute contracts to waive a jury trial. These contracts are preferred as a way to lower legal costs especially in complex litigation. Federal law also permits "jury waiver" contracts.

The ruling has the potential for broad national impact since it would apply not only to California residents, but potentially to those who are doing business in this state.

The Supreme Court indicated in its decision that the state Constitution for-bids the creation of judicial rules of waiver, even if the rules are promulgated pursuant to a legislative delegation of such power to the judiciary.

Instead, the court found that the phrase "prescribed by law" in the California Constitution meant that the Legislature alone had the power to determine the circumstances under which a jury trial could be waived.

In a concurring opinion, Justice Chin urged "... the Legislature to enact legislation expressly authorizing pre-dispute jury waivers."

The Civil Justice Association of California was, within hours of the decision, drafting legislation and seeking a legislative author to reinstate the ability of individuals and companies to rely on pre-dispute jury waiver contracts. In a statement released shortly after that decision, CJAC said:

"We began working on a bill shortly after the decision was announced. The constitutional right to a jury trial deserves solid protection, however, people should have the right to make an informed agreement to waive a jury.

"A trial before a judge only, like the use of an arbitrator or mediator, is an important option that benefits businesses, individuals and the court system. The decision did reinforce the legitimacy of arbitration agreements (an outcome certainly not welcomed by plaintiffs' lawyers, whose friend-of-the-court brief in the case was an irrelevant diatribe against arbitration)."

Mandatory Reporting Bill Goes to Governor

SB 1018 (Simitian) was sent to the governor Aug. 15. The governor had 12 days to veto or sign the bill, but had not made a decision by press time.

The bill proposes a pilot program that would require all officers and employees of banks, federal and state credit unions, and their affiliates, to report any suspected financial elder or dependent adult abuse.

Failure to report would expose the officers and employees to fines and possible misdemeanor charges.

The pilot program would begin Jan. 1, 2007 and sunset in 2013 unless a future statute extends the date. Unlike previous bills on elder financial abuse, this one did not include CPAs and attorneys as mandated reporters.

CalCPA supports efforts to prevent elder financial abuse, but opposes mandates that could subject professionals to civil suits from disgruntled clients.

Bruce C. Allen is CalCPA's director of government relations.